# In the matter of Vogue Clothiers Private Limited (IB)- 1593(ND)-2019

> NCLT judgment dated 2020-01-30. Citation: TCN-2020-NCLT-02125. Utsav Securities Private Limited, a non-banking financial corporation, filed a petition against…

- **Court:** NCLT
- **Order date:** 30 Jan 2020
- **Citation:** TCN-2020-NCLT-02125
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/vogue-clothiers-private-limited-ib-1593nd-2019-108c48ae

## Summary

### Background

Utsav Securities Private Limited, a non-banking financial corporation, filed a petition against Vogue Clothiers Private Limited, the Corporate Debtor, for initiating the Corporate Insolvency Resolution Process (CIRP) due to the Corporate Debtor's failure to repay a loan of Rs. 6,10,00,000 disbursed in February 2017. The Financial Creditor recalled the loan on 27.04.2019. The Corporate Debtor resisted the petition, arguing the lack of a contractual agreement, an undefined loan period, and the absence of an agreement for interest payment. The Financial Creditor argued that the transaction was a financial debt, supported by bank statements, Form 26AS, and the NBFC status of the creditor.

## Facts

Utsav Securities Private Limited (Financial Creditor), an NBFC, granted financial assistance of Rs. 6,10,00,000 to Vogue Clothiers Private Limited (Corporate Debtor) in February 2017. The disbursal occurred in multiple tranches between 16.02.2017 and 22.02.2017 via RTGS transfers from the Financial Creditor's bank accounts. The Corporate Debtor failed to service the interest on the loan. The Financial Creditor recalled the loan via notice dated 27.04.2019. The Corporate Debtor made one interest payment of Rs. 6,05,718 on 14.02.2018, after TDS deduction. The Financial Creditor presented bank statements and Form 26AS as evidence of the loan and interest accrual. The Corporate Debtor argued the absence of a contractual agreement, undefined loan period, and lack of

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## Issues and analysis

### Issue 1: Whether the transaction between Utsav Securities Private Limited and Vogue Clothiers Private …

**Ratio:** Section 5(8)(a) of the IBC defines 'financial debt' as a debt along with interest, if

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**Reasoning:** The NCLT reasoned that the disbursal of funds by Utsav Securities Private Limited, an

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**Interpretation:** The interpretation of 'financial debt' under Section 5(8)(a) extends to

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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:** Ina Mal…; L. N. G…
- **Appellants:** Utsav Securities…
- **Respondents:** Vogue Clothiers…

## Timeline

- **2017-02-01 — Loan Disb…**: Utsav Securities Private Limited disbursed Rs. 6,10,00,000 to Vogue Clothiers Private…
- **2017-02-16 — First Tranche…**: Rs. 90,00,000 disbursed…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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