# In the matter of M/s Jagbasera Infratech Private Ltd Vs. Rawal Variety Construction Ltd.  Company Appeal (AT) (Insolvency) No.150 of 2019

> NCLAT judgment dated 2022-04-04. Citation: TCN-2022-NCLAT-00556. The case involves an appeal against the Adjudicating Authority's order dated 2018-12-11,…

- **Court:** NCLAT
- **Order date:** 4 Apr 2022
- **Citation:** TCN-2022-NCLAT-00556
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/ms-jagbasera-infratech-private-ltd-vs-rawal-variety-construction-ltd-company-app-1ff54cf8

## Summary

### Background

The case involves an appeal against the Adjudicating Authority's order dated 2018-12-11, which dismissed a petition filed by Jagbasera Infratech Private Ltd under Section 7 of the Insolvency and Bankruptcy Code, 2016. The appellant, Jagbasera Infratech, sought to initiate the Corporate Insolvency Resolution Process (CIRP) against Rawal Variety Construction Ltd, the respondent. The Adjudicating Authority rejected the petition, leading to the current appeal before the National Company Law Appellate Tribunal (NCLAT). The core issue revolves around whether the appellant qualifies as a 'Financial Creditor' under the IBC, considering their investment in a real estate joint venture project with the respondent.

## Facts

Jagbasera Infratech Private Ltd (Appellant) entered into a Memorandum of Understanding (MoU) on 2011-09-28 and a Joint Venture Agreement on 2012-02-27 with Rawal Variety Construction Ltd (Respondent/Corporate Debtor). Between 2011-10-21 and 2018-05-14, the Appellant paid Rs.4,21,37,850 to the Corporate Debtor. The Appellant claimed this amount was a 'financial debt' under Section 5(8) of the Insolvency and Bankruptcy Code (IBC) because the Corporate Debtor defaulted in returning the amount. The Appellant argued the project was a Real Estate Project, and they were a 'Promoter' interested in forward sales of furnished studio flats. The Respondent contended the Appellant was engaged in forward sales and invested as a 'Promoter' only. The Adjudicating Authority dismissed

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## Issues and analysis

### Issue 1: Whether the Appellant, Jagbasera Infratech Private Ltd, qualifies as a 'Financial Creditor' under …

**Ratio:** The definition of 'financial creditor' under Section 5(7) of the IBC requires a financial

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**Reasoning:** The court reasoned that based on the Memorandum of Understanding (MoU) and Joint Venture

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**Interpretation:** The interpretation of 'financial creditor' and 'financial debt' is crucial. The

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**Application:** In this case, the Appellant acted as a 'Promoter' and 'Investor', not as a

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## Parties

- **Judges:** Anant Bijay…; Ms Shreesha…
- **Appellants:** M/s Jagbasera…
- **Respondents:** Rawal Variety…
- **Advocates:** Sumant Bha…; Vedant Bha…; +2 more

## Timeline

- **2011-09-28 — Memorandum of…**: Memorandum of Understanding is made and executed at Greater Noida between M/s Rawal…
- **2012-02-27 — Joint Venture…**: Joint Venture Agreement between M/s Rawal Variety Construction Ltd and M/s Jagbasera…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61(3) — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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