# In the matter of Adhunik Corporation Limited vs. Shivam India Limited

> NCLAT judgment dated 2025-02-19. Citation: TCN-2025-NCLAT-00205. The appeal arises from an order dated 11.10.2023 passed by the Adjudicating Authority,…

- **Court:** NCLAT
- **Order date:** 19 Feb 2025
- **Citation:** TCN-2025-NCLAT-00205
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/adhunik-corporation-limited-vs-shivam-india-limited-bd6e6396

## Summary

### Background

The appeal arises from an order dated 11.10.2023 passed by the Adjudicating Authority, National Company Law Tribunal, Kolkata Bench, dismissing a Section 7 application filed by Adhunik Corporation Limited (Appellant) seeking initiation of Corporate Insolvency Resolution Proceedings (CIRP) against Shivam India Limited (Respondent-Corporate Debtor). The Appellant claimed that the Respondent defaulted on financial assistance provided under a Memorandum of Agreement (MoA).

## Facts

Adhunik Corporation Limited (Appellant) provided financial assistance to Shivam India Limited (Respondent) to operationalize its factory, which was shut down due to financial constraints. An agreement dated 18.05.2015 was entered into, followed by a Memorandum of Agreement (MoA) executed on 23.06.2020. The Appellant provided Rs. 27.85 crore to the Respondent, including Rs. 23.49 crore as direct financial assistance and Rs. 4.36 crore for raw materials. The financial assistance was secured by depositing 69.42% equity shares of the Respondent with Trans Scan Securities Pvt. Ltd. The Appellant was to receive sales commission in return. The Appellant claimed that the Respondent failed to repay the financial assistance and sales commission. A notice dated 11.10.2021 was

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## Issues and analysis

### Issue 1: Whether the infusion of funds by the Appellant in the Corporate Debtor was in the nature of …

**Ratio:** For a debt to be treated as a financial debt, there must be a disbursal of money against

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**Reasoning:** The NCLAT considered the MoA clauses, which provided for the Appellant to supply raw

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**Interpretation:** The term 'financial debt' should be interpreted to include transactions that

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**Application:** In this case, the NCLAT found that the infusion of funds by the Appellant was a

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## Parties

- **Judges:** Ashok Bh…; Barun M…
- **Appellants:** Adhunik Corporatio…
- **Respondents:** Shivam India…

## Timeline

- **2015-05-18 — Initial Agr…**: Appellant and Respondent entered into an…
- **2020-06-23 — Memorandum of Agreement…**: Fresh MoA executed between Adhunik Corporation Limited, Shivam India Limited, and…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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