Put-Option Holders: Financial Creditors Under The IBC?

In its recent judgment in the case of Jignesh Shah v. Union of India¹ (Jignesh Shah), a three-judge bench of the Supreme Court set aside the NCLAT judgment in the case of Pushpa Shah v. IL&FS Financial Services Limited² (NCLAT Judgment) along with the original judgment of the NCLT³ (NCLT Judgment and, together, La-Fin Judgments). The NCLT Judgment and the NCLAT Judgment had rejected the corporate debtor's objection in relation to the claim being time barred and initiated corporate insolvency resolution process on the basis that a put option holder may be treated as a "financial creditor" under the Insolvency & Bankruptcy Code, 2016 (IBC).

Factual Background

The appeal in the case of Jignesh Shah was filed by the shareholders of La-Fin Financial Services Pvt. Ltd. (La-Fin) assailing the order of the NCLT (upheld by the NCLAT) admitting an application filed by IL&FS Financial Services Ltd. (IFIN) under Section 7 of the IBC to initiate the corporate insolvency