Amount invested in real estate project by promoter is not financial debt under Section 5(8) of IBC: NCLAT

It was noted that the relationship between the parties was that of land owner and developer. Thus, any amount invested towards the completion of the real estate project could not be viewed as a financial debt.

The National Company Law Appellate Tribunal (NCLAT) has held that an amount invested by a promoter in a real estate project would not fall within the ambit of 'financial debt' as defined under Section 5(8) of the Insolvency and Bankruptcy Code (IBC) [Jagbasera Infratech Private Ltd v. M/s Rawal Variety Construction].

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