Investors Who Were Promised Assured Returns Qualify As Financial Creditors U/S 5(7) Of IBC: NCLT Indore
The National Company Law Tribunal (NCLT), Indore Bench, comprising Mr. Mohan P. Tiwari (Member-Judicial) and Mr. Sanjeev Sharma (Member-Technical), has held that the deposit schemes with assured returns amount to financial debt and the investors promised assured returns qualify as the financial creditor under section 5(7) of the IBC, 2016. Background of the...
The National Company Law Tribunal (NCLT), Indore Bench, comprising Mr. Mohan P. Tiwari (Member-Judicial) and Mr. Sanjeev Sharma (Member-Technical), has held that the deposit schemes with assured returns amount to financial debt and the investors promised assured returns qualify as the financial creditor under section 5(7) of the IBC, 2016.
Background of the Case
The financial creditors (125 investors) filed a section 7 IBC petition seeking initiation of CIRP against the Garima Real Estate & Allied Limited (Corporate Debtor).
The financial creditors had executed application forms and application-cum-agreements with the corporate debtor under an allegedly illegal investment scheme. The corporate debtor assured the creditors fixed returns on maturity.
Subsequently, SEBI initiated proceedings against the corporate debtor on a complaint of illegal fund mobilization. By its order, SEBI prohibited the corporate debtor and its directors from continuing the Collective Investment Schemes (CIS) and issued the direction to wind up the scheme and refund the investors within three months.
However, the corporate debtor failed to return the amount even after maturity. The total claimed amount, including interest, aggregated to Rs. 11,568,590.
Decision of the Tribunal
The NCLT observed that the transactions in question constitute “financial debt” within the meaning of Section 5(8)(a) of the IBC, 2016, as they involve consideration for the time value of money. And, since the investors were promised assured returns, they fall under the category of “financial creditor” u/s 5(7) on the IBC. For its observations, the tribunal relied on the rulings of Hon'ble NCLAT in Mohan Lal Dhakad v. BNG Global India Ltd., Bohar Singh Dhillon v. Rohit Sehgal, and Nikhil Mehta & Sons (HUF) v. AMR Infrastructures Ltd., wherein similar transactions were held to be financial debt.
With the above observations, the bench admitted the application and declared the moratorium under section 14 IBC.
Case Name: Bhojraj Verma and Ors. v. Garima Real Estate and Allied Ltd.
Case No.: C.P. (IB) 4 of 2020
For Financial Creditor: Mr. Sunil Bhavsar, Advocate
For Corporate Debtor: Ex parte (no appearance)
Coram: Mr. Mohan P. Tiwari (Member-Judicial) and Mr. Sanjeev Sharma (Member-Technical)
Order Date: 09.10.2025