NCLAT Reiterates That A Decree-Holder Cannot Be Treated As A Financial Creditor For Triggering CIRP Under IBC

The National Company Law Appellate Tribunal, Delhi (NCLAT) in the case of Sh. Sushil Ansal Vs Ashok Tripathi and Ors, has reiterated that a decree-holder though covered under the definition of creditor under Section 3(10) of the Insolvency and Bankruptcy Code (IBC) would not fall within the class of financial creditors and therefore, a decree holder cannot initiate a corporate insolvency resolution process (CIRP) against a corporate debtor with an object to execute a decree.

In the facts of the case, Respondent Nos 1 and 2 (Respondents), as allottees of a home in a housing project in Lucknow, approached the Uttar Pradesh Real Estate Regulatory Authority (UP RERA) for recovery of their dues against the developer, Ansal Properties and Infrastructure Limited (Corporate Debtor), who had failed to honour the timelines under the built up agreement/ builder buyer agreement. What followed was the grant of orders and a recovery certificate issued by UP RERA in favour of the