# In the matter of Jaypee Infratech Limited. CA No. 81-2018 IN CP No. (IB)-77-ALD-2017

> NCLT judgment dated 2018-05-09. Citation: TCN-2018-NCLT-01437. ICICI Bank Limited filed a claim as a financial creditor against Jaypee Infratech Limited…

- **Court:** NCLT
- **Order date:** 9 May 2018
- **Citation:** TCN-2018-NCLT-01437
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/jaypee-infratech-limited-ca-no-81-2018-in-cp-no-ib-77-ald-2017-baafbbb1

## Summary

### Background

ICICI Bank Limited filed a claim as a financial creditor against Jaypee Infratech Limited (JIL), the corporate debtor, based on a third-party mortgage provided by JIL for the loans extended by ICICI Bank to JIL's holding company, Jayprakash Associates Limited (JAL). The Resolution Professional rejected ICICI Bank's claim, arguing that JIL was not the direct beneficiary of the loan and that the mortgage did not constitute a 'financial debt' as defined under the Insolvency and Bankruptcy Code (IBC), 2016. ICICI Bank then filed an application under Section 60(5) of the IBC to challenge the Resolution Professional's decision.

## Facts

ICICI Bank Limited extended credit facilities to Jayprakash Associates Limited (JAL). Jaypee Infratech Limited (JIL) provided a third-party mortgage on its immovable properties as collateral security for the loans granted by ICICI Bank to JAL. JIL is the holding company of JAL. When JAL defaulted on its payments, ICICI Bank issued a demand notice to JAL. Subsequently, Corporate Insolvency Resolution Process (CIRP) was initiated against JIL. ICICI Bank filed a claim with the Resolution Professional of JIL, seeking recognition as a financial creditor based on the mortgage provided by JIL. The Resolution Professional rejected ICICI Bank's claim, stating that the mortgage did not constitute a 'financial debt' under Section 5(8) of the Insolvency and Bankruptcy Code (IBC),

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## Issues and analysis

### Issue 1: Whether a third-party mortgage provided by a corporate debtor as collateral security for the debt …

**Ratio:** The essential ingredient of a 'financial debt' under the IBC is the disbursement of debt

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**Reasoning:** The court reasoned that the definition of 'financial debt' under Section 5(8) of the IBC

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**Interpretation:** The court interpreted the definition of 'financial debt' narrowly, emphasizing

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**Application:** The court applied this interpretation to the facts of the case, finding that

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## Parties

- **Judges:** V. P. S…; Saroj Ra…
- **Appellants:** ICICI Bank…
- **Respondents:** Jaypee Infratech…; Anuj…

## Timeline

- **2017-08-09 — Company Petition…**: IDBI Bank's company petition under Section 7 of the Code for initiation of CIRP against…
- **2017-08-09 — Public Annou…**: Resolution Professional issued a public advertisement inviting claims from creditors of…

## 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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