Loan Taken From "Special Window For Affordable & Mid-Income Housing Fund" To Be Recognised As 'Interim Finance' U/S 5(15) Of IBC: NCLT, Delhi

SWAMIH is a government-backed initiative in India, designed to provide funding to revive stalled residential projects. It acts as a "last-mile funding" solution by providing capital to complete construction.

Brief Facts:

Insolvency Proceedings were Initiated against M/s Ansal Crown Infrabuild Private Limited (“Corporate Debtor”) on 21.04.2023. During the proceedings SWAMIH Investment Fund (“Applicant”) submitted its claim as interim finance against the corporate Debtor on 08.05.2023.

The applicant had provided funding to the Corporate Debtor for completion of its project during the final stage through an agreement dated 24.12.2020.

However, the Resolution Professional (“RP”) did not classify the applicant's fund as interim finance. Consequently, the Applicant filed an application raising objections to the Resolution Plan by the RP as it had not admitted the applicant's claim as 'Interim Finance' under Section 5(15) of the Code.

Contentions:

The applicant submitted that the definition of Interim Finance was amended on March 13, 2020 and to include the words “and such other debt as may be notified.” It was further submitted that before the amendment was passed an Ordinance was also passed under the code emphasizing the importance and need to provide the highest priority in repayment of last mile funding to the corporate debtors.

Pursuant to it, the Central Government issued a notification on March 18, 2020 specifically categorizing funds provided by SWAMIH Fund as interim finance under Section 5(15) of the Code.

The applicant further contended that the funding provided by it qualifies as 'Interim Finance' and, is required to be repaid in priority.

Per Contra, the RP stated that interim finance refers only to the funding raised during the CIRP period and that the applicant had provided funding prior to the initiation of CIRP which is why the same could not be considered as 'Interim Finance'.

Findings:

The Tribunal, on a conjoint reading of the Amendment Act, Ordinance, and the Notification held that the debt raised by SWAMIH qualifies as 'Interim Finance' under Section 5(15) of the Code.

The tribunal further noted as per the ordinance top priority for repayment has to be given to last mile funding irrespective of whether such funding was given before or after initiation of CIRP.

It remarked that the amendment retained the essence of the Ordinance and expanded the scope of the definition of 'Interim Finance' by including other debts as notified by the central government. Thereafter, the Central Government issued a Notification declaring the fund provided by SWAMIH to be classified as 'Interim Finance' under the Code.

Based on the above, the Tribunal opined that it has nowhere been specified that the funding being provided before the initiation of CIRP cannot be declared as interim finance. It further stated that last mile funding is critical to prevent insolvency or facilitate timely resolution.

Therefore, the tribunal allowed the application and held that funds provided by SWAMIH falling within the definition under Section 5(15) of the Code, is required to be treated as 'Interim Finance' and should be repaid on priority over all other payments under the approved Resolution Plan.

Case Title: M/s Conquerent Control Systems Private Limited V/s M/s Ansal Crown Infrabuild Private Limited

Case Number: CP (IB) No. 783 (ND)/ 2022

Judgement Date: 17.04.2025

For Applicant: Mr. Krishnendu Datta, Senior Advocate, Mr. Nikhil Mehndiratta, Mr. Agastya Sen, Ms. Nidhisha Chokshi, Advocates.

For RP :Adv. Abhishek Anand, Adv. Karan Kohli, Adv. Ridhima Mehrotra, Adv. Rakesh Kumar, Adv. Preeti Kashyap, Adv. Ankit Sharma, Adv. Yash Dhawan, Sunil Kumar (in person)

For SRA : Mr. Nipun Gautam, Adv.

Click Here To Read/Download The Order