Mumbai: The Mumbai bench of the National Company Law Tribunal (NCLT) has rejected a plea filed by Israel Discount Bank Limited seeking initiation of insolvency proceedings against Thane-based Hella Infra Market Limited, holding that the bank failed to establish that the alleged liability constituted a “financial debt” under the Insolvency and Bankruptcy Code (IBC).

The bench presided over by judicial member Nilesh Sharma and technical member Sameer Kakar pronounced the order on October 6, 2026. The tribunal held that the bank could not qualify as a financial creditor merely because the rights under a promissory note and corporate guarantee had been transferred to it.

“The Applicant may have acquired contractual rights under the Promissory Note and Corporate Guarantee by transfer. However, an assignment can transfer an existing debt; it cannot create the statutory character of a financial debt where that character has not been established in the first place. Since the liability sought to be enforced against the CD has not been shown to constitute a financial debt under Section 5(8), the Applicant does not qualify as a Financial Creditor in respect of the present claim merely by virtue of the transfer. In our view, the debt arose due to a trade transaction between Hella Singapore and P. Marom; hence, the underlying transaction is not a financing transaction,” the order copy reads.

Bank’s Insolvency Plea

Israel Discount Bank had approached the tribunal under Section 7 of the IBC seeking commencement of the Corporate Insolvency Resolution Process (CIRP) against Hella Infra Market. The bank claimed an outstanding amount of USD 7.80 million (around Rs 69.20 crore), including USD 7.5 million towards principal and USD 301,096.2 towards accrued interest and default charges.

The dispute arose from a transaction involving Hella Infra Market’s Singapore-based entity, Hella Infra Market Singapore Pvt Ltd, and Israeli company P. Marom Construction Services Ltd. Under the arrangement, a credit line of up to USD 10 million was made available through Israel Discount Bank against a promissory note issued by Hella Singapore.

Hella Infra Market had also executed a corporate guarantee in connection with the promissory note. After Hella Singapore failed to repay the amount, the bank sought payment from Hella Infra Market under the guarantee.

According to the bank, the transaction amounted to a financial debt because it involved a credit facility, a promissory note, discounting charges representing the time value of money and a corporate guarantee. It argued that the transaction had the “commercial effect of borrowing” under Section 5(8) of the IBC.

Company’s Opposition

Hella Infra Market, however, opposed the insolvency proceedings, contending that the bank had not lent any money directly to it. The company argued that the original transaction was a commercial supply arrangement and that the bank had merely acquired receivables arising from that transaction.

The company also pointed out that disputes had arisen over the quality of goods supplied and that it had already filed a civil suit before the competent court at Ahmedabad. The NCLT agreed with the company’s core contention that the bank had failed to establish the existence of a financial debt owed by Hella Infra Market.

The tribunal noted that the original commercial transaction was between P. Marom and Hella Singapore, while the bank had made the disbursement to P. Marom. No amount was disbursed by the bank to Hella Singapore or Hella Infra Market. The rights under the promissory note and corporate guarantee were subsequently transferred to the bank.

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