# In the matter of Liquid Space Entertainment Private Limited C.P.(IB)No.9-BB-2017

> NCLT judgment dated 2018-11-29. Citation: TCN-2018-NCLT-00262. IDAC Solutions Private Limited and Nithin Shabbir filed a joint application under Section 7 of…

- **Court:** NCLT
- **Order date:** 29 Nov 2018
- **Citation:** TCN-2018-NCLT-00262
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/liquid-space-entertainment-private-limited-cpibno9-bb-2017-5145637b

## Summary

### Background

IDAC Solutions Private Limited and Nithin Shabbir filed a joint application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Liquid Space Entertainment Private Limited. The applicants claimed to be financial creditors of the corporate debtor, asserting that the corporate debtor had defaulted on payments related to loans and advances made by them. The respondent company raised preliminary objections, contending that the transactions did not constitute financial debt and that the claims were time-barred. The applicants argued that the amounts advanced were loans, as reflected in the corporate debtor's financial statements, and that the acknowledgment of debt in the balance sheets

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## Facts

IDAC Solutions Private Limited (Applicant No. 1) and Nithin Shabbir (Applicant No. 2) jointly filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Liquid Space Entertainment Private Limited (Corporate Debtor). Applicant No. 1 granted a debt of Rs. 67,00,000, while Applicant No. 2 granted a debt of Rs. 3,25,80,000. The date of default was April 1, 2014. The total amount claimed to be in default by Applicant No. 1 was Rs. 1,02,17,500, including interest at 18% per annum. The total amount claimed to be in default by Applicant No. 2 was Rs. 4,96,84,500, including interest at 18% per annum. The Respondent Company argued that the amounts advanced were related to share application money and partnership in a music festival, not loans. The

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## Issues and analysis

### Issue 1: Whether the amounts advanced by the Applicants to the Corporate Debtor constitute a 'financial …

**Ratio:** A financial debt is defined under Section 5(8) of the IBC as a debt along with interest,

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**Reasoning:** The court considered the documents filed by the applicants, including the financial

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**Interpretation:** The court interpreted the definition of 'financial debt' under Section 5(8) of

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**Application:** The court applied the ratio to the facts of the case and found that the amounts

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## Parties

- **Judges:** Rajeshwara Rao…; Ashok Kumar…
- **Appellants:** IDAC Solutions…
- **Respondents:** Liquid Space…

## Timeline

- **2009-01-01 — Incorporation of…**: Nellamakkada Aiyappa Bopanna and Nellamakkada Aiyappa Uthappa incorporated Liquid Space…
- **2011-08-12 — Incorporation of IDAC…**: IDAC Solutions Private…

## 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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