Neeta Zanvar Vs Filatex Fashions Ltd (NCLT Hyderabad)
NCLT Hyderabad held that equity investment is not a loan and doesn’t fall within the meaning of ‘operational debt’ under section 5(21) of the Insolvency and Bankruptcy Code. Accordingly, application u/s. 9 of IBC for initiation of IBC dismissed.
Facts- The present Application has been filed by Mrs Neeta Zanvar, (Operational Creditor/OC/Applicant) u/s. 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against M/s. Filatex Fashions Limited, (Corporate Debtor/CD /Respondent) on account of an alleged operational debt amounting to ₹2,75,56,134/.
Conclusion- A plain reading of the provision of section 5(21) of the IBC clearly indicates that a claim arising out of equity investment or share subscription—however couched—is not within the statutory contemplation of an operational debt. It neither pertains to goods or services rendered, nor does it relate to statutory dues.
The present transaction, being an equity investment, does not relate to the provision of goods or services, and hence does not fall within the meaning of “operational debt” under the Code.
Held that the alleged claim does not constitute an “operational debt” under Section 5(21) of the Code; no operational default under Section 3(12) is established and the demand notice issued under Section 8 is invalid for want of proper authorisation. Accordingly, the application is dismissed as not maintainable.
