Respondents who booked units with an assured return plan in a mall would fall within the purview of ‘financial creditors’

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  • Last Updated on 19 October, 2021

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Corporate Insolvency Resolution Process - Financial creditor

Case Details: J.M. Financial Asset Reconstruction Company Ltd. v. Dr. Anil Kumar Tandon - [2021] 131 taxmann.com 48 (NCLAT- New Delhi)

Judiciary and Counsel Details

    • Justice A.I.S. Cheema, Officiating Chairperson and Dr. Alok Srivastava, Technical Member
    • Ramji Srinivasan, Sr. Adv., Ms. Anushree Kapadia, Ms. Poonam Mathur, Shivkrit Rai and Ms. Rajshree Chaudhary, Advs. for the Appellant. 
    • Krishnendu Datta, Sr. Adv., Abhishek Anand, Kunal Godhwani, Adv., Pranay Nath Jha, Shubham Gupta, Aditya Parolia, Ms. Aditi Sinha and Akshay Srivastava, Advs. for the Respondent.

Facts of the Case

In the instant case, the Respondents booked a unit in a mall being constructed by a corporate debtor and the said Unit was purchased under an assured return plan. However, the Corporate debtor defaulted in payment of assured monthly returns to respondents.
Meanwhile, Corporate Insolvency Resolution Process (CIRP) was initiated against the corporate debtor and Resolution Professional (RP) was appointed. The Respondents sought to be included in the Committee of Creditors (CoC) as financial creditors.
The RP was of the view that neither claim of respondents did fall within the definition of financial debt nor respondents could be termed as ‘financial creditor’.

NCLAT Held

The NCLAT noted that the definition of ‘financial debt’ had been amended and in view of the revised definition, any amount raised from an allottee under a real estate project is deemed to be covered by the definition of ‘financial debt’. Thus, the amount paid by respondents was financial debt and respondents were to be treated as financial creditors and RP was directed to include respondents in CoC.

Case Review

    • Devendra Padamchand Jain v. Sandhya Prakash Ltd. [2021] 131 taxmann.com 47 (NCLT – Ahd.) (para 31) affirmed [See Annex].

List of Cases Referred to

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