# In the matter of Anant Jain & Anr. Vs. Kaushambi Paper Mills Pvt. Ltd. CA(AT)(Ins) No.1400 of 2019

> NCLAT judgment dated 2019-12-04. Citation: TCN-2019-NCLAT-00057. The appellants, including a director of M/s Kaushambi Paper Mills Pvt. Ltd., filed an…

- **Court:** NCLAT
- **Order date:** 4 Dec 2019
- **Citation:** TCN-2019-NCLAT-00057
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/anant-jain-anr-vs-kaushambi-paper-mills-pvt-ltd-ca-10f30b80

## Summary

### Background

The appellants, including a director of M/s Kaushambi Paper Mills Pvt. Ltd., filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process against the corporate debtor. The Adjudicating Authority rejected this application, stating that the appellants did not qualify as 'Financial Creditors'.

## Facts

The appellants, including a director of M/s Kaushambi Paper Mills Pvt. Ltd., filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process against the corporate debtor. This application was filed before the Adjudicating Authority, which is the National Company Law Tribunal, Principal Bench, New Delhi. The Adjudicating Authority considered the application and subsequently rejected it. The Adjudicating Authority's order, dated November 1, 2019, was based on the finding that the appellants did not fall within the definition of 'Financial Creditors' as per the provisions of the I&B Code . The appellants contended that they had disbursed a loan to the corporate debtor, which

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## Issues and analysis

### Issue 1: Whether the appellants qualify as 'Financial Creditors' under the Insolvency & Bankruptcy Code, …

**Ratio:** A disbursal of money to a corporate debtor does not constitute 'Financial Debt' under

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**Reasoning:** The corporate debtor had not borrowed the money against payment of interest nor raised

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**Interpretation:** The court interpreted 'Financial Debt' strictly according to Section 5(8) of

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**Application:** Since the appellants' loan to the corporate debtor lacked the characteristics

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## Parties

- **Judges:** S.J. Mukhop…; Bansi Lal…; +1 more
- **Appellants:** Anant…; Anant Jain…
- **Respondents:** M/s Kaushambi…
- **Advocates:** Himanshu…; Ayush…; +2 more

## Timeline

- **November 1, 2019 — Adjudicating Authority's…**: The Adjudicating Authority (NCLT, Principal Bench, New Delhi) rejected the application…
- **December 4, 2019 — NCLAT Or…**: The National Company Law Appellate Tribunal dismissed the appeal, upholding the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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