# In the matter of Sach Marketing Pvt. Ltd. Vs. RP of Mount Shivalik
Industries Ltd., Ms. Pratibha Khandelwal Company Appeal (AT) (Ins) No. 180 of 2021

> NCLAT judgment dated 2021-10-07. Citation: TCN-2021-NCLAT-00071. The appeal was filed by Sach Marketing Pvt. Ltd. against the order dated 18.01.2021 passed by…

- **Court:** NCLAT
- **Order date:** 7 Oct 2021
- **Citation:** TCN-2021-NCLAT-00071
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/sach-marketing-pvt-ltd-vs-rp-of-mount-shivalik-industries-ltd-ms-pratibha-khande-a828281e

## Summary

### Background

The appeal was filed by Sach Marketing Pvt. Ltd. against the order dated 18.01.2021 passed by the National Company Law Tribunal (NCLT), Jaipur Bench, which dismissed I.A. No. 135/JPR/2019 in C.P. No. (IB)-86/ND/2018. The appellant challenged the decision of the Resolution Professional (RP) of Mount Shivalik Industries Ltd. (Corporate Debtor) classifying their claim as 'Operational Debt' instead of 'Financial Debt'. The appellant argued that a security deposit made with the Corporate Debtor should be considered a financial debt under Section 5(8)(f) of the Insolvency and Bankruptcy Code (IBC).

## Facts

Sach Marketing Pvt. Ltd. entered into an agreement with Mount Shivalik Industries Ltd. (Corporate Debtor) on 01.04.2014, where Sach Marketing was appointed as a sales promoter for beer for 12 months. As per the agreement, Sach Marketing was required to deposit a minimum security of Rs. 53,15,000/- with the Corporate Debtor, which would carry interest at 21% per annum. A subsequent agreement on 01.04.2015 retained the security deposit requirement. Sach Marketing provided Rs. 61,00,850/- in 2014, and Rs. 25,00,000/- was adjusted from funds provided earlier. The Corporate Debtor unilaterally adjusted the amount from the security balance to a Security Deposit/Loan Account in 2015-16. On 31.03.2016, the Corporate Debtor admitted an interest liability of Rs. 18,06,000/- but

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## Issues and analysis

### Issue 1: Whether the 'Security Deposit' and the interest thereon would fall within the ambit of the …

**Ratio:** A 'Financial Debt' means a debt along with interest, if any, which is disbursed against

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**Reasoning:** The NCLAT considered the terms of the agreement, the intention of the parties, and the

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**Interpretation:** The court interpreted Section 5(8) of the IBC to include transactions that have

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**Application:** The court applied the ratio to the facts of the case, finding that the security

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## Parties

- **Judges:** Shreesha…; Anant Bijay…; +1 more
- **Appellants:** SACH MARKETING…
- **Respondents:** Mount Shivalik…; Resolution…

## Timeline

- **2014-01-09 — C&F Arran…**: Mount Shivalik Industries Limited appointed Sach Marketing Pvt. Ltd. as C&F agent for…
- **2014-04-01 — Agreement between Sach Marketing and Mount…**: An agreement was executed between Sach Marketing and Mount Shivalik, appointing Sach…

## 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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