Case Law Details
New Okhla Industrial Development Authority Vs Anand Sonbhadra (Supreme Court)
Facts- The appellant ‘NOIDA’ initially submitted Form ’B’ and claimed as an operational creditor in regard to the dues outstanding under the lease. Subsequently the appellant filed a claim in Form ‘C’ and claimed as a financial creditor. There was some correspondence which reveals that the appellant insisted upon being treated as a financial creditor. Finally, the matter was considered by the adjudicating authority (NCLT) which held that there was no financial lease in terms of the Indian Accounting Standards and there was no financial debt. By the impugned order, NCLAT has affirmed the view taken by the NCLT. Hence the appeal.
Conclusion- Section 5(8)(d) includes only a finance or a capital lease, which is deemed, as such, under the Indian Accounting Standards. Section 5(8)(f) is a residuary and catch all provision. A lease, which is not a finance or a capital lease under Section 5(8)(d), may create a financial debt within the meaning of Section 5(8)(f), if, on its terms, the Court concludes that it is a transaction, under which, any amount is raised, having the commercial effect of the borrowing. All that we are finding, in the facts of this case, is that the lease in question does not fall within the ambit of Section 5(8)(f). This is for the reason that the lessee has not raised any amount from the appellant under the lease, which is a transaction.
1. Hardly six years old, the Insolvency and Bankruptcy Code (hereinafter referred to as the ‘IBC”) continues to be a fertile ground to spawn litigation. Born in the year 2016, the IBC this time around has given rise to the question as to whether the appellant would be a financial creditor and entitled to be so treated in the Corporate Insolvency Resolution Process (CIRP, in short) commenced against the corporate debtor under the ‘IBC’.
THE APPEALS
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