# In the matter of Raj Singh Gehlot Vs. Vistra (ITCL) India Ltd. & Anr.  Company Appeal (AT) (Ins) No. 06 of 2021

> NCLAT judgment dated 2022-08-02. Citation: TCN-2022-NCLAT-00307. This case involves an appeal against the order dated 21.12.2020 passed by the Adjudicating…

- **Court:** NCLAT
- **Order date:** 2 Aug 2022
- **Citation:** TCN-2022-NCLAT-00307
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/raj-singh-gehlot-vs-vistra-612be838

## Summary

### Background

This case involves an appeal against the order dated 21.12.2020 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi, Bench –III) in the case of CP (IB) -1600/ND/2018 under Section 7 of the Code, initiating CIRP of the Ambience Pvt. Ltd.-CD. The appeal was filed by Mr. Raj Singh Gehlot, Director of Ambience Pvt. Ltd., under Section 61 of IBC, 2016, challenging the legality of the order. The dispute arises from a Share Subscription cum Shareholders Agreement (SSSA) between Vistra ITCL (formerly IL & FS Trust Company Ltd.), Ambience/Corporate Debtor, and others, concerning investments in a joint venture company for real estate development. Vistra ITCL, as the financial creditor, initiated CIRP based on defaults in payments as per a

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## Facts

1. Raj Singh Gehlot, Director of Ambience Pvt. Ltd., filed an appeal against the initiation of CIRP against Ambience Pvt. Ltd.
2. Vistra ITCL (formerly IL & FS Trust Company Ltd.) initiated CIRP as a financial creditor based on a Settlement Agreement.
3. The dispute stems from a Share Subscription cum Shareholders Agreement (SSSA) concerning investments in a joint venture company for real estate development.
4. Vistra ITCL invested in Optionally Convertible Debentures and Unsecured Loans in the SPV.
5. The SSSA was amended multiple times, including changes to coupon payments and capital structure.
6. A Settlement Agreement was entered into on 7 April 2017, but subsequent payments were not made due to difficulties in the real estate sector.
7. Vistra ITCL filed an

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## Issues and analysis

### Issue 1: Whether the debt claimed by Vistra ITCL qualifies as a 'financial debt' under Section 5(8) of the …

**Ratio:** The essential element of a 'financial debt' under Section 5(8) of the IBC is that it

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**Reasoning:** The tribunal reasoned that the investments were made into the SPV/Joint Venture Company,

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**Interpretation:** The interpretation of Section 5(8) requires a strict adherence to the principle

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**Application:** In this case, the funds were invested in the SPV, and not directly disbursed to

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## Parties

- **Judges:** M. Venu…; Ashok Kumar…
- **Appellants:** Raj Singh…
- **Respondents:** Ambience Pv…; Vistra ITCL…

## Timeline

- **2011-05-28 — Share Subscription cum…**: Execution of the Share Subscription cum Shareholders Agreement between IL & FS Trust…
- **2011-09-03 — First Amendment…**: Amendment to Share Subscription cum…

## 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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