# In the matter of Ambika Enclave Pvt. Ltd. & Ors. vs. Shreesai Baba Infra Projects Pvt. Ltd.

> NCLAT judgment dated 2024-05-15. Citation: TCN-2024-NCLAT-00432. The case involves an appeal against the dismissal of an application under Section 7 of the…

- **Court:** NCLAT
- **Order date:** 15 May 2024
- **Citation:** TCN-2024-NCLAT-00432
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/ambika-enclave-pvt-ltd-ors-vs-shreesai-baba-infra-projects-pvt-ltd-6fa884dd

## Summary

### Background

The case involves an appeal against the dismissal of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Appellants, claiming to be financial creditors, sought to initiate Corporate Insolvency Resolution Process (CIRP) against Shree Sai Baba Infra Projects Pvt. Ltd. (Corporate Debtor). The application was dismissed by the National Company Law Tribunal (NCLT), Allahabad Bench, on the ground that there was no relationship of financial creditor and corporate debtor and no transaction in the nature of financial debt between the parties. The Appellants had advanced a loan to Proplarity Homes Pvt. Ltd. (PHPL), which entered into a sale deed with the Corporate Debtor. The Appellants contended that the Corporate Debtor was obligated to pay them the

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## Facts

Ambika Enclave Pvt. Ltd. & Ors. (Appellants) advanced a loan of more than 16 Cr. to Proplarity Homes Pvt. Ltd. (PHPL), now Sparkspell Homes Pvt. Ltd., under a loan agreement dated 2016-10-13. PHPL (Vendor) entered into a sale deed with Shree Sai Baba Infra Projects Pvt. Ltd. (Corporate Debtor/Vendee) for the sale of Block A, B, C, D & F in the project 'Pratham' located at Lucknow. The sale deed was to be executed for Rs. 3.90 Cr., and clause 35 stated that payment/consideration was received from the confirming party. PHPL came under CIRP, and the IRP issued a demand notice dated 2020-09-15 to the Corporate Debtor for the sale consideration. The Respondent allegedly admitted in a reply dated 2020-10-01 that cheques mentioned in the sale deed dated 2017-05-01

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## Issues and analysis

### Issue 1: Whether the Appellants can be considered financial creditors of Shree Sai Baba Infra Projects Pvt. …

**Ratio:** The root requirement for a creditor to become a financial creditor under Part II of the

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**Reasoning:** The court relied on the Supreme Court's decision in Anuj Jain IRP of JIL Vs. Axis Bank

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**Interpretation:** Section 5(8) of the IBC defines 'financial debt' as a debt along with interest,

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**Application:** In this case, the Appellants advanced a loan to PHPL, not to the Corporate

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## Parties

- **Judges:** Rakesh Kuma…; Indevar P…
- **Appellants:** Ambika Enclave…
- **Respondents:** Shree Sai Baba…; Shreesai Baba…

## Timeline

- **2016-10-13 — Loan Agre…**: Appellants advanced a loan of more than 16…
- **2017-05-01 — Sale Dee…**: PHPL entered into a sale deed with Shree Sai Baba Infra Projects Pvt. Ltd. (Corporate…

## 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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