# In the matter of Orator Marketing Pvt. Ltd. Vs. Samtex Desinz Pvt. Ltd., Civil Appeal No. 2231 of 2021

> SC judgment dated 2021-07-26. Citation: TCN-2021-SC-00030. The appeal was filed under Section 62 of the Insolvency and Bankruptcy Code (IBC) against the final…

- **Court:** SC
- **Order date:** 26 Jul 2021
- **Citation:** TCN-2021-SC-00030
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/orator-marketing-pvt-ltd-vs-samtex-desinz-pvt-ltd-civil-appeal-no-2231-of-2021-1395b881

## Summary

### Background

The appeal was filed under Section 62 of the Insolvency and Bankruptcy Code (IBC) against the final judgment and order of the National Company Law Appellate Tribunal (NCLAT), New Delhi, which dismissed the appellant's appeal and confirmed the order of the Adjudicating Authority (NCLT), New Delhi. The NCLT had dismissed the petition filed by the appellant under Section 7 of the IBC, finding that the appellant was not a financial creditor of the respondent. The appellant is an assignee of the debt in question. The core issue revolves around whether a person giving a term loan without interest for working capital requirements qualifies as a financial creditor under Section 7 of the IBC.

## Facts

M/s Orator Marketing Pvt. Ltd. (the Appellant) filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) before the National Company Law Tribunal (NCLT) to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s Samtex Desinz Pvt. Ltd. (the Respondent). The Appellant's claim was based on a term loan of Rs. 1.60 crores advanced to the Respondent by M/s Sameer Sales Private Limited (Original Lender), which was later assigned to the Appellant. The loan was interest-free and intended to meet the Respondent's working capital requirements. The loan was due to be repaid by 01.02.2020. The NCLT rejected the application, stating that the Appellant was not a financial creditor because the loan was interest-free. The NCLAT upheld the NCLT's

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## Issues and analysis

### Issue 1: Whether a person who gives a term loan to a Corporate Person, free of interest, on account of its …

**Ratio:** The definition of 'financial debt' under Section 5(8) of the IBC requires a disbursement

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**Reasoning:** The court reasoned that the NCLT and NCLAT misconstrued the definition of 'financial

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**Interpretation:** The court interpreted the definition of 'financial debt' in Section 5(8) of the

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**Application:** The court applied the ratio to the facts of the case, holding that the

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## Parties

- **Judges:** INDIRA BA…; V. RAMASUBR…
- **Appellants:** M/S ORATOR…
- **Respondents:** M/S Samtex Desinz…; M/s Samtex Desinz…

## Timeline

- **2018-01-20 — Loan Agre…**: Loan agreement executed between M/S Sameer Sales Pvt. Ltd. and M/S Samtex Desinz Pvt.…
- **2020-02-01 — Loan Repayme…**: The loan amount shall become due and payable on…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 62 — Appeal to Supreme Court](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-62)

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