# In the matter of Jain MFG India Pvt. Ltd. CA No. 142-2019 in CP(IB) No. 422-ALD-2018

> NCLT judgment dated 2020-01-23. Citation: TCN-2020-NCLT-02206. The case involves an application filed by Mr. Rajnish Jain, a promoter, stakeholder, and MD of…

- **Court:** NCLT
- **Order date:** 23 Jan 2020
- **Citation:** TCN-2020-NCLT-02206
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/jain-mfg-india-pvt-ltd-ca-no-142-2019-in-cpib-no-422-ald-2018-b1862b01

## Summary

### Background

The case involves an application filed by Mr. Rajnish Jain, a promoter, stakeholder, and MD of the Suspended Board of Directors, seeking a declaration regarding whether BVN Traders should be considered a 'financial creditor' under Section 5(8) of the IBC, 2016. The Resolution Professional (RP) initially admitted the claim of BVN Traders as a financial creditor, based on a security interest shown through the possession of an original title deed. However, the RP later revisited the claim and found that BVN Traders had not filed a conveyance deed as required by Section 55 of the TPA 1882. The RP also obtained legal opinions indicating that BVN Traders did not meet the definition of a financial creditor under Section 5(7) read with Section 5(8) of the IBC, 2016, and had

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## Facts

Mr. Rajnish Jain, representing the suspended board of directors, filed an application to determine if BVN Traders qualifies as a 'financial creditor' under the IBC, 2016. The RP initially admitted BVN Traders' claim as a financial creditor, citing a security interest based on the possession of a title deed for a plot in Kanpur. However, the RP later discovered the absence of a conveyance deed, which is a critical document for establishing a valid security interest under Section 55 of the TPA 1882. The corporate debtor, Jain Manufacturing (India) Pvt. Ltd., denied ever taking a loan from BVN Traders or creating any mortgage in their favor. Ledger entries showed RTGS payments from Jain Manufacturing to BVN Traders, but these were later moved from a normal ledger account

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## Issues and analysis

### Issue 1: Whether BVN Traders should be declared a 'financial creditor' under Section 5(8) of the Insolvency …

**Ratio:** The legal principle applied is the definition of 'financial creditor' and 'financial

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**Reasoning:** The adjudicating authority considered the provisions of the IBC, the facts presented, and

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**Interpretation:** The interpretation of Section 5(7) and 5(8) of the IBC, 2016, is central to

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**Application:** In this specific case, the adjudicating authority applied the definition of

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## Parties

- **Judges:** Rajesh Daya…
- **Appellants:** Rajnish…
- **Respondents:** M/S Jain Mfg.…; BVN Tra…

## Timeline

- **2018-10-21 — FIR File…**: CA Dilip Kumar, partner of BVN Traders, filed…
- **2019-03-23 — First Meeting…**: Jain Manufacturing India Private Limited was not having knowledge of the alleged loan…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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