Interest-Free Debt Must Involve Time Value Of Money To Qualify As Financial Debt: NCLT Delhi

The NCLT Delhi has ruled that an interest-free debt must involve the "time value of money" to qualify as financial debt under the Insolvency and Bankruptcy Code (IBC). The tribunal clarified that for a debt to be considered "financial debt," there must be consideration for the passage of time during which the money is utilized. Simply being an interest-free loan is not enough; it must be demonstrably linked to commercial effect of borrowing. This decision provides critical clarity on the definition of financial debt, ensuring that only genuine financial creditors can initiate Corporate Insolvency Resolution Process (CIRP).