NCLT Ahmedabad: Amount Invested In A Joint Venture Project Of A Promoter And Investor Does Not Constitute Financial Debt Under IBC
Sachika Vij
6 Feb 2024 1:45 PM GMT
The National Company Law Tribunal ('NCLT') Ahmedabad, comprising Justice Mrs. Chitra Hankare (Judicial Member) and Mr. Velamur G Venkata Chalapathy (Technical Member) held that the amount invested in a Joint Venture Project of a promoter and investor is not a Financial Debt under Insolvency and Bankruptcy Code, 2016 ('IBC'). Background Facts: GSEC Monarch and Deccan Aviation Pvt....
The National Company Law Tribunal ('NCLT') Ahmedabad, comprising Justice Mrs. Chitra Hankare (Judicial Member) and Mr. Velamur G Venkata Chalapathy (Technical Member) held that the amount invested in a Joint Venture Project of a promoter and investor is not a Financial Debt under Insolvency and Bankruptcy Code, 2016 ('IBC').
Background Facts:
GSEC Monarch and Deccan Aviation Pvt. Ltd. (Corporate Debtor) was incorporated as a Joint Venture between the Corporate Debtor and Deccan Charters Pvt. Ltd. (Applicant). On 30.11.2018, a Business Undertaking Transfer Agreement ('BTA') was executed for the Corporate Debtor to undertake the entire business of the Applicant for a consideration of Rs. 11.50 crores and the payment of liabilities of the Applicant, both current and non-current liabilities.
Various reminders were sent for the payment of the outstanding debt. The default of default is 30.11.2018. Presently, a Corpoarte Insolvency Resolution Process ('CIRP') application has been filed under Section 7 of IBC against the Corporate debtor.
NCLT Verdict:
The NCLT Ahmedabad rejected the CIRP application and held that the amount invested in a Joint Venture Project of a promoter and investor is not a Financial Debt under IBC.
It observed that the Business Transfer Agreement and the intention of investment or debt provides that the transactions between the Applicant and the Corporate Debtor was for the purpose a Joint Venture. The debt and its service and its disbursement do not evidence any creditor-debtor arrangement. The debt is in-built in an agreement to be a joint venture for share of business and furtherance of business interests.
Thus, the nature of transactions and the disbursements do not correctly bring the status of the debt under IBC.
Case Title: Deccan Charters Pvt. Ltd. vs. GSEC Monarch and Deccan Aviation Pvt. Ltd.
Case No.: CP(IB)/100(AHM)2022
Counsel for Applicant: Mr. Tanmay Banthia, Adv. a.w Mr. Anandodaya Mishra, Adv.
Counsel for Corporate Debtor: Mr. Rohan Ved, Adv.
