NCLT Kolkata Rules, Disbursal Against Time Value Of Money Constitutes Financial Debt
Pranav B Prem
The National Company Law Tribunal (NCLT), Kolkata Bench, comprising Smt. Bidisha Banerjee (Judicial Member) and Cmde Siddharth Mishra (Technical Member), has admitted a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), and directed the initiation of the Corporate Insolvency Resolution Process (CIRP) against Jasmine Commodities Private Limited. The Tribunal reiterated that the existence of financial debt hinges on the disbursal of funds against the consideration for time value of money, and once “debt” and “default” are established, the petition must be admitted.
Factual Background
The petition was filed by Horizon Commtrade Limited (the financial creditor) alleging that it had extended a loan to Jasmine Commodities Private Limited (the corporate debtor) under an intercompany loan agreement dated 10.09.2019. In terms of the agreement, the financial creditor disbursed a total of ₹3.06 crores to the corporate debtor through several payments made between September and October 2019. As per the contractual terms, the loan was to be repaid after a period of 55 months from the date of disbursal, with the principal and interest payable within seven days of completion of the tenure—i.e., by April 17, 2024.
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Upon the corporate debtor’s failure to repay the loan amount within the stipulated time, the financial creditor issued a loan recall notice dated April 20, 2024. As no response or payment was received, the financial creditor moved the Tribunal under Section 7 of the IBC seeking initiation of CIRP.
Submissions by the Parties
Counsel for the financial creditor submitted that the amounts were disbursed strictly in accordance with the loan agreement, and that the bank statements corroborated the disbursement of the funds. It was further submitted that the corporate debtor had defaulted on its repayment obligation, and the recall notice issued remained unanswered. The creditor argued that the application satisfied all statutory requirements under Section 7 of the Code and must be admitted.
On the other hand, the corporate debtor contended that the petition was not maintainable, alleging that the financial creditor had distorted facts to gain undue advantage. It argued that the Tribunal is not a recovery forum, relying on the Supreme Court’s decision in M/s. S.S Engineers v. Hindustan Petroleum. It also claimed that no legal cause of action had arisen and highlighted its own financial distress and efforts toward recovery.
However, these arguments failed to impress the Tribunal, which noted that the debtor had not denied the disbursal or the failure to repay, thereby admitting default.
Tribunal's Observations and Legal Reasoning
The Tribunal found clear and unambiguous evidence of disbursal under the loan agreement, which was supported by bank statements and the inter-company loan agreement annexed to the petition. The repayment schedule under the agreement was also clear, and default had undeniably occurred when the debtor failed to repay the due amount after April 17, 2024.
Rejecting the corporate debtor’s contention that the application lacked cause of action, the Tribunal emphasized that under the IBC, once financial debt and default are established, the adjudicating authority is bound to admit the application.
To substantiate the meaning of “financial debt,” the Tribunal relied on several decisions of the Hon’ble Supreme Court. In Pioneer Urban Land and Infrastructure Ltd. v. Union of India [(2019) 8 SCC 416], the Court had held that disbursal of money against the consideration for time value of money is the fundamental test for a financial debt. Similarly, in Anuj Jain v. Axis Bank Ltd. [(2020) 8 SCC 401], it was reiterated that disbursal with time value of money is an essential component of financial debt.
The Tribunal also cited Indus Biotech Private Limited v. Kotak India Venture (Offshore) Fund [(2021) 6 SCC 436], which laid down that four ingredients must be satisfied to trigger a petition under Section 7: (i) existence of debt; (ii) occurrence of default; (iii) that the debt is owed to a financial creditor; and (iv) that the default was committed by a corporate debtor.
Additionally, reference was made to the decision in Innoventive Industries Ltd. v. ICICI Bank [(2018) 1 SCC 407], which clarified that once default is established and the application is complete, it must be admitted without delving into further disputed questions of fact or law.
Finding the application well within the limitation period—the date of default being April 20, 2024, and the application filed on July 15, 2024—the Tribunal concluded that the financial creditor had met all legal requirements under the Code.
Final Directions
Accordingly, the NCLT admitted the petition under Section 7 of the IBC and ordered initiation of CIRP against the corporate debtor. A moratorium under Section 14 was imposed, and Ms. Hemi Gupta was appointed as the Interim Resolution Professional (IRP). The IRP was directed to carry out all functions as contemplated under the Code and make a public announcement calling for claims.
The Tribunal also instructed the IRP to take charge of the corporate debtor's assets and operations without delay, with police assistance if necessary. The officers of the corporate debtor were ordered to cooperate fully and furnish all required documents and information. Furthermore, the IRP was directed to file periodic progress reports, and the matter was listed for the next hearing on May 16, 2025, for submission of the first report.
Appearance
For the Financial Creditor: Mr. Mukesh Singh Bhaduria, PCMA
For Corporate Debtor: Mr. Neeraj Kant Singh, Adv.
Cause Title: Horizon Commtrade Limited V. Jasmine Commodities Private Limited
Case No: Company Petition (IB) No. 271/KB/2024
Coram: Smt. Bidisha Banerjee [Member(Judicial)], Cmde Siddharth Mishra [Member (Technical)]
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