# In the matter of Arrow Engineering Ltd. Vs. Golden Tobacco Limited Company Appeal (AT) (Insolvency) No. 183 of 2021

> NCLAT judgment dated 2021-12-02. Citation: TCN-2021-NCLAT-00026. Arrow Engineering Ltd. filed an appeal against the order dated 25.01.2021 passed by the…

- **Court:** NCLAT
- **Order date:** 2 Dec 2021
- **Citation:** TCN-2021-NCLAT-00026
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/arrow-engineering-ltd-vs-golden-tobacco-limited-company-appeal-ae6ad461

## Summary

### Background

Arrow Engineering Ltd. filed an appeal against the order dated 25.01.2021 passed by the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, which rejected their application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The application pertained to a dispute over financial assistance provided by Arrow Engineering to Golden Tobacco Limited (Corporate Debtor) for the development of land owned by the latter. The Adjudicating Authority held that the amount paid could not be considered a 'financial debt' or 'operational debt' and that the claim was barred by limitation.

## Facts

Arrow Engineering Ltd. (Appellant) provided financial assistance to Golden Tobacco Limited (Respondent/Corporate Debtor) for the development of land owned by the latter. By a letter dated 03.06.2011, the Corporate Debtor issued a Letter of Intent for marketing/financial assistance. The Appellant advanced different amounts to the Corporate Debtor. By letter dated 22.07.2011, the Corporate Debtor acknowledged the receipt of Rs.10 Crores. On 10.10.2011, the Corporate Debtor again wrote to the Appellant recording terms and conditions for financial assistance. A receipt of amount of Rs.15 Crores was also acknowledged. In a subsequent letter dated 01.02.2012, the letter dated 10.10.2011 was referred to as Letter of Understanding which letter also acknowledged receipt of

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## Issues and analysis

### Issue 1: Whether Corporate Debtor owed a financial debt to …

**Ratio:** The definition of 'financial debt' under Section 5(8) of the I&B Code includes any

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**Reasoning:** The appellate tribunal considered the letters written by the Corporate Debtor to the

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**Interpretation:** The court interpreted the transaction between Arrow Engineering and Golden

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**Application:** The tribunal applied the definition of 'financial debt' to the facts of the

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## Parties

- **Judges:** Ashok Bh…; Jarat Kuma…; +1 more
- **Appellants:** Arrow Engineering…
- **Respondents:** Golden Tobaccco…

## Timeline

- **2009-12-26 — MOU with Seth…**: Golden Tobacco Limited entered into a MOU with Seth Developers Pvt. Ltd. and Suraksha…
- **2011-06-03 — Letter of…**: Corporate Debtor issued a Letter of Intent for marketing/ financial assistance to Arrow…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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