[1] Background of the case:
Issues:
Observations:
The adjudicating authority stated as per section 5(7) defining ‘Financial creditor’ that “means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to;” and defining ‘Financial Debt’ U/s 5(8)(f) that “a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing;”
Relying on the above-mentioned sections, it is clear that, in the present case, the buyer as per Section 2(d) of Real Estate (Regulation and Development) Act, 2016 is not an allottee because the Buyer was not allotted or transferred with the land through the sale deed that was executed as there was a failure on part of the seller.
Also, as per the clause in the agreement to sale, it expressly mentioned that in case the seller fails to execute the sale deed in favour of the buyer, then he shall be liable to return the amount as stated along with the interest, thus constituting as debt owed by the Seller to the buyer. Thus, relying on section 5(7), it is clear that, the money owed is not disbursed as a loan with consideration for the time value of money but was paid as an advance for purchase of residential plots thereby not fulfilling the criteria of ‘Financial debt’ under the code.
Held:
[1] Forum: National Company Law Tribunal, Principal Bench, New Delhi.
Case No./Citation: Company Appeal (AT)(INS) No.74 of 2024 in CP No.105/ND/2023.
Bench: Justices Ashok Bhushan, Yogesh Khanna, and Barun Mitra.