# In the matter of Santosh Kumar vs. ASK Trusteeship Services Private Limited & Ors.

> NCLAT judgment dated 2024-01-10. Citation: TCN-2024-NCLAT-00693. This appeal was filed by the Suspended Director of the Corporate Debtor, challenging the…

- **Court:** NCLAT
- **Order date:** 10 Jan 2024
- **Citation:** TCN-2024-NCLAT-00693
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/santosh-kumar-vs-ask-trusteeship-services-private-limited-ors-51d8e843

## Summary

### Background

This appeal was filed by the Suspended Director of the Corporate Debtor, challenging the order dated 24.11.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi, in C.P. (IB) No.390(PB)/2023. The Adjudicating Authority admitted the Section 7 application filed by the Respondent No.1, the Financial Creditor, leading to the appeal. The case revolves around a Debenture Subscription Agreement (DSA) where the Financial Creditor subscribed to unlisted optionally convertible cumulatively secured debentures (OCD) issued by the Corporate Debtor. The Corporate Debtor sought an extension for redemption, which was granted until July 31, 2021. However, the Corporate Debtor failed to redeem the OCDs on the revised date, leading to a

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## Facts

Santosh Kumar, the Suspended Director of Nobility Estates P. Ltd. (Corporate Debtor), filed an appeal against the order of the Adjudicating Authority (NCLT), Principal Bench, New Delhi, which admitted a Section 7 application filed by ASK Trusteeship Services Private Limited (Financial Creditor). The Financial Creditor and Corporate Debtor entered into a Debenture Subscription Agreement (DSA) where the Financial Creditor subscribed to optionally convertible debentures (OCDs) worth Rs. 125,00,00,000/- issued by the Corporate Debtor. The redemption date was initially set for 06.10.2020, but the Corporate Debtor requested an extension until 31.07.2021, which was granted. The Corporate Debtor failed to redeem the OCDs by the extended date. The Financial Creditor issued a

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## Issues and analysis

### Issue 1: Whether the optionally convertible debentures (OCDs) constitute a 'financial debt' within the …

**Ratio:** The ratio is that optionally convertible debentures (OCDs) can be considered financial

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**Reasoning:** The court reasoned that the DSA in question was for OCDs, not CCDs, and there was no

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**Interpretation:** The interpretation of Section 5(8)(c) of the IBC is central to this issue. The

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**Application:** The court applied the ratio and reasoning to the specific facts of the case,

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## Parties

- **Judges:** Ashok Bh…; Barun M…; +1 more
- **Appellants:** Santosh…
- **Respondents:** Nobility Estates…; ASK Trusteeship…

## Timeline

- **2020-10-06 — Original Redemp…**: Original date for redemption of Optionally Convertible Debentures (OCDs) as per the…
- **2020-10-03 — Request for E…**: Corporate Debtor requested an extension of…

## 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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