{"id":8734,"date":"2025-09-15T06:52:31","date_gmt":"2025-09-15T06:52:31","guid":{"rendered":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024\/"},"modified":"2025-09-22T11:42:07","modified_gmt":"2025-09-22T11:42:07","slug":"murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024","status":"publish","type":"post","link":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024\/","title":{"rendered":"Murlidhar Vincom Pvt. Ltd. v. Skoda (India) Pvt. Ltd. (2024)"},"content":{"rendered":"<h2><span class=\"ez-toc-section\" id=\"Murlidhar_Vincom_Pvt_Ltd_v_Skoda_India_Pvt_Ltd_2024\"><\/span>Murlidhar Vincom Pvt. Ltd. v. Skoda (India) Pvt. Ltd. (2024)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<section>\n<h2><span class=\"ez-toc-section\" id=\"Facts\"><\/span>Facts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>From 2009 to 2014, Murlidhar Vincom Pvt. Ltd. (Appellant) made investments in the form of \u201cShare Application Money\u201d in Skoda (India) Pvt. Ltd. (Corporate Debtor).<\/li>\n<li>Initially, equity shares amounting to \u20b96.98 Lakh were issued, followed by additional investments of \u20b91.32 Crore, yet no shares were issued in return.<\/li>\n<li>Skoda (India) Pvt. Ltd. paid back \u20b940 Lakh but later sought additional payments of \u20b979 Lakh to resolve a liquidity issue. They did not issue shares against the payment or repay the remaining \u20b992 Lakh.<\/li>\n<li>Claiming the payment was a financial obligation, the Appellant issued a demand notice under the Companies Act, 2013 with a request to settle the payment with interest, which was ignored.<\/li>\n<li>Murlidhar Vincom submitted a Section 7 application under the IBC 2016, initiating a Corporate Insolvency Resolution Process (CIRP) which Skoda termed as \u201cshare application money.\u201d<\/li>\n<\/ul>\n<\/section>\n<section>\n<h2><span class=\"ez-toc-section\" id=\"Issues\"><\/span>Issues<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>Does the unallotted share application money qualify as \u201cfinancial debt\u201d as defined under Section 5(8) of IBC?<\/li>\n<li>Is there a default on repayment by the Company, thus allowing the BAR to initiate CIRP?<\/li>\n<li>What are the legal consequences of not issuing shares within the statutory timeframe as per Companies Act 2013?<\/li>\n<\/ul>\n<\/section>\n<section>\n<h2><span class=\"ez-toc-section\" id=\"Contentions\"><\/span>Contentions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>The unallotted share application money which appellant claimed was a financial debt owed by the company Skoda (India) Pvt.<\/li>\n<li>Respondent argued share application money is not a form of financial debt within the scope of the Insolvency and Bankruptcy Code.<\/li>\n<li>It was noted that the Code and its settled laws do not consider share application money as financial debt in the absence of share allotment.<\/li>\n<\/ul>\n<\/section>\n<section>\n<h2><span class=\"ez-toc-section\" id=\"Judgements\"><\/span>Judgements<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>In the matter of application of financial debt under IBC Pramod Sharma v. Karanaya Heart Care Pvt. Ltd. (2022) was cited as a precedent and the New Delhi Bench of NCLT on March 22, 2024, awarded the application of section 7 and in its judgement noted that share application money is not financial debt of the IBC.<\/li>\n<li>NCLAT (November 26, 2024) affirmed the decision and added as unallotted share application money there is no consideration for the time value of money and no statutory compliance for debt.<\/li>\n<li>The tribunal noted that under CIRP claims were not allowed and the petitioner must seek a remedy under Companies Act for repayment.<\/li>\n<li>The court recognized the importance of distinguishing real financial equity from something that is meant to disguise a loan.<\/li>\n<\/ul>\n<\/section>\n<section>\n<h2><span class=\"ez-toc-section\" id=\"My_View\"><\/span>My View<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p class=\"note\">Judgement reflects distinction between true equity infusions and financial debt in the context of insolvency proceedings. It shores up the misuse of the insolvency framework by equity injections that present themselves as debt, in scenarios where there is a statutory non-compliance of share allotment rules. The dismissal directs claimants towards the right statutory processes.<\/p><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #0c0c0c;color:#0c0c0c\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #0c0c0c;color:#0c0c0c\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024\/#Murlidhar_Vincom_Pvt_Ltd_v_Skoda_India_Pvt_Ltd_2024\" >Murlidhar Vincom Pvt. Ltd. v. Skoda (India) Pvt. Ltd. (2024)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024\/#Facts\" >Facts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024\/#Issues\" >Issues<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024\/#Contentions\" >Contentions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024\/#Judgements\" >Judgements<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024\/#My_View\" >My View<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/murlidhar-vincom-pvt-ltd-v-skoda-india-pvt-ltd-2024\/#FAQ_Murlidhar_Vincom_Pvt_Ltd_v_Skoda_India_Pvt_Ltd_2024\" >FAQ: Murlidhar Vincom Pvt. Ltd. v. Skoda (India) Pvt. Ltd. (2024)<\/a><\/li><\/ul><\/nav><\/div>\n\n<\/section>\n<section>\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The case clarifies that unallotted share application money in private companies cannot be treated as financial debt under IBC if statutory compliance is absent and the consideration for time value of money is missing. Consequently, CIRP under Section 7 of IBC is not maintainable in such scenarios, and affected parties must seek other legal remedies for repayment and relief.<\/p>\n<\/section>\n<footer><b>Written By:<\/b><\/p>\n<ul>\n<li><b>Preethi Srinivasan<\/b><\/li>\n<li>\n<p class=\"authors\"><b>Shameksha Raghavan<\/b><\/p>\n<\/li>\n<\/ul>\n<\/footer>\n\n\n<hr>\n  <h2><span class=\"ez-toc-section\" id=\"FAQ_Murlidhar_Vincom_Pvt_Ltd_v_Skoda_India_Pvt_Ltd_2024\"><\/span>FAQ: Murlidhar Vincom Pvt. Ltd. v. Skoda (India) Pvt. Ltd. (2024)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n  <div class=\"faq-item\">\n    <div class=\"question\">Q1. What is the case of Murlidhar Vincom v. Skoda (India) Pvt. Ltd. (2024) about?<\/div>\n    <div class=\"answer\">This case deals with whether unallotted share application money can be treated as \u201cfinancial debt\u201d under Section 5(8) of the Insolvency and Bankruptcy Code (IBC), thereby enabling initiation of Corporate Insolvency Resolution Process (CIRP).<\/div>\n  <\/div>\n\n  <div class=\"faq-item\">\n    <div class=\"question\">Q2. What were the facts of the case?<\/div>\n    <div class=\"answer\">Murlidhar Vincom Pvt. Ltd. invested money in Skoda (India) Pvt. Ltd. as share application money. Some shares were issued initially, but later large amounts remained unallotted. The company also failed to repay most of the money, leading the appellant to file under Section 7 of IBC.<\/div>\n  <\/div>\n\n  <div class=\"faq-item\">\n    <div class=\"question\">Q3. What was the main legal issue?<\/div>\n    <div class=\"answer\">The central issue was whether unallotted share application money qualifies as \u201cfinancial debt\u201d under the IBC and whether non-repayment constituted a default enabling CIRP.<\/div>\n  <\/div>\n\n  <div class=\"faq-item\">\n    <div class=\"question\">Q4. What did the NCLT decide?<\/div>\n    <div class=\"answer\">On March 22, 2024, the NCLT, New Delhi, held that share application money does not qualify as financial debt under IBC and rejected the Section 7 application.<\/div>\n  <\/div>\n\n  <div class=\"faq-item\">\n    <div class=\"question\">Q5. What was the NCLAT ruling in this case?<\/div>\n    <div class=\"answer\">On November 26, 2024, the NCLAT upheld the NCLT decision, reasoning that unallotted share application money does not involve consideration for the time value of money, hence cannot be treated as financial debt.<\/div>\n  <\/div>\n\n  <div class=\"faq-item\">\n    <div class=\"question\">Q6. What precedent was cited in this case?<\/div>\n    <div class=\"answer\">The tribunal referred to Pramod Sharma v. Karanaya Heart Care Pvt. Ltd. (2022), which similarly clarified that share application money is not financial debt.<\/div>\n  <\/div>\n\n  <div class=\"faq-item\">\n    <div class=\"question\">Q7. Why is share application money not considered financial debt?<\/div>\n    <div class=\"answer\">Because financial debt under IBC must involve disbursement against consideration for time value of money. Share application money represents an intent to acquire equity, not a loan or borrowing.<\/div>\n  <\/div>\n\n  <div class=\"faq-item\">\n    <div class=\"question\">Q8. What is the significance of this judgment?<\/div>\n    <div class=\"answer\">The case draws a clear distinction between equity investment and financial debt. It prevents misuse of IBC by investors trying to recover unallotted share application money through insolvency proceedings instead of remedies under the Companies Act.<\/div>\n  <\/div>\n\n  <div class=\"faq-item\">\n    <div class=\"question\">Q9. What legal remedy is available to investors in such cases?<\/div>\n    <div class=\"answer\">Investors must seek remedies under the Companies Act, 2013 for refund of unallotted share application money, rather than filing for insolvency under Section 7 IBC.<\/div>\n  <\/div>\n\n  <div class=\"faq-item\">\n    <div class=\"question\">Q10. Why is this case important for law students and practitioners?<\/div>\n    <div class=\"answer\">It clarifies the scope of \u201cfinancial debt\u201d under IBC, reinforces the principle of time value of money, and highlights the limits of insolvency law in disputes involving share application money.<\/div>\n  <\/div>\n\n\n\n<hr>\n  <script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-9757683154964762\"\n     crossorigin=\"anonymous\"><\/script>\n<ins class=\"adsbygoogle\"\n     style=\"display:block; text-align:center;\"\n     data-ad-layout=\"in-article\"\n     data-ad-format=\"fluid\"\n     data-ad-client=\"ca-pub-9757683154964762\"\n     data-ad-slot=\"5376335121\"><\/ins>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script>\n<hr>\n\n<blockquote>\n  <p>\n    <strong>Award-Winning Article Written By: Ms.Shameksha Raghavan<\/strong>\n  <\/p>\n  <figure>\n    <img decoding=\"async\" \n      src=\"https:\/\/www.legalserviceindia.com\/images\/ae-1.png\" \n      alt=\"Certificate of Excellence awarded by Legal Service India\" \n      style=\"border: 0; width: auto; height: auto;\">\n    <figcaption>\n      Authentication No: SP563103155399-08-0925\n    <\/figcaption>\n  <\/figure>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Murlidhar Vincom Pvt. Ltd. v. Skoda (India) Pvt. Ltd. (2024) Facts From 2009 to 2014, Murlidhar Vincom Pvt. Ltd. (Appellant) made investments in the form of \u201cShare Application Money\u201d in Skoda (India) Pvt. Ltd. (Corporate Debtor). Initially, equity shares amounting to \u20b96.98 Lakh were issued, followed by additional investments of \u20b91.32 Crore, yet no shares<\/p>\n","protected":false},"author":365,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"two_page_speed":[],"_jetpack_memberships_contains_paid_content":false,"_joinchat":[],"footnotes":""},"categories":[20],"tags":[28],"class_list":{"0":"post-8734","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-company-law","7":"tag-top-news"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/posts\/8734","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/users\/365"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/comments?post=8734"}],"version-history":[{"count":0,"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/posts\/8734\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/media?parent=8734"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/categories?post=8734"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/tags?post=8734"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}