# In the matter of Pramod Sharma Vs. Karanaya HeartCare Pvt. Ltd. Comp. App. (AT) (Ins.) No. 426 of 2022

> NCLAT judgment dated 2022-04-21. Citation: TCN-2022-NCLAT-00522. The case involves an appeal against an order dated 02.03.2020, where an application under…

- **Court:** NCLAT
- **Order date:** 21 Apr 2022
- **Citation:** TCN-2022-NCLAT-00522
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/pramod-sharma-vs-karanaya-heartcare-pvt-ltd-comp-app-da59b3c6

## Summary

### Background

The case involves an appeal against an order dated 02.03.2020, where an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by the Appellant, was dismissed. The Appellant claimed to have provided Rs. 1,03,00,000/- as share application money to the Respondent, but no shares were allotted. The principal amount was repaid, but no interest was paid. The Appellant argued that the application under Section 7 should be maintainable.

## Facts

Pramod Sharma, the Appellant, claimed to have given Rs. 1,03,00,000/- to Karanaya HeartCare Pvt. Ltd., the Respondent, as share application money. No shares were allotted in return. The principal amount of Rs. 1,03,00,000/- was subsequently repaid, but no interest was paid. The Appellant then filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the insolvency process against the Respondent, arguing that the unpaid interest constituted a financial debt. The Adjudicating Authority dismissed the application, noting that the matter had been previously settled amicably and that the share application money did not qualify as a financial debt under Section 5(8) of the Code. The Appellant then appealed this decision.

## Issues and analysis

### Issue 1: Whether the amount given as share application money can be considered a financial debt under …

**Ratio:** Share application money, where no shares are allotted and no time value is attached, does

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**Reasoning:** The Adjudicating Authority observed that the Respondent failed to show any agreement

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**Interpretation:** Section 5(8) of the Insolvency and Bankruptcy Code defines 'financial debt'.

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**Application:** In this case, the Appellant provided share application money to the Respondent,

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## Parties

- **Judges:** Ashok Bh…; Alok Sriv…; +1 more
- **Appellants:** Pramod S…
- **Respondents:** Karanaya HeartCare…
- **Advocates:** Sunil Singh…

## Timeline

- **2020-03-02 — Order Da…**: Order dated 02.03.2020 by which Application under Section 7 of the Insolvency and…
- **2017-10-11 — Previous…**: Order dated 11th October, 2017 of the Hon'ble National Company Law Tribunal passed in…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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