# In the matter of Budhpur Buildcon Pvt. Ltd
Vs.
Mr. Abhay Narayan Manudhane Company Appeal(AT) (Ins) No.589 of 2021
& I.A. No.1739/2021 & 753/2022

> NCLAT judgment dated 2022-09-09. Citation: TCN-2022-NCLAT-00222. The case involves an appeal filed by Budhpur Buildcon Pvt. Ltd. against an order passed by…

- **Court:** NCLAT
- **Order date:** 9 Sept 2022
- **Citation:** TCN-2022-NCLAT-00222
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/budhpur-buildcon-pvt-ltd-vs-mr-abhay-narayan-manudhane-company-appealat-ins-no58-5c33b27f

## Summary

### Background

The case involves an appeal filed by Budhpur Buildcon Pvt. Ltd. against an order passed by the National Company Law Tribunal (NCLT), Mumbai Bench, regarding the rejection of their claim as a financial debt in the corporate insolvency resolution process (CIRP) of Housing Development and Infrastructure Limited (HDIL). Budhpur Buildcon claimed a financial debt of Rs. 14,391 crores based on various agreements with HDIL, arguing that the funds provided were for the development of a slum rehabilitation project. The Resolution Professional (RP) rejected the claim, stating it was essentially a claim for penal interest due to breach of contract and not a financial debt as defined under the Insolvency and Bankruptcy Code (IBC). The NCLT upheld the RP's decision, leading to this

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## Facts

Budhpur Buildcon Pvt. Ltd. (Appellant) entered into various agreements with Housing Development and Infrastructure Limited (HDIL) (Corporate Debtor) for the development of a slum rehabilitation project. The Appellant claimed to have disbursed Rs. 721.03 crores to HDIL, with a total claim of Rs. 14,391 crores including interest. The Appellant's claim was based on a clause in the Supplemental Agreement dated 20.03.2012, which stipulated a 2% per month interest on amounts due in case of default by HDIL. The Resolution Professional (RP) rejected the Appellant's claim, stating that it was primarily a claim for penal interest due to breach of contract and not a financial debt under the Insolvency and Bankruptcy Code (IBC). The RP also noted that the claim was submitted four

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## Issues and analysis

### Issue 1: Whether the amount claimed by Budhpur Buildcon constitutes a 'financial debt' under Section 5(8) of …

**Ratio:** A 'financial debt' requires a disbursal against the consideration for the time value of

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**Reasoning:** The NCLAT reasoned that the amount claimed by Budhpur Buildcon was primarily for penal

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**Interpretation:** Section 5(8) of the IBC defines 'financial debt' and requires a disbursal

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**Application:** In this case, the NCLAT applied the ratio to the facts and found that the

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## Parties

- **Judges:** Ashok Kumar…; Rakesh…
- **Appellants:** Budhpur Buildcon…
- **Respondents:** Housing Developmen…; Abhay Narayan…

## Timeline

- **2019-08-20 — CIRP Star…**: Corporate Insolvency Resolution Process (CIRP) commenced for Housing Development and…
- **2019-11-20 — Cut-off Date f…**: Cut-off date for submission of claims by creditors as per Regulation 12(2) of the IBBI…

## 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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