# In the matter of Phoenix Arc Private Limited Vs.
Spade Financial Services Limited & Ors. (Civil Appeal No. 2842 of 2020 with 3063 of 2020)

> SC judgment dated 2021-02-01. Citation: TCN-2021-SC-00078. The case involves appeals against a judgment by the National Company Law Appellate Tribunal (NCLAT)…

- **Court:** SC
- **Order date:** 1 Feb 2021
- **Citation:** TCN-2021-SC-00078
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/phoenix-arc-private-limited-vs-spade-financial-services-limited-ors-7a6d8b61

## Summary

### Background

The case involves appeals against a judgment by the National Company Law Appellate Tribunal (NCLAT) regarding the inclusion of AAA Landmark Private Limited ("AAA") and Spade Financial Services Private Limited ("Spade") in the Committee of Creditors (CoC) of AKME Projects Limited ("Corporate Debtor") during its Corporate Insolvency Resolution Process (CIRP). The NCLAT had dismissed the appeal filed by AAA and Spade, affirming their exclusion from the CoC as related parties but acknowledging them as financial creditors. Phoenix Arc Private Limited ("Phoenix") appealed, contesting the finding that AAA and Spade were financial creditors, while Spade and AAA also appealed their exclusion from the CoC.

## Facts

The Corporate Insolvency Resolution Process (CIRP) was initiated against AKME Projects Limited on 2018-04-18. During the CIRP, Spade filed a claim as a financial creditor for Rs. 52,96,00,000, later revised to Rs. 109,11,00,000, based on a Memorandum of Understanding (MoU) dated 2011-08-12, alleging Inter Corporate Deposits (ICDs) with 24% interest. Spade claimed it granted ICDs of Rs. 66,00,00,000 between June 2009 and January 2013. AAA filed a claim as a financial creditor for Rs. 93,90,00,000, later revised to Rs. 109,72,00,000, based on a Development Agreement dated 2012-03-01. The IRP rejected both claims. NCLT initially allowed their inclusion in the CoC, but later excluded them, finding their transactions collusive. NCLAT affirmed the exclusion but acknowledged

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## Issues and analysis

### Issue 1: Whether Spade and AAA are financial …

**Ratio:** The essential ingredient of a financial debt is disbursal against consideration for the

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**Reasoning:** The court found that the transactions between the Corporate Debtor and Spade and AAA were

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

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

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## Parties

- **Judges:** Dr Dhananjaya Y…; Indu Mal…; +1 more
- **Appellants:** Phoenix Arc…
- **Respondents:** AKME PROJECTS…; Spade Financial…

## Timeline

- **2018-04-18 — CIRP Init…**: Corporate Insolvency Resolution Process (CIRP)…
- **2018-05-10 — Spade's Initi…**: Spade filed its claim in Form C as a…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(7) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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