NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY versus ANAND SONBHADRA

Citation: [2022] 5 S.C.R. 319 · Decided: 17-05-2022 · Supreme Court of India · Bench: K.M. JOSEPH · Disposal: Dismissed

Cited by 2 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

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[2022] 5 S.C.R. 319
319
NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY
v.
ANAND SONBHADRA
(Civil Appeal No. 2222 of 2021)
MAY 17, 2022
[K. M. JOSEPH AND HRISHIKESH ROY, JJ.]
Insolvency and Bankruptcy Code, 2016: ss. 21, 27, 28, 30 –
Proceedings involving Corporate Debtor – Committee of Creditors
– Importance and Procedure – In the idea of resurrecting an ailing
corporate debtor, the Code contemplates the formation of Committee
of Creditors as per s.21 – The Committee consists of financial
creditors as per s. 27 – The Committee is conferred with the duty to
appoint Resolution Professionals – The Resolution Plan scrutinized
by such professionals then awaits the decision of the Committee as
per s. 30 – It is a fundamental aspect of the committee that it consists
of Financial Creditors and not operational Creditors – Therefore.
the one seeking to exercise the powers of such Committee, must, at
the very first instance, establish the fact of being a Financial
Creditors.
Insolvency and Bankruptcy Code, 2016: Financial Creditors
and Operational Creditors – Distinction with respect to Privileges
– s.5(7) defines ‘financial creditor’ as person to whom a financial
debt is due besides an assignee or transferee from such person –
Financial Creditors constitutes the Committee of Creditors as per
the policy of IBC – Such policy does not includes Operational
Creditors in the aforesaid constitution of committee – Hence
Operational creditors, unlike Financial Creditors, do not enjoy the
powers of the Committee – Apart from this aspect, the peculiar benefit
of being Operational Creditor is that they enjoy priority over
Operational Creditors in matters of payment of amount.
Insolvency and Bankruptcy Code, 2016 – s. 2(20) –
Operational Creditor – A person is operational creditor to whom
the operational debt (a debt in respect of dues arising under any
law for the time being in force and payable to any local authority)
is owed and includes any person to whom such debt has been legally
assigned or transferred.
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SUPREME COURT REPORTS
[2022] 5 S.C.R.
Insolvency and Bankruptcy Code, 2016: s. 5 (8) – Financial
Debt – When an amount could be termed as such – The policy of
law under IBC requires “Disbursement” leading to a debt along
with interest – Interest, as such, is not a necessary requirement of s.
5(8), but the fact of disbursement from the creditor to the debtor is
a necessity for looking a debt as financial debt, as contemplated by
the said section – Such Disbursement has to be understood in terms
of money which has been paid by the creditor and debtor.
Insolvency and Bankruptcy Code, 2016: ss 5(8), 3(33) –
Words ‘Transaction’ and ‘Disbursed’ – Distinguished – The word
“transaction” includes transfer of assets, funds or goods and
services from or to the corporate debtors – But imposing such a
meaning of the word “Transaction” as inclusive in the word
“Disbursed” will lead to unnecessary straining of the provision –
Interpretation of the term Disbursed, as occurring u/s.5(8), should
mean the payment of money, which flows to the debtor.
Insolvency and Bankruptcy Code, 2016: ss 3(6), 5(8) – Words
‘Claim’ and ‘Debt’ – Claim, as defined u/s.3(6), may or may not be
fixed, disputed or undisputed, secured or unsecured but it bears an
indispensable element of “right to payment” – Claim cannot exists
independent of the element of “right to payment” – The source of
such “right to payment” can be either under a judgment or under
any other circumstance – When claim is accompanied by liability it
gives rise to debt – Debt, as defined under the Code includes
financial as well as operational debt and the same appears to be
intertwined with the definition of “claim” – Debt denotes a liability
or obligation which relates to a claim.
Insolvency and Bankruptcy Code, 2016: s.5(8)(d) – Indian
Accounting Standards – rr.61 to 67 – Financial Lease – Financial
lease as such is not defined under IBC – s.5(8)(d) refers lease as
inclusive of Financial lease as given under Indian Accounting
Standards – r.62 declares that a lease is classified as a financial
lease if it transfers, substantially, all the risks and rewards incidental
to ownership of an underlying asset – As per r.63, what matters for
a lease to be financial lease is its substance and not the form – In
the instant case, the rights are transferred in favour of the allotees
only by way of a sub-lease, and therefore there is no transfer of
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ownership of

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