The National Company Law Appellate Tribunal (NCLAT) has dismissed a plea filed by Saregama India Ltd to initiate insolvency proceedings against Chennai-based Home Movie Makers observing that it is not a financial creditor under the Insolvency and Bankruptcy Code (IBC).
The appellate tribunal held that the advance money paid by the RP-Sanjiv Goenka Group company to film producer Home Movie Makers for using the free commercial time (FCT) while telecasting of Tamil Commercial Serial titled Ganga on Sun TV channel, was not a financial debt under the definition given in the IBC.
A two-member bench headed by Chairperson Justice S J Mukhopadhaya upheld the earlier order passed by the Chennai bench of NCLT on February 14 in the matter, which had rejected Saregama's plea.
NCLAT observed that as per the terms and conditions and the clauses in the marketing agreement between them, money paid by Saregama cannot be termed as financial debt.
"We are of the view that the appellant (Saregama), who claims to be a financial creditor, however, claims made by it, is not a financial debt," said NCLAT.
It further added, "It is reiterated that in the marketing agreements and subsequent correspondence exchanged between the appellant and the respondent (Home Movie Makers), no way it is mentioned that the amount paid by the appellant to be repayable along with interest over a period of time in a single or series of payments in future."
NCLAT further said it was of firm opinion that Saregama "has not disbursed money against the consideration for the time value".
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