# In the matter of MS Biotech Private Limited CP (IB) No. 243-7-HDB-2018

> NCLT judgment dated 2019-03-12. Citation: TCN-2019-NCLT-04460. M/s. Vijayanagar Sugar Private Limited filed a petition against M/s. MS Biotech Private Limited…

- **Court:** NCLT
- **Order date:** 12 Mar 2019
- **Citation:** TCN-2019-NCLT-04460
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/ms-biotech-private-limited-cp-ib-no-243-7-hdb-2018-1573a927

## Summary

### Background

M/s. Vijayanagar Sugar Private Limited filed a petition against M/s. MS Biotech Private Limited (formerly known as M/s. Aroma Biotech Private Limited) under Section 7 of the Insolvency and Bankruptcy Code, 2016, alleging default in repayment of Rs. 7,46,50,685/-, which includes a principal loan amount of Rs. 5,00,000/- and unpaid interest of Rs. 2,46,50,685/-. The petitioner sought admission of the petition, initiation of the Corporate Insolvency Resolution Process (CIRP), granting of a moratorium, and appointment of an Interim Resolution Professional (IRP). The corporate debtor refuted the claim, stating that the amount was given as an advance for a lease agreement, not as a loan. The corporate debtor also argued that the financial creditor came before the

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## Facts

M/s. Vijayanagar Sugar Private Limited (the Financial Creditor) claimed that M/s. MS Biotech Private Limited (the Corporate Debtor) defaulted on a loan of Rs. 7,46,50,685/-, including principal and interest. The Financial Creditor sought to initiate Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC). The Corporate Debtor argued that the Rs. 5 crores received was an advance for a lease agreement, not a loan, and that the Financial Creditor was attempting to take over the Corporate Debtor's business. The Financial Creditor transferred Rs. 5 crores to the Corporate Debtor in installments between November and December 2014. The Corporate Debtor repaid Rs. 50 lakhs on 31.07.2015. A draft Memorandum of Understanding

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## Issues and analysis

### Issue 1: Whether the amount given by the Petitioner to the Corporate Debtor constitutes a 'financial debt' …

**Ratio:** Section 5(8) of the I&B Code defines 'Financial Debt' as a debt along with interest,

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**Reasoning:** The NCLT reasoned that the recital in the lease deed coupled with the Minutes of Meeting

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**Interpretation:** The interpretation of 'financial debt' hinges on whether the disbursement of

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**Application:** In this case, the NCLT applied the definition of 'financial debt' to the facts,

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## Parties

- **Judges:** Ratakonda…
- **Appellants:** Vijayanagar Sugar…
- **Respondents:** MS Biotech…

## Timeline

- **2014-09-04 — Draft MoU fo…**: A draft Memorandum of Understanding (MoU) for a lease was exchanged between the parties,…
- **2014-09-27 — Board Reso…**: The Petitioner relied on a Board Resolution dated 27.09.2014 to grant a loan of Rs. 5…

## 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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