# In the matter of Arcons Infrastructures and Constructions Private Limited CP (IB) 1279-MB-C-I-2019

> NCLT judgment dated 2022-11-11. Citation: TCN-2022-NCLT-00473. The case involves an application filed by India Factoring and Finance Solutions Private Limited…

- **Court:** NCLT
- **Order date:** 11 Nov 2022
- **Citation:** TCN-2022-NCLT-00473
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/arcons-infrastructures-and-constructions-private-limited-cp-ib-1279-mb-c-i-2019-6571c242

## Summary

### Background

The case involves an application filed by India Factoring and Finance Solutions Private Limited (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Arcons Infrastructure and Construction Private Limited (Corporate Debtor). The Financial Creditor claimed that the Corporate Debtor defaulted on payments related to a factoring agreement. The Corporate Debtor argued that the debt was not a 'Financial Debt' as defined under the IBC due to the nature of the factoring agreement and the involvement of IL&FS Transportation Networks Limited.

## Facts

India Factoring and Finance Solutions Private Limited (Financial Creditor) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Arcons Infrastructure and Construction Private Limited (Corporate Debtor). The Corporate Debtor was incorporated on 09.06.2006. The Financial Creditor and Corporate Debtor entered into a factoring agreement dated 05.07.2018, following a facility letter dated 04.07.2018. The Corporate Debtor had an agreement for construction of Check Posts with IL&FS Transportation Networks Ltd (ITNL). The Corporate Debtor approached the Financial Creditor for financial assistance to meet working capital requirements. The Financial Creditor purchased approved bills

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## Issues and analysis

### Issue 1: Whether the amount disbursed under the factoring agreement qualifies as a 'Financial Debt' as …

**Ratio:** Section 5(8)(e) of the IBC defines 'Financial Debt' to include receivables sold or

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**Reasoning:** The NCLT considered the defence raised by the Corporate Debtor but found it invalid,

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**Interpretation:** The interpretation of Section 5(8) of the IBC is crucial to determine whether

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**Application:** The NCLT applied Section 5(8)(e) to the facts of the case, noting that the

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## Parties

- **Judges:** P.N. Deshmukh…; Shyam Babu…
- **Appellants:** India Factoring…
- **Respondents:** Arcons Infrastruct…
- **Advocates:** Shyam Ka…; Rahul Des…; +2 more

## Timeline

- **2006-06-09 — Incorporation of…**: Arcons Infrastructure and Construction Private Limited was incorporated under the…
- **2018-07-04 — Facility…**: Financial Creditor issued a facility…

## 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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