# In the matter of Kumar Motors Pvt. Ltd.

> NCLT judgment dated 2024-04-08. Citation: TCN-2024-NCLT-01795. Metamorphosis Trading LLP, the Financial Creditor, filed a Company Petition under Section 7 of…

- **Court:** NCLT
- **Order date:** 8 Apr 2024
- **Citation:** TCN-2024-NCLT-01795
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/kumar-motors-pvt-ltd-95dd481c

## Summary

### Background

Metamorphosis Trading LLP, the Financial Creditor, filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Kumar Motors Private Limited, the Corporate Debtor. The petition was based on a default in repayment of Rs. 8,70,03,275/-. The Financial Creditor acquired the debt from Innoventive Industries Limited, the original investor, through a Deed of Assignment following liquidation proceedings against Innoventive Industries Limited. The Corporate Debtor had previously denied the existence of the debt. Innoventive Industries Limited had filed a Company Petition for Winding Up of the Corporate Debtor in the Bombay High Court, which was later transferred to the NCLT. The

…

## Facts

Metamorphosis Trading LLP filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against Kumar Motors Private Limited, claiming a default of Rs. 8,70,03,275. The debt originated from a Subscription and Share Holder's Agreement (SSA) between Innoventive Industries Limited and Kumar Motors Private Limited. Innoventive Industries Limited was admitted into CIRP, and Metamorphosis Trading LLP acquired the debt through a Deed of Assignment from the liquidator. The Corporate Debtor denied the existence of the debt and argued that the amount claimed was not a financial debt, as it was related to a share subscription agreement. The Corporate Debtor contended that the Financial Creditor was an investor, not a lender, and that no default

…

## Issues and analysis

### Issue 1: Whether the amount claimed by the Financial Creditor constitutes a 'financial debt' under Section …

**Ratio:** The amount given as an advance towards the Share Application money is not a Financial

…

**Reasoning:** The court reasoned that the original investor was roped in as an equity investor and the

…

**Interpretation:** The interpretation of 'financial debt' under Section 5(8) of the IBC requires a

…

**Application:** The court applied the principle that an advance towards share application money

…

## Parties

- **Judges:** V. G. Bisht…; SH. PRABHAT…
- **Appellants:** Metamorphosis…
- **Respondents:** Kumar Motors…

## Timeline

- **2004-02-10 — Incorporation of…**: Kumar Motors Private Limited…
- **2011-09-06 — Subscription and Share…**: Corporate Debtor entered into a Subscription and Share Holder's Agreement ("SSA") with…

## 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)

---

This is a preview. The full structured summary, issues, precedents and source judgment are available on CaseEase - Legal Intelligence Simplified: https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/kumar-motors-pvt-ltd-95dd481c