The National Company Law Appellate Tribunal (NCLAT) New Delhi Bench has ruled that mortgaging property to facilitate a loan transaction without actual disbursal of money to the corporate debtor cannot be treated as a financial debt under the Insolvency and Bankruptcy Code, 2016 (IBC).
The Tribunal rejected the appellant’s plea seeking recognition as a financial creditor in the Corporate Insolvency ResolutionProcess (CIRP).
The appellant Amisha In Sky Creation Pvt. Ltd., had mortgaged its properties in favour of the State Bank of India to enable the Corporate Debtor to secure loan facilities. A notarised Deed of Agreement executed between the parties in 2016 provided that the Corporate Debtor would repay the…