# In the matter of Anil Mahindroo & Anr. Vs. Earth Iconic Infrastructure (P) Ltd. CA (AT) No. 74-2017

> NCLAT judgment dated 2017-08-02. Citation: TCN-2017-NCLAT-00144. The appellants, claiming to be 'Financial Creditors', filed an application under Section 7 of…

- **Court:** NCLAT
- **Order date:** 2 Aug 2017
- **Citation:** TCN-2017-NCLAT-00144
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/anil-mahindroo-anr-vs-earth-iconic-infrastructure-721e6c1a

## Summary

### Background

The appellants, claiming to be 'Financial Creditors', filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating insolvency proceedings against the Respondent, 'Corporate Debtor'. The Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi, dismissed the application, observing that the applicants could not be regarded as Financial Creditors because their advance payment for purchasing a flat could not be considered a 'Financial Debt' due to a stipulation in the MOU regarding assured return payment. The Adjudicating Authority referenced a similar case, Nikhil Mehta & Sons v. AMR Infrastructures Ltd., in its decision.

## Facts

Anil Mahindroo & Anr (the Appellants) claimed to be 'Financial Creditors' and filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate insolvency proceedings against Earth Iconic Infrastructure (P) Ltd (the Respondent), referred to as the 'Corporate Debtor'. The Appellants and Respondent had executed a Memorandum of Understanding (MOU) and an allotment letter. The Appellants were allotted a flat with reference number ETTS 1959 in the Earth Titanium Studios project developed by the Respondent in Greater Noida, UP. The MOU contained an express promise by the Respondent to guarantee a return on the investment, styled as 'commitment amount', until actual possession. The total sale consideration for the flat was Rs. 20,80,000 plus

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## Issues and analysis

### Issue 1: Whether the appellants can be regarded as 'Financial Creditors' within the meaning of Section 5(7) …

**Ratio:** A 'Financial Creditor' is defined under Section 5(7) of the Insolvency and Bankruptcy

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**Reasoning:** The Appellate Tribunal reasoned that the Adjudicating Authority wrongly concluded that

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**Interpretation:** The interpretation of 'financial creditor' hinges on whether the transaction

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**Application:** The Appellate Tribunal applied this principle to the facts, noting that the

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## Parties

- **Judges:** S.J. Mukhop…; Balvinder…
- **Appellants:** Anil Mahi…
- **Respondents:** Earth Iconic…

## Timeline

- **2017-03-08 — Order by Adjudicating…**: The Adjudicating Authority (National Company Law Tribunal) dismissed the application…
- **2017-07-21 — Nikhil Meht…**: Reference to the decision in “Nikhil Mehta and Sons v. AMR Infrastructure Ltd” dated 21st…

## 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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