# In the matter Vijay Rochlani Vs Shantai Exim Ltd CP (IB) -1712 (MB)-2017

> NCLT judgment dated 2019-01-14. Citation: TCN-2019-NCLT-05260. Vijay Rochlani, a Financial Creditor, filed a Company Petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 14 Jan 2019
- **Citation:** TCN-2019-NCLT-05260
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/in-the-matter-vijay-rochlani-vs-shantai-exim-ltd-cp-4b0be736

## Summary

### Background

Vijay Rochlani, a Financial Creditor, filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Shantai Exim Ltd., the Corporate Debtor, due to non-payment of a claimed 'financial debt' of ₹50,00,000/-. The Corporate Debtor had approached the Petitioner for short-term financial assistance in December 2016, assuring repayment by March 2017. The Petitioner provided ₹55,00,000/-, and the Corporate Debtor repaid ₹5,00,000/- in March 2017, promising to pay the balance in December 2017. An interest of @12% p.a. was agreed upon for the remaining amount. The Corporate Debtor paid interest for three quarters until June 2017 but then defaulted on both interest and principal. The Petitioner sent a legal notice on 11.10.2017, but the Corporate

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## Facts

Vijay Rochlani, the Petitioner, claims a financial debt of ₹50,00,000/- from Shantai Exim Ltd., the Corporate Debtor. In December 2016, the Corporate Debtor approached the Petitioner for short-term financial assistance, assuring repayment by March 2017. The Petitioner provided ₹55,00,000/-. The Corporate Debtor repaid ₹5,00,000/- in March 2017 and promised to pay the balance in December 2017, with an agreed interest of 12% p.a. The Corporate Debtor paid interest until June 2017 but then defaulted. A legal notice was sent on 11.10.2017, but no payment was made. The Petitioner's wife is the sister of the directors of the Corporate Debtor, and a divorce petition is pending. The Corporate Debtor argues the amount was a family advance, not a loan, and is retained due to the

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## Issues and analysis

### Issue 1: Whether the impugned amount falls under the definition of 'Financial Debt' as prescribed under …

**Ratio:** The definition of 'Financial Debt' under Section 5(8) of the Insolvency and Bankruptcy

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**Reasoning:** The NCLT reasoned that the transfer of money had an element of interest, the Debtor

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**Interpretation:** The interpretation of Section 5(8) requires that a financial debt must have a

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**Application:** In this case, the NCLT applied the definition of 'Financial Debt' to the facts

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## Parties

- **Judges:** M.K. Sh…
- **Appellants:** Vijay Roc…
- **Respondents:** Shantai Exi…
- **Advocates:** Deep Shrid…; Madhavi N…; +4 more

## Timeline

- **2016-12-01 — Corporate Debtor…**: The Corporate Debtor approached the…
- **2016-12-01 — Financial Assistance…**: The Petitioner provided financial…

## 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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