# In the matter of Vasan Health Care Private Limited IA-1165-IB-2020 CA-1-2017

> NCLT judgment dated 2022-07-22. Citation: TCN-2022-NCLT-01591. The case involves two applications, IA/1165/2020 and IA/1166/2020, filed by Reliance Commercial…

- **Court:** NCLT
- **Order date:** 22 Jul 2022
- **Citation:** TCN-2022-NCLT-01591
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/vasan-health-care-private-limited-ia-1165-ib-2020-ca-1-2017-d244ecd3

## Summary

### Background

The case involves two applications, IA/1165/2020 and IA/1166/2020, filed by Reliance Commercial Finance Ltd. against the Resolution Professional (RP) of Vasan Health Care Private Limited. These applications challenge the RP's rejection of the applicant's claims, arguing that the claims should be considered as 'Financial Debt' rather than 'Operational Debt'. The dispute arises from a Master Rental Agreement (MRA) between Rentworks India Pvt. Ltd (RWIPL) and Vasan Health Care, where RWIPL provided equipment to Vasan Health Care in exchange for rent. RWIPL later assigned its receivables to Reliance Capital Ltd., and subsequently, a Facility Agreement was executed between Reliance Commercial Finance and Vasan Health Care, converting the outstanding rental arrears into a

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## Facts

Rentworks India Pvt. Ltd (RWIPL) and Vasan Health Care Private Limited entered into a Master Rental Agreement (MRA) on 2011-06-29, where RWIPL agreed to provide equipment to Vasan Health Care in consideration of rent. Clause 26 of the MRA allowed RWIPL to assign its rights and obligations to another party, with Vasan Health Care acknowledging the new owner of the equipment. RWIPL subsequently sold the receivables under the Rental Agreement and assigned the Collateral Securities to Reliance Capital Ltd. RWIPL and Reliance Capital Ltd. executed Deeds of Hypothecation, creating a charge over the equipment owned by RWIPL. Vasan Health Care made intermittent payments but, as of December 2015, had arrears of Rs. 31,35,43,346/-. Reliance Commercial Finance and Vasan Health

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## Issues and analysis

### Issue 1: Whether the claim of Reliance Commercial Finance Ltd. against Vasan Health Care Private Limited …

**Ratio:** The legal principle applied is the definition of 'financial debt' under Section 5(8) of

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**Reasoning:** The court reasoned that the MRA, coupled with the subsequent assignment of receivables

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**Interpretation:** The court interpreted Section 5(8) of the IBC to include debts arising from

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**Application:** The court applied the ratio and reasoning to the specific facts of the case,

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## Parties

- **Judges:** (Retd.) S.…; SAMEER…
- **Appellants:** Reliance Commercia…
- **Respondents:** Vasan Health Care…; Rajendran…

## Timeline

- **2011-06-29 — Master Rental Agreement…**: RWIPL and Vasan Health Care Private Limited executed a Master Rental Agreement (MRA)…
- **2015-12-01 — Arrears in Rental…**: Vasan Health Care had arrears of Rs. 31,35,43,346/- in respect of the rental and other…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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