# In the matter of Vedic Realty Private Limited C.P (IB) No. 85-KB-2021

> NCLT judgment dated 2022-10-19. Citation: TCN-2022-NCLT-00678. Narayan Shaw Enterprises Private Limited, the Financial Creditor, filed an application under…

- **Court:** NCLT
- **Order date:** 19 Oct 2022
- **Citation:** TCN-2022-NCLT-00678
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/vedic-realty-private-limited-cp-ib-no-85-kb-2021-6becddc9

## Summary

### Background

Narayan Shaw Enterprises Private Limited, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Vedic Realty Private Limited, the Corporate Debtor, for initiation of the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed that the Corporate Debtor defaulted in the payment of Rs. 11,63,92,329 as of March 20, 2020, with the date of default stated as June 6, 2018. The Corporate Debtor, however, denied the default, claiming that the amount transferred was not a loan but an investment to boost the business, and there was no contract between the parties.

## Facts

Narayan Shaw Enterprises Private Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Vedic Realty Private Limited (Corporate Debtor). The Financial Creditor claimed a default of Rs. 11,63,92,329 as of March 20, 2020, with the date of default being June 6, 2018. The Financial Creditor transferred Rs. 9,50,00,000 in four tranches in 2015. The Corporate Debtor argued that the amount was an investment, not a loan, and there was no contract. The Corporate Debtor sent balance confirmation statements for 2015-16, 2016-17, and 2017-18. The Financial Creditor issued a demand notice on February 21, 2020, for Rs. 9,50,00,000 with accrued interest, which received no reply. The Corporate Debtor's audit report

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## Issues and analysis

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

**Ratio:** Section 5(8) of the Insolvency and Bankruptcy Code, 2016 defines 'financial debt' as a

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**Reasoning:** The court reasoned that for a debt to be considered a 'financial debt', it must be

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**Interpretation:** The interpretation of 'financial debt' requires a clear establishment of a debt

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**Application:** The court applied the definition of 'financial debt' to the facts of the case

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## Parties

- **Judges:** RohitKa…; Balraj…
- **Appellants:** Narayan Shaw…
- **Respondents:** Vedic Realty…

## Timeline

- **2015-06-09 — RTGS Tra…**: Financial Creditor transferred a sum of…
- **2015-06-22 — RTGS Tra…**: Financial Creditor transferred a sum of…

## 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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