M/s Saregama India Limited Vs. M/s Home Movie Makers Private Ltd. [Company Appeal (AT) (Insolvency) 359 of 2019] - Synopsis
Team SoOLEGAL 2 Mar 2021
In this case, M/s Saregama India Limited Vs. M/s Home Movie Makers Private Ltd. [Company Appeal (AT) (Insolvency) 359 of 2019], the appellant had lodged an appeal against the order of National Company Law Tribunal, Chennai Bench, in which the Adjudicating Authority had dismissed the application of the appellant. The appellant had filed an application before the Adjudicating Authority under Section 7 of Insolvency Bankruptcy Code, 2016, for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, but the same was being rejected by the Bench. After hearing both the parties, NCLT had rejected the application by stating that, the claim of the appellant was not a financial debt. The only point to be considered is whether or not the appellant's argument fits under the category of financial debt. The Appellant did not disburse the money for consideration of the time value of the money and the Respondent did not collect the money as a financial debt. On the other hand, it was a deal between the Appellant and the Respondent for the use of FCT which was made available to the Respondent (Producer) when broadcasting their serials. However, as far as the Respondent is concerned, the Appellant must pay the consideration for the use of the FCT.

The Hon'ble National Company Law Appellate Tribunal had examined the separate terms and conditions of the deal between the Appellant and the Respondent to conclude whether the money provided by the Appellant amounts to giving of debt. The Bench had also noted that nowhere in the marketing agreements and subsequent communications shared between the Appellant and the Respondent, it was specified that the money charged by the Appellant will be repayable, along with interest, over a period of time in a single payment or a sequence of payments in the future. The Appellant had not disbursed money against the consideration for the time value. It was however held that the appellant's allegation was not a financial debt within the scope of Section 5(8) of Insolvency Bankruptcy Code, 2016. 
The appeal was dismissed.

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