# In the matter of Nishit B Patel Vs. Good Value Financial Services Pvt Ltd & Anr. Company Appeal (AT)(Insolvency) No.198/2020

> NCLAT judgment dated 2022-02-14. Citation: TCN-2022-NCLAT-00631. The case involves an appeal against the order dated 31.12.2019 passed by the Adjudicating…

- **Court:** NCLAT
- **Order date:** 14 Feb 2022
- **Citation:** TCN-2022-NCLAT-00631
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/nishit-b-patel-vs-good-value-financial-services-pvt-ltd-anr-company-appeal-b7fde4af

## Summary

### Background

The case involves an appeal against the order dated 31.12.2019 passed by the Adjudicating Authority, National Company Law Tribunal, Mumbai Bench II, which admitted a Company Petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. The Appellant, a shareholder of the Corporate Debtor, Peacock Construction Pvt Ltd, challenged the order, arguing that the claim of the Financial Creditor, Good Value Financial Services Pvt Ltd, was not a 'Debt' and that the transaction was not a 'Loan Transaction'. The Appellant also contended that the claim was barred by limitation.

## Facts

Good Value Financial Services Pvt Ltd (Financial Creditor) advanced Rs. 5,25,22,000 on 28.10.2009 and Rs. 10,00,000 on 18.12.2010 to Peacock Construction Pvt Ltd (Corporate Debtor), totaling Rs. 5,35,00,000. The Financial Creditor claimed this was a loan, while the Corporate Debtor alleged it was an advance for acquiring Floor Space Index (FSI). The Financial Creditor sent a letter on 28.03.2019 demanding repayment with 18% quarterly interest. The Corporate Debtor allegedly defaulted, leading the Financial Creditor to file a Section 7 application under the IBC. The Corporate Debtor argued no interest was paid, and the claim was time-barred. The Adjudicating Authority admitted the petition, leading to an appeal by a shareholder of the Corporate Debtor. The Financial

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## Issues and analysis

### Issue 1: Whether the amount advanced by the Financial Creditor to the Corporate Debtor constitutes a …

**Ratio:** Section 5(8)(f) of the IBC defines 'financial debt' as any amount raised under any other

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**Reasoning:** The NCLAT reasoned that the amount disbursed by the Financial Creditor to the Corporate

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

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**Application:** In this case, the NCLAT applied the definition of 'financial debt' to the facts

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## Parties

- **Judges:** M. Venu…; Kanthi Na…; +1 more
- **Appellants:** Nishit B…
- **Respondents:** Peacock Constructi…; Good Value…
- **Advocates:** Rahul Ch…; Nitin M…; +5 more

## Timeline

- **2009-10-28 — First Disbu…**: Financial Creditor advanced Rs.…
- **2010-12-18 — Second Disbu…**: Financial Creditor advanced Rs.…

## 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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