Log in or register
Share on LinkedInShare on LinkedIn

ARTICLE · 11 DECEMBER 2018

Does Payment Of Interest Constitute A Financial Debt?

Dhaval Vussonji & Associates
Explore more from Dhaval Vussonji & Associates

This highlights the importance of having crystallized terms in respect of any lending in the absence of which a creditor may possibly not have recourse under the Code.

IndiaInsolvency/Bankruptcy/Re-Structuring
Malavika Menon
Malavika Menon
Nisarg Mehta
Nisarg Mehta
Nikhil Khurana
Nikhil Khurana
Author LinkedIn connections

The National Company Law Appellate Tribunal, New Delhi ("NCLAT") in the case of Sanjay Kewalramani vs. Sunil Parmanand Kewalramani & Ors. vide order dated 12th July, 2018 held that the mere fact that a company has paid interest on an unsecured loan for a certain period of time (i) cannot be a ground to hold that the debt comes within the meaning of "Financial Debt" as defined under Section 5 (8) of the Insolvency and Bankruptcy Code, 2016 ("Code"); and (ii) cannot be termed as 'disbursement of an amount for consideration for the time value of money'.

  • Facts

Mr. Sunil Parmanand Kewalramani ("Petitioner 1"), for himself and on behalf of Mr. Parmanand Kewalramani ("Petitioner 2") and Mr. Madhu Kewalramanj ("Petitioner 3") (collectively referred to as "Petitioners") had filed a petition to initiate corporate insolvency resolution proceedings under Section 7 of the Code against Medilux Laboratories Private Limited ("Company") for claims amounting to

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

Related Articles

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

See more popular content from

Article

The Insolvency And Bankruptcy Code (Amendment) Act, 2026

India's Insolvency and Bankruptcy Code undergoes significant reform through the 2026 Amendment Act, introducing stricter timelines, enhanced creditor oversight, and frameworks for group and cross-border insolvency. The amendments address persistent challenges in resolution efficiency, withdrawal restrictions, and fraudulent transaction scrutiny while aligning with international best practices to strengthen investor confidence.
IndiaInsolvency/Bankruptcy/Re-Structuring
Mansukhlal Hiralal & Company
Mansukhlal Hiralal & Company
Article

The IBC Amendment Act, 2026: Reshaping Real Estate Insolvency

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (‘Amendment Act’), which amends the Insolvency and Bankruptcy Code, 2016 (‘Code’), received Presidential assent on April 6, 2026. Most amendments took effect on May 26, 2026. However, three significant mechanisms the accelerated admission deadline, creditor-initiated resolution, and group insolvency have been enacted but have not yet come into force and will take effect only upon the issuance of a commencement notification by the Central Government under the applicable provisions of the Code.
IndiaInsolvency/Bankruptcy/Re-Structuring
Shardul Amarchand Mangaldas & Co
Shardul Amarchand Mangaldas & Co
Article

IBC Amendment Bill 2026: Key Changes, Timelines And Practical Implications For Stakeholders

India's insolvency regime is entering a decisive phase of reform. Nearly a decade after the Insolvency and Bankruptcy Code, 2016 ("IBC") came into force, the Insolvency and Bankruptcy Code (Amendment) Bill, 2026, reportedly passed by the Lok Sabha on 30 March 2026, introduces a series of targeted changes aimed at improving the efficiency and predictability of the framework.
IndiaInsolvency/Bankruptcy/Re-Structuring
Legitpro Law
Legitpro Law
Article

IBC Update - Removal Of Interim Moratorium For Personal Guarantors Apples To Pending Proceedings

The Bombay High Court recently addressed a critical question regarding the temporal application of Section 96(4) of the Insolvency and Bankruptcy Code, which removed the interim moratorium protection for personal guarantors of corporate debtors. The ruling clarifies whether this amendment applies only to fresh applications filed after its enactment or extends to insolvency proceedings that were already pending when the law changed. This decision has significant implications for creditors seeking to pursue p
IndiaInsolvency/Bankruptcy/Re-Structuring
Mansukhlal Hiralal & Company
Mansukhlal Hiralal & Company
Article

The End Of The “Settlement Exit”? — The Stricter Section 12A Regime Post-2026 Amendment

For nearly eight years, the Insolvency and Bankruptcy Code, 2016 (IBC) carried within it a quiet contradiction. On the one hand, it was designed to be a serious, time-bound, collective resolution mechanism and a creditor-driven process. On the other hand, it contained Section 12A, a provision that became one of the most strategically exploited exits in Indian commercial law.
IndiaInsolvency/Bankruptcy/Re-Structuring
Foresight Law Offices
Foresight Law Offices