# In the matter of Synergy Petro Products Private Limited (IB)-1106-PB-2020

> NCLT judgment dated 2021-05-31. Citation: TCN-2021-NCLT-02075. The case involves an application filed under Section 7 of the Insolvency & Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 31 May 2021
- **Citation:** TCN-2021-NCLT-02075
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/synergy-petro-products-private-limited-ib-1106-pb-2020-8d65ee73

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 by M/s. National Agriculture Cooperative Marketing Federation Limited (NAFED), the Financial Creditor, against M/s. Synergy Petro Products Private Limited, the Corporate Debtor, for initiation of Corporate Insolvency Resolution Process (CIRP). The application is based on the Corporate Debtor's alleged default in repaying an arbitral award dated 10.07.2019. The Corporate Debtor raised preliminary objections, contending that the Applicant does not fall under the definition of Financial Creditor and there is no existence of Financial Debt as defined under the provisions of the Code.

## Facts

M/s. National Agriculture Cooperative Marketing Federation Limited (NAFED) filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Synergy Petro Products Private Limited. The basis for the application was an arbitral award dated 10.07.2019, which allegedly established a debt of ₹55,37,797/- related to monthly license fees from April 2007 to October 2009 and due license fees from November 2009 to 15th July, 2015, with interest. The underlying agreement, dated 17.08.2005 and 03.07.2006, involved the lease of a plot of land (Plot No. B-481) in Bhiwadi, Rajasthan, to the Corporate Debtor for business purposes, with a monthly license fee of ₹50,000/- for covered area

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## Issues and analysis

### Issue 1: Whether the arbitral award based on a rental/lease agreement constitutes a 'Financial Debt' under …

**Ratio:** A rental/lease agreement typically constitutes an operational debt, not a financial debt,

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**Reasoning:** The court reasoned that the transactions between the parties, based on the rental/lease

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**Interpretation:** The interpretation of 'Financial Debt' under the IBC is crucial. The court

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**Application:** In this specific case, the arbitral award was based on the Corporate Debtor's

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## Parties

- **Judges:** B.S.V. Prakash…; HEMANT KUMAR…
- **Appellants:** M/s. National…
- **Respondents:** M/s. Synergy…
- **Advocates:** Harsh Upa…; Priya…

## Timeline

- **2005-08-17 — Agreement…**: Applicant/Financial Creditor and the…
- **2006-07-03 — Agreement…**: Applicant/Financial Creditor and the…

## 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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