In our previous post, we discussed the La-Fin Judgments passed by the NCLAT (Pushpa Shah v. IL&FS Financial Services Limited) and NCLT, which had held that a put option holder may be treated as a ‘financial creditor’ under the Insolvency & Bankruptcy Code, 2016 (IBC). A three-judge bench of the Supreme Court set aside the La-Fin Judgments in Jignesh Shah vs Union of India primarily on the technical grounds of limitation without expressing a view on whether the NCLT and NCLAT were correct in treating a put option holder as a financial creditor.
This was followed by the landmark decision of Pioneer Urban and Infrastructure Limited vs Union of India (Pioneer Judgment) in which the Supreme Court interpreted the provisions of Section 5(8)(f) of the IBC in a manner similar to that done in the La-Fin Judgments, stating that the provision would subsume within it “amounts raised under transactions which are not necessarily loan transactions, so long as they have the commercial effect of a borrowing” and “done with profit as the main aim.”
Continue Reading Put option Holders: Financial Creditors under the IBC? – Part 2