The NCLT rejected these arguments, holding that the substance and commercial effect of a transaction, rather than the label attached to it, determines whether it is financial debt.
“The transaction, therefore, possesses all the essential attributes of a borrowing notwithstanding the terminology adopted by the parties,” the tribunal said.
It added that the contractual clause relied upon by Reliance merely created an additional payment mechanism and did not extinguish the company’s primary liability.
The Bench noted that Reliance had repeatedly acknowledged the outstanding amount after the ₹15 crore payment.
In April 2024, it proposed paying the balance in two instalments by June 30 and September 30, 2024. In August 2024, it proposed…