# In the matter of ATS Infrastructure Ltd. (IB) – 906(ND)-2022

> NCLT judgment dated 2023-06-09. Citation: TCN-2023-NCLT-03008. The case involves an application filed by Kohinoor Apparels Pvt Ltd & Ors, the Financial…

- **Court:** NCLT
- **Order date:** 9 Jun 2023
- **Citation:** TCN-2023-NCLT-03008
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/ats-infrastructure-ltd-ib-906nd-2022-b99bd94f

## Summary

### Background

The case involves an application filed by Kohinoor Apparels Pvt Ltd & Ors, the Financial Creditors, under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against ATS Infrastructure Ltd, the Corporate Debtor, due to a default in payment of Rs. 11,42,34,311/-. The Financial Creditors had invested in a real estate project, "ATS Pristine", developed by ATS Housing Private Limited (AHPL), an associate company of the Corporate Debtor, under a 'buy-back' scheme. The Corporate Debtor allegedly failed to honor the buy-back agreements, and the issued cheques were dishonored.

## Facts

M/s. Kohinoor Apparels Pvt Ltd & Ors, acting as Financial Creditors, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. ATS Infrastructure Ltd, the Corporate Debtor, due to a default in payment of Rs. 11,42,34,311/-. The Financial Creditors had invested in the real estate project 'ATS Pristine', developed by ATS Housing Private Limited (AHPL), an associate company of the Corporate Debtor. The investment was made under a 'buy-back' scheme, where the Corporate Debtor assured the Financial Creditors that their respective units would be bought back at a contractually agreed sale consideration after a prescribed time period. The Financial Creditors invested in

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## Issues and analysis

### Issue 1: Whether the Applicant falls in the category of Financial Creditor as per Section 5(7) of the Code …

**Ratio:** The status of “Financial Creditor” cannot be accorded to a person who, in the garb of a

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**Reasoning:** The Adjudicating Authority determined that the Financial Creditors were speculative

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**Interpretation:** Section 5(7) of the IBC defines a financial creditor as a person to whom a

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**Application:** The Authority applied the ratio to the facts of the case, finding that the

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## Parties

- **Judges:** BACHU VENKAT…; ATUL CHAT…
- **Appellants:** M/s. KOHINOOR…
- **Respondents:** ATS INFRASTRUCTURE…; M/s. ATS INFRASTRU…

## Timeline

- **2022-11-14 — Application…**: M/s. Kohinoor Apparels Pvt Ltd & 2 ORS. filed an application under Section 7 of the…
- **2018-09-01 — MoU between FC…**: Financial Creditor No. 1 and the Corporate Debtor entered into a Memorandum of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 3(11) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-3)

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