# In the matter of Jaypee Infratech Limited CA No. 118-2018 IN CP No. (IB)-77-ALD-2017

> NCLT judgment dated 2018-05-15. Citation: TCN-2018-NCLT-01410. Central Bank of India filed an application claiming to be a financial creditor of Jaypee…

- **Court:** NCLT
- **Order date:** 15 May 2018
- **Citation:** TCN-2018-NCLT-01410
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/jaypee-infratech-limited-ca-no-118-2018-in-cp-no-ib-77-ald-2017-aa30c340

## Summary

### Background

Central Bank of India filed an application claiming to be a financial creditor of Jaypee Infratech Limited (JIL). The Resolution Professional rejected the claim, stating that the mortgage created in favor of the bank did not qualify as a 'Financial Debt' under Section 5(8) of the Insolvency and Bankruptcy Code, 2016, because the credit facilities were sanctioned to JIL's holding company, Jaiprakash Associates Ltd (JAL), not directly to JIL. The bank argued that JIL mortgaged its property to secure loans granted by the bank to JAL, making JIL a surety/guarantor. The bank sought a declaration that it is a financial creditor of JIL.

## Facts

Central Bank of India (the Applicant) claimed to be a financial creditor of Jaypee Infratech Limited (JIL, the Corporate Debtor). The Applicant's claim was based on a mortgage created by JIL in favor of the Applicant to secure loans granted by the Applicant to Jaiprakash Associates Ltd (JAL), the holding company of JIL. The Resolution Professional rejected the Applicant's claim, arguing that the debt was not a 'Financial Debt' under Section 5(8) of the Insolvency and Bankruptcy Code, 2016, because the credit facilities were sanctioned to JAL, not JIL. The Applicant argued that JIL acted as a surety/guarantor for the loans granted to JAL. The Applicant filed a company application seeking a declaration that it is a financial creditor of JIL. A similar application

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## Issues and analysis

### Issue 1: Whether the mortgage created by Jaypee Infratech Limited in favor of Central Bank of India to …

**Ratio:** A financial creditor is one to whom a financial debt is owed. A financial debt is a debt

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**Reasoning:** The court reasoned that the facts of the case were similar to those in Company

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**Interpretation:** The court interpreted the definition of 'financial debt' under the IBC to

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**Application:** The court applied the reasoning from the ICICI Bank case to the present case,

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## Parties

- **Judges:** SH. V.P.…; Saroj Ra…
- **Appellants:** Central Bank of…
- **Respondents:** Jaypee Infratech…; Anuj…

## Timeline

- **2017-01-09 — Power of Attor…**: Power of Attorney dated 09.01.2017 executed in favor of Central Bank of India by Mr. R.…
- **2017-02-09 — Power of Attorney…**: Power of Attorney dated 09.02.2017…

## 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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