NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY versus ANAND SONBHADRA

NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY versus ANAND SONBHADRA

The Court held NOIDA is not a 'financial creditor' under Section 5(8) of the IBC: (i) Section 5(8) requires disbursement which, in the context of that provision, means payment of money flowing to the debtor — there was no disbursement by NOIDA to the corporate debtor; (ii) the lease is not a finance lease under IND...

Source-derived case information.

Parties
Appellant: NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY; Respondent: ANAND SONBHADRA
Jurisdiction
India
Judgment Date
17 May 2022
Procedural Posture
Civil Appeal / Appeal From NCLAT Order
Outcome
Appeals dismissed.
Legal Topics
Financial Creditor Vs Operational Creditor, Definition of Financial Debt (s.5(8) Ibc), Financial Lease Under Indian Accounting Standards (ind as Rr.61 67), Interpretation of 'disbursed' and 'transaction', Role and Constitution of Committee of Creditors
Insolvency and Bankruptcy Company Law Property Law Contract Accounting Standards Financial Creditor Vs Operational Creditor Definition of Financial Debt (s.5(8) Ibc) Financial Lease Under Indian Accounting Standards (ind as Rr.61 67) +2 more

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Parties

NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY

Appellant

ANAND SONBHADRA

Respondent

Procedural Posture

Civil Appeal / Appeal From NCLAT Order

Legal Issues

  1. 1 Whether appellant (NOIDA) is a financial creditor under Section 5(8) of the IBC
  2. 2 Whether the lease is a 'financial lease' under IND AS (relevant rr.61-67) attracting s.5(8)(d)
  3. 3 Whether s.5(8)(f) (any amount raised under any other transaction having commercial effect of a borrowing) applies to the lease

Ratio Decidendi

The Court held NOIDA is not a 'financial creditor' under Section 5(8) of the IBC: (i) Section 5(8) requires disbursement which, in the context of that provision, means payment of money flowing to the debtor — there was no disbursement by NOIDA to the corporate debtor; (ii) the lease is not a finance lease under IND AS rr.61-67 because it does not transfer substantially all risks and rewards incidental to ownership of the underlying asset (land), and factors such as restriction on assignment, limited mortgage rights, reservation of overriding powers and the inapplicability of 'economic life' to land preclude classification as a finance lease under s.5(8)(d); and (iii) s.5(8)(f) does not...

Court Disposition

Appeals dismissed.

Orders

  • Appeals dismissed.
  • Parties to bear their own costs.