# In the matter of Manthan Broadband Services Private Limited CA(IB)No. 1052-KB-2019 in CP(IB)No. 1634-KB-2018

> NCLT judgment dated 2019-09-18. Citation: TCN-2019-NCLT-01397. Alliance Broadband Services Private Limited, the Financial Creditor, filed an application under…

- **Court:** NCLT
- **Order date:** 18 Sept 2019
- **Citation:** TCN-2019-NCLT-01397
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/manthan-broadband-services-private-limited-caibno-1052-kb-2019-in-cpibno-1634-kb-725bbfe9

## Summary

### Background

Alliance Broadband Services Private Limited, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Manthan Broadband Services Private Limited, the Corporate Debtor, due to a default in repayment of a loan. The Financial Creditor claimed a default amount of Rs. 11,06,15,268/-, comprising principal and interest. The Corporate Debtor argued that a portion of the amount was an advance against a property sale, not a financial debt, and that the Financial Creditor lacked a money lending license. The Financial Creditor contended that the transactions constituted financial debt with time value of money, supported by loan agreements and pledged shares.

## Facts

Alliance Broadband Services Private Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Manthan Broadband Services Private Limited (Corporate Debtor). The Financial Creditor claimed a default of Rs. 11,06,15,268/-, comprising a principal amount of Rs. 10,20,00,000/- and interest of Rs. 86,15,268/-. The dates of default were stated as August 26, 2018, and November 28, 2018. The Financial Creditor provided an accommodation loan of Rs. 5,30,00,000/- to finance set-top box installation infrastructure, secured by 77,500 equity shares in the Financial Creditor held by the Corporate Debtor, with an interest rate of 9.75% per annum. The loan was

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## Issues and analysis

### Issue 1: Whether the transactions between the Financial Creditor and the Corporate Debtor constitute a …

**Ratio:** A 'financial debt' means a debt along with interest, if any, which is disbursed against

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**Reasoning:** The NCLT reasoned that the transactions involved a disbursement of money by the Financial

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**Interpretation:** The court interpreted Section 5(8) of the IBC, 2016, to include transactions

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**Application:** The NCLT applied the ratio to the facts by noting that the Financial Creditor

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## Parties

- **Judges:** Madan B.…; Virendra Kumar…
- **Appellants:** Alliance Broadband…
- **Respondents:** Manthan Broadband…

## Timeline

- **2017-04-11 — Loan Tra…**: The Financial Creditor transferred a…
- **2017-01-01 — Additional Su…**: Another sum of Rs. 1,00,00,000/-…

## 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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