# In the matter of Shantai Exim Ltd. C.P.(IB)-1712(MB)-2017

> NCLT judgment dated 2019-01-14. Citation: TCN-2019-NCLT-05262. Vijay Rochlani, a Financial Creditor, filed a Company Petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 14 Jan 2019
- **Citation:** TCN-2019-NCLT-05262
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/shantai-exim-ltd-cpib-1712mb-2017-993052e4

## Summary

### Background

Vijay Rochlani, a Financial Creditor, filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Shantai Exim Ltd., the Corporate Debtor, for a claimed 'financial debt' of ₹50,00,000/-. The Corporate Debtor allegedly failed to repay the outstanding debt with interest as of 11.10.2017, even after a legal notice was served. The Corporate Debtor argued that the amount was not a loan but a family advance related to a divorce petition involving the Petitioner's wife, who is the sister of the Corporate Debtor's directors. The Petitioner contended that the payment of interest was evidenced by handwritten workings from the Corporate Debtor's accounts department and that the amount was received as 'Short Term Borrowing'.

## Facts

Vijay Rochlani, acting as a Financial Creditor, provided financial assistance of ₹55,00,000/- to Shantai Exim Ltd., the Corporate Debtor, in December 2016. The Corporate Debtor assured repayment by March 2017 and repaid ₹5,00,000/- in mid-March 2017, promising to pay the balance by December 2017. The Corporate Debtor offered 12% p.a. interest on the remaining ₹50,00,000/-, paying interest for three quarters until June 2017 after TDS deduction. After June 2017, the Corporate Debtor ceased both interest and principal payments. A legal notice was sent on 11.10.2017, but no response or payment was received. The Corporate Debtor claimed the amount was not a loan but a family advance related to the divorce of the Petitioner's wife, who is the sister of the Corporate Debtor's

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## Issues and analysis

### Issue 1: Whether the impugned amount falls under the definition of 'Financial Debt' as prescribed under …

**Ratio:** A 'Financial Debt' under Section 5(8) of the IBC must have a component of 'Interest' and

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**Reasoning:** The NCLT reasoned that the Corporate Debtor's records showed the transaction as 'Short

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**Interpretation:** The interpretation of 'Financial Debt' under Section 5(8) requires the presence

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**Application:** In this case, the NCLT applied the ratio and reasoning to the facts, noting

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## Parties

- **Judges:** M.K. Sh…
- **Appellants:** Vijay Roc…
- **Respondents:** Shantai Exi…
- **Advocates:** Madhavi N…; Deep Shrid…; +2 more

## Timeline

- **2016-12-01 — Financial Assistance…**: The Petitioner provided financial assistance…
- **2017-03-01 — Partial Rep…**: The Corporate Debtor repaid…

## 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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