# In the matter of S and A Finman Limited Company Petition no. (IB)-1124 (PB)-2018

> NCLT judgment dated 2019-05-24. Citation: TCN-2019-NCLT-03207. The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 24 May 2019
- **Citation:** TCN-2019-NCLT-03207
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/s-and-a-finman-limited-company-petition-no-ib-1124-pb-2018-118be6f0

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against S And A Finman Limited, the Corporate Debtor. The applicant, Viswanatha Balasubramanian, is the Financial Creditor. The Corporate Debtor allegedly defaulted on a loan of Rs. 2,74,98,475 taken from the Financial Creditor, secured by a buy-back arrangement with an assured return of 22%. The Corporate Debtor made payments until September 2017, after which defaults occurred. The respondent argued that the transaction was a sale and purchase agreement, not a loan, and denied any assured return

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## Facts

Viswanatha Balasubramanian, the applicant, claimed to be a financial creditor of S And A Finman Limited, the corporate debtor. An agreement to sell dated 2014-02-15 was executed between the parties, where the corporate debtor took a loan of Rs. 2,74,98,475 from the applicant. The loan was secured by a collateral security of property under a buy-back arrangement with an assured return of around 22% with quarterly/monthly payments. The respondent made assured return payments until September 2017, but defaulted thereafter. As of 2018-07-31, a total sum of Rs. 4,50,92,692 was claimed to be due. The respondent, S And A Finman Limited, argued that the transaction was a sale and purchase commercial transaction, not a loan, and denied any assured return obligation or

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## Issues and analysis

### Issue 1: Whether the applicant qualifies as a 'Financial Creditor' under Section 7 of the Insolvency and …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016, allows a Financial Creditor to

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**Reasoning:** The court examined the material on record and found that the applicant had disbursed

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**Interpretation:** The term 'Financial Creditor' is interpreted to include entities to whom a

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**Application:** The court applied the definition of 'Financial Creditor' to the facts of the

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## Parties

- **Judges:** M. M. K…; S. K. MOH…
- **Appellants:** Viswanatha…
- **Respondents:** S And A Finman…

## Timeline

- **2014-02-15 — Agreement t…**: Agreement to sell executed between Viswanatha Balasubramanian and S And A Finman Limited,…
- **2017-09-01 — Cessation of…**: S And A Finman Limited stopped making assured return payments to Viswanatha…

## 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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