# In the matter of Canara Bank vs. Vivek Kumar

> NCLAT judgment dated 2025-01-09. Citation: TCN-2025-NCLAT-00272. Canara Bank filed an appeal against the rejection of its claim as a financial creditor by the…

- **Court:** NCLAT
- **Order date:** 9 Jan 2025
- **Citation:** TCN-2025-NCLAT-00272
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/canara-bank-vs-vivek-kumar-93d4abb4

## Summary

### Background

Canara Bank filed an appeal against the rejection of its claim as a financial creditor by the National Company Law Tribunal (NCLT), New Delhi, in relation to the Corporate Insolvency Resolution Process (CIRP) of AVJ Developers (India) Private Limited. The NCLT had dismissed Canara Bank's application, which sought directions to admit its claim based on housing loans disbursed to homebuyers in AVJ Heights project. The Resolution Professional (RP) had rejected Canara Bank's claim, arguing that the bank did not directly finance the Corporate Debtor and that the homebuyers were the actual financial creditors. The RP also relied on a previous NCLAT judgment, Value Infracon India Private Limited, which held that banks lending to homebuyers cannot be classified as financial

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## Facts

Canara Bank disbursed housing loans to homebuyers for the AVJ Heights project developed by AVJ Developers (India) Private Limited. A tripartite agreement was executed between Canara Bank, the homebuyers, and AVJ Developers. The agreement contained a clause (Clause 16) stating that in the event of default, the Corporate Debtor/Builder would refund the entire amount advanced by the bank. AVJ Developers defaulted on construction and was admitted into CIRP. Canara Bank filed a claim as a financial creditor, which was rejected by the Resolution Professional (RP). The RP argued that Canara Bank did not directly finance the Corporate Debtor and that the homebuyers were the actual financial creditors. The RP relied on the NCLAT judgment in Value Infracon India Private Limited,

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## Issues and analysis

### Issue 1: Whether Canara Bank can be considered a financial creditor of AVJ Developers (India) Private …

**Ratio:** A creditor is defined under Section 3(10) of the Code as any person to whom a debt is

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**Reasoning:** The NCLAT reasoned that the specific clause (Clause 16) in the tripartite agreement,

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**Interpretation:** The interpretation of 'financial debt' under Section 5(8) of the IBC is broad

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**Application:** In this case, Clause 16 of the tripartite agreement established a direct

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## Parties

- **Judges:** Rakesh Kuma…; Naresh Sa…
- **Appellants:** Canara…
- **Respondents:** AVJ Developers…; Sh. Vivek…

## Timeline

- **2019-10-21 — CIRP Init…**: Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor…
- **2019-11-22 — RP Appoin…**: Mr. Anil Tayal was confirmed as the Resolution Professional during the first meeting of…

## 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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