NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY versus ANAND SONBHADRA

61. It is apposite, at this juncture, to advert to the Indian Accounting Standards relevant to our inquiry.

62. The Rules, which are relevant in regard to the specification of a lease as a financial lease are set down as Rules 61 to 67 of Indian Accounting Standards [for short “IAS”]. They have been made under Section 133 of the Companies Act, 2018. “Classification of leases (paragraphs B53–B58) 61 A lessor shall classify each of its leases as either an operating lease or a finance lease. 6 2012 (5) SCC 661 NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] 62 A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. 63 Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form of the contract. Examples of situations that individually or in combination would normally lead to a lease being classified as a finance lease are: (a) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term; (b) the lessee has the option to purchase the underlying asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception date, that the option will be exercised; (c) the lease term is for the major part of the economic life of the underlying asset even if title is not transferred; (d) at the inception date, the present value of the lease payments amounts to at least substantially all of the fair value of the underlying asset; and (e) the underlying asset is of such a specialised nature that only the lessee can use it without major modifications. 64 Indicators of situations that individually or in combination could also lead to a lease being classified as a finance lease are: (a) if the lessee can cancel the lease, the lessor’s losses associated with the cancellation are borne by the lessee; (b) gains or losses from the fluctuation in the fair value of the residual accrue to the lessee (for example, in the form of a rent rebate equaling most of the sales proceeds at the end of the lease); and (c) the lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent. 65 The examples and indicators in paragraphs 63–64 are not always conclusive. If it is clear from other features that the lease does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset, the lease is classified as an operating lease. For example, this may be the case if ownership of the underlying asset transfers at the end of the lease for a variable payment equal to its then fair value, or if there are variable lease payments, as a result of which the lessor does not transfer substantially all such risks and rewards. 66 Lease classification is made at the inception date and is reassessed only if there is a lease modification. Changes in estimates (for example, changes in estimates of the economic life or of the residual value of the underlying asset), or changes in circumstances (for example, default by the lessee), do not give rise to a new classification of a lease for accounting purposes. Finance leases Recognition and measurement 67 At the commencement date, a lessor shall recognise assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.”

63. The analysis of the said criteria in the context of the lease in question, would yield the following results. Under Rule 61, the lessor is obliged to classify each of its leases as an operating lease or a finance lease. In Civil Appeal No. 2222 of 2021, there is no case for the appellant- NOIDA, that it has been classified as finance lease. As far as the other Civil Appeal filed by the very same Authority, i.e., NOIDA is concerned, Smt. Madhavi Diwan, sought to contend that, while it is not shown as a finance lease as such, the transaction is characterised as a sale in the balance sheet.

64. Rule 62, the sheet anchor of the appellant, declares that a lease is classified as a financial lease if it transfers, substantially, all the risks and rewards incidental to ownership of an underlying asset. Moving on to Rule 63, it undoubtedly, declares that what matters is not the form but the substance. Thereafter, under the examples of situations, either individually or in combination, which would lead to a lease being classified as a finance lease, certain situations have been depicted. As far as the NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] first situation is concerned, it would involve a lease, where, there is a transfer of ownership of an underlying asset to the lessee by the end of the lease term. There is no case for the appellants that the lease contemplates transfer of ownership of the underlying asset. The underlying asset is the land.In fact, the case of the appellant would appear to be also that there is no transfer of ownership because by the end of lease term third party rights would have been created over the dwelling unit/ built up space/ plot constructed by the Lessee. It is also the further case set up that the Lessee alone brings third parties on to the property and gets paid by such parties. It will be relevant to notice that the so called third parties do not get ownership rights as such. The rights are transferred in favour of the allotees of dwelling units /built up space/ plot only by way of a sub-lease. Therefore, there is no transfer of the ownership of the underlying asset by the end of the lease term.Under the next situation considered relevant under the Indian Accounting Standards, is the granting of an option to the lessee to purchase the underlying asset at a price, which is expected to be sufficiently lower than the fair value at the date of option becoming exercisable for it to be reasonably certain at the inception date, that the option will be exercised. The underlying asset is the plot.

65. From the Table presented before the NCLAT by the appellant, we find that appellant appears to have taken the stand that the lease rent is paid for the leasing of the land and the premium is paid for the rights to develop and construct the buildings on the lease land. Therefore, the underlying asset is not just a land but the right to develop or construct a building.

66. A lease of immovable property is defined in Section 105 of the Transfer of Property Act, inter alia, as a transfer of a right to enjoy such property. The property, which is leased, under the lease is the plot of land. Section 105 speaks about the terms on which the lease takes place. The right to enjoy the leased property and the terms, on which it is to be enjoyed, must be distinguished from the property, which is the subject matter of lease. The subject matter of the lease is such property. It is such property, viz., immovable property, in the case of a lease of an immovable property, which can be treated as the underlying asset, for the purpose of the Rules made under Section 133 of the Companies Act, 2013. The contention of the appellant that the underlying asset is also the right to develop or construct a building on the leased land, does not appear to be tenable. The very contention contains an irreconcilable contradiction. On the one hand, the land is correctly described as the leased land. The right to develop or construct a building on the leased land, cannot be treated as the underlying asset. In fact, there is no case that the buildings that are put up on the leased land, would also constitute part of the underlying asset. We may firstly notice that there is no option to purchase ‘the right to develop or construct the building’. This itself suffices to expose the fallacy that the right to develop or construct the building is also part of the underlying asset.

67. At any rate there is no right within the meaning of criteria with the Lessee to purchase the asset. This criterion is also not fulfilled as there is no option to purchase at all that is vested with the lessee.

68. The third criteria in Rule 63 is, where the lease term is for the major part of the economic life of the underlying asset, even if the title is not transferred. The definition of ‘economic life’, as provided in Indian Accounting Standards (hereinafter referred to as ‘the IAS’, for short) 17, reads as under: “Economic life is either: (a) the period over which an asset is expected to be economically usable by one or more users; or (b) the number of production or similar units expected to be obtained from the asset by one or more users.” (Emphasis supplied) The lease in question is for a period of ninety years.In regard to land, the underlying asset, ‘the principle of economic life of underlying asset’, is inapposite. The economic life of land is not limited. The principle in the said situation is predicated with reference to measuring the economic life of an asset. More importantly, it speaks of the major part of the economic life of the asset. Both these concepts are inapposite and even inapplicable with regard to land. Land does not depreciate with the passage of time. Ordinarily, the price of land would only increase, unlike other assets.

69. The argument of the appellant is that on the construction being completed the lease land shall be of no value to the lessor and the third party right being created, results in the economic life and the value of the asset being exhausted. We find no merit in this argument having NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] regard to the fact that the underlying asset is the land.There is another important reason which we must set out here. A sub- lease has been produced before this Court in C.A.No.2369 of 2021. Originally it was referred to in the course of argument by Shri Devashish Bharuka. However, it has subsequently been filed under an affidavit on behalf of Respondent No..1 in C.A.No.2367-2369 of 2021. The sub-lease, no doubt, is entered into between the appellant as Lessor and one M/s. Cloud 9 Projects Pvt. Ltd., the Lessee in the said lease and the sub-lessee. The sub-lease dated 12.11.2018 would show that the land admeasuring 40087 sq.mtr. bearing Plot NO.GH-02 was the subject matter of the lease. The lease was, as in the facts of this case, for a period of 90 years. The lease was entered into with the lessee in the said case on 17.06.2009.

70. It is indicated in the sub-lease that the lessee has the right to allot to its applicants, the dwelling units including the undivided proportionate share in the land, inter-alia. It is further provided that the sub-lessee will observe the covenants, terms and conditions, laid down in the original lease. Thereafter, it is provided that in consideration of the amount paid, which included the cost of super structure and the undivided proportionate share in the land underneath the building paid by the sub- lessee to the lessee the lessee sells, transfers, and conveys to the sub- lessee the dwelling unit with proportionate right, inter-alia, in the land underneath the building. It is next provided that the lessee simultaneously sub-leases to the sub-lessee for the unexpired period of ninety years lease, the undivided unidentified title to the land proportionate to the area allotted to the sub-lessee in relation to the total area subject to various terms and conditions. In Condition 6, it is mentioned inter-alia that the sub-lessee shall get exclusive possession of the built-up covered area of the dwelling unit, and is being transferred the title of the same along with the right over the land, through the sub-lease. The lessee and the sub- lessee are to perform the covenants and conditions in the lease deed between the lessee and the lessor as applicable in relation to the land and the unit being leased under these present. The sub-lessee cannot mortgage the dwelling unit to secure ‘any loan’ at any stage except with the prior permission of the lessor. Sub lessee is to also obtain an appropriate NOC from the lessee/lessor, in this regard. The sub-lessee can use the dwelling unit only for residential purposes and for no other purpose. The right of the sub-lessee is made subject to the provisions of the UP Act of 2010. It is thereafter that condition 21 deals with what is to happen on the expiry of the lease of the land. It reads as follows: “21. That the Lessee /Sub-Lessee shall on the expiry of the lease of the land, peacefully hand over the said land unto the Lessor after removing the superstructure, within the stipulated period. The share in the undivided proportionate land hereby sub-leased, shall always remain un-divisible and unidentified. Similarly, the Sub-Lessee shall have the right of usage of common areas and will not have any independent right of possession of the same. It is further provided in condition 24 that the terms and conditions of the parent lease deed, inter-alia, shall be binding on the parties after execution of the sub-lease. Condition 27 provides that in case of any breach of the terms and conditions of the sub-lease by the lessee/sub- lessee, the lessor will have the right to re-enter the demised dwelling unit, after determining the sub lease. It is further provided that at the time of re-entry of demised dwelling unit, the lessor may re-allot the same to any other person. All the clauses of the parent lease deed are made applicable and they are to prevail in case of any repugnancy between them and the sub-lease.

71. A perusal of the same would reveal that in keeping with the lease deed and the provisions of Section 9 of the U.P. Apartment Owners Act, it is that the sub-lease deed is executed. The sub-lessee or the allottee pays the cost of the structure and the undivided proportionate interest in the land. The transfer to him is described as a sale and conveyance. There is simultaneous sub-lease also in regard to the unidentified title to the proportionate land. The sub-lease appears to effect a sale of the dwelling unit. However, certain conditions appear to militate against an absolute transfer. They include the condition that the sub- lessee cannot mortgage the dwelling unit for securing any loan at any stage except with prior written permission of the lessor. The use of the dwelling unit being limited to residential purpose is perhaps another feature which is unique. The power of the lessor to re-enter the dwelling unit, which is described in condition 27 as the ‘demised’ dwelling unit, after determining the sub-lease and also the power to re-allot the same to any person are clearly inconsistent with a completed sale. This is apart from condition 21 which we had extracted which obliges the sub-lessee on the expiry of the lease of the land to deliver to the lessor the land, after removing the super structure within the stipulated time. It will be noticed further, that the rent and the premium which is the amount claimed by the appellant has no relation with what the lessee would get from the NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] sub-lessee. There is no such case that the amount which is claimed relates to any default by the sub-lessee.

72. The underlying asset in the lease is no doubt the plot of land. The terms contemplate construction of residential flats over the plot by the lessee. The lessee can subject to the lease transfer the built-up flats. The transfer is secured through a sub- lease. The transferor in the sub- lease of the dwelling unit is the lessee in regard to which the sub-lease appears to evidence the sale. We have noticed the features in terms of the conditions. If the built-up area/flats is to be treated as part of the underlying asset then the appellant would be the lessor of the flat. However, going by the terms of the lease and the sub-lease, the flat is entirely constructed by the lessee and it is the lessee who transfers the same to the sub-lessee, and gets the entire consideration. The title flows from the lessee to the sub-lessee. The subject matter of the sub-lease is the dwelling unit as also the undivided right in the land. The question is whether on the basis of Section 5(8)(d), under the lease, what is the underlying asset as between the appellant and the corporate debtor? Though the flats to be constructed are contemplated in the lease, it is not the same as understanding them as the subject matter of the lease. The flats would be the subject matter of the sub-lease. No doubt, from the lease and the sub-lease the right of the lessee or rather its obligation under the lease is to put up the residential flats which he can transfer in terms of the lease. It may be true that the terms of the lease are made binding on the sub- lessee. However, as between the lessor and the lessee, the underlying asset would be the plot of land. From the terms of the sub lease which is as per the decision of the Lessor (appellant) goes to show the extent of the control by the Lessor and consequent intrusion into the power of the lessee namely, despite power to effect an apparent sale of the flat the term includes barring the purchaser from mortgaging the dwelling unit for any loan except with the prior consent of the lessor, the power of re-entry of the lessor and to re-allot the “sold dwelling unit” to any other person and the obligation of the lessee/sub lessee to surrender the land after demolishing the super structure on the expiry of the period of lease.

73. The lease before us is stated to be for a period of 90 years. The lease is intended and structured to attain the objective of putting up residential structures as part of the planned development of the area.The constructed area or the flats can be transferred to the allottees by the Lessee on the strength of tripartite sub-leases. This is borne out by the terms of the sub-lease produced before this court. This is also clear from the provisions of the clause before us which contemplate the execution of a sub-lease. There is no provision for renewal. The parties have clearly contemplated that the terms of the sub-lease will be in the form and format as provided by the Lessor (appellant). It is accordingly that the clause in the lease actually contemplates inter aliathat the construction be completed within 7 years from the date of execution of the lease deed with a maximum extension of another 3 years with penalty. Ordinarily, there would be no further extension. Therefore, the construction can be used till the expiry of the 90 years period by the sub- lessee and the terms of the lease and sub-lease would clearly indicate that at the end of 90 years, far from any enlargement of the rights of the sub-lessee, the sub-lessee is to deliver back the land directly to the Lessor after removing the superstructure. It is another matter that with the passage of a long period of time, the superstructure itself may be in astate of disrepair. However, what is relevant is that the concept of economic life is ill-suited to the facts as the lease is in respect of land which is to be taken as the underlying asset. It may not be possible to hold that the lease is for the major part of the economic life of land.It cannot be said that at the expiry of 90 years the land will cease to be economically usable. Therefore, we cannot accept the argument of the appellant that after 90 years appellant would not getthe empty parcel of land and the land would not be of any commercial use to the appellant after the expiry of the lease. The argument that the land will be of no value to the lessor, has no force, having regard to the nature of underlying asset, namely, land which indeed ordinarily would have perennial value. In clause 12 under other clauses, it is provided that lessee shall not be allowed to assign or change his role. Any breach would lead to cancellation and entire money deposited will be forfeited. Though the words used are the lessee cannot assign or change his ‘role’, it would in substance mean that it is a contract to the contrary within the meaning of Section 108 of the Transfer of Property Act. The position would indeed be that the lessee cannot assign his right.We must at this juncture notice under the heading ‘Transfer of Plot” that the lease does contemplate that upto 30.09.2010, the lessee has a right to sub-divide the allotted plot into suitable smaller plots as per the planning norms and to transfer the same to the interested parties with prior approval of the lessor on payment of transfer charges. However, the area of the sub-divided plot cannot be NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] less than 20,000 sq. meters. We would notice that the leasehold plot in the case is only 22565.77 sq.meters. We would understand the scope of the said provision as right given to the lessee, no doubt, to transfer the allotted plot after sub-division into smaller plots and to transfer the plots so sub-divided.This is subject to two conditions. This is permitted only for a period of two months from the date of execution of the agreement namely till 30.09.2010. This can be only done if the lessor permits it by prior approval. More importantly, the sub-plots which can be so transferred, cannot be less than 20000 sq. meters. As we have noticed this will appear to be a standard clause and we have noticed that the lease in the case of M/s Cloud 9 which we have adverted to, consisted of about 40000 square meters. We do note that the lease deed in civil appeal no. 2367-69 of 2021 is for a plot of 69998.73 square metres. Also, therein the minimum size of the sub divided plot is not less than 10,000 square metres. But the other conditions including prior approval remains the same.Further provisions under the heading ‘transfer of plot’ deal with only cases of individual flat/plot being transferrable subject to the various conditions, the most pertinent being that it contemplates essentially a sub-lease. We do not think that we can permit the matter to be appreciated on the basis of the situation contemplated in a case where under the lease within 2 months on a sub-division of the plot assignment takes place of the plot without the construction and without obtaining the completion certificate. In fact, no argument was advanced based on the said provision. The claim relates to rental and premium on the basis that the lease continued and the lessee (corporate debtor) persevered in the lease.

74. The underlying principle appears to be that even if it is by way of a lease, the rights are vested with the lessee, for the lion’s share of the economic life or the value of the underlying asset, then, substantially, the lessee is enjoying the rights as an owner it is in this context that the principle is laid down that the transfer of title is not necessary. In other words, sans transfer of title, the lessee enjoys the asset for the fruitful period of the life of the asset. At the end of the major part of the economic life of an underlying asset, the life of which is limited by time, the asset would be mostly depreciated, if not, without any value. Such a situation can never apply, in the case of land.

75. The fourth example of the situation, whereunder a lease is to be classified as a financial lease, is, if at the inception date, the present value of the lease payments, amounts to at least substantially all of the fair value of the underlying asset. ‘Fair Value’ is defined in the IAS, as follows: “Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.”

76. Inception date is different from the commencement of lease as ordinarily understood under the IAS. Inception date has been defined in the IAS, as follows: “The inception of the lease is the earlier of the date of the lease agreement and the date of commitment by the parties to the principal provisions of the lease. As at this date: (a) a lease is classified as either an operating or a finance lease; and (b) in the case of a finance lease, the amounts to be recognised at the commencement of the lease term are determined.”

77. In fact, there is no such classification done by the appellant. Even as on the commencement day, what is paid by the lessee, is only ten percent of the total premium.There is neither a transfer of ownership, at the end of the lease term. There is also no option to purchase with the lessee.The payment of ten percent of the premium, in the first place, does not represent substantially all of the fair value of the underlying asset. The lease is for a period of ninety years. At the end of ninety years, there is, in fact, no provision for renewal of the lease. The amount of the premium paid cannot be linked with the fair value of the land. The relationship between the appellant and the lessee, was to remain throughout as lessor and lessee. It may not be possible to even find that the total premium and the rent would represent substantially all of fair value of the underlying asset.

78. The fifth example in Rule 63 is clearly inapplicable as it is not the appellant’s case that the underlying asset is of such a specialised nature that the lessee could only use it without major modification. Therefore, as far as Rule 63 is concerned, to sum-up, none of the situations mentioned in Rule 63 are present in the instant lease.

79. Rule 64 continues with situations, which, individually or in combination, would also lead to a lease being classified as a finance lease. The first situation is power reserved with the lessee to cancel the lease and the lessor’s losses associated with the cancellation being borne NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] by the lessee. This example also does not apply for the simple reason that lease does not confer even the power to cancel the lease on the lessee. On the other hand, by stark contrast, the lessor is abundantly clothed in various contexts to cancel the lease.

80. The second situation in Rule 64 is, when the gains or losses from the fluctuation in the fair value of the residual accrue to the lessee. The specific example, which is given in the said situation is a case of a rent rebate, equalling most of the sale proceeds at the end of the lease. The example clearly has the underpinning of an ultimate sale at the end of the lease. In other words, a finance lease posits ordinarily a lease to begin with and a sale, when the curtains are finally wrung down. We have already noticed that no sale of the underlying asset is contemplated. The lease is for a period of ninety years. The expression ‘residual value’ is also defined. It reads as follows: “The residual value of an asset is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.” Residual value is predicated with reference to the end of the useful life of an asset. Useful life is, inter alia, the period over which an asset is expected to be available for use by an entity. The ‘end’ of useful life is hard to conceive in respect of land. Also, nothing is shown to establish how the ingredients are attracted.

81. The last example in Rule 64 is the ability of the lessee to continue for a secondary period at a rent that is substantially lower than the market rent. As far the lease in question is concerned, the period of the lease is ninety years. The lease, as such, does not contemplate a renewal of the lease. No secondary period is contemplated.

82. Rule 65 goes on to declare that the examples and indicators in Rules 63 and 64 are not always conclusive. Though the learned Solicitor General seized upon this enunciation, the very next sentence would belie the possibility of any expectation on the basis of the aforesaid declaration. What is stated is that even despite the presence of the examples and indicators in Rules 63 and 64, if other features of the lease do not persuade the Court to conclude that the lease transfers substantially all the risks and rewards incidental to ownership, it is to be classified as an operating lease. It would not be a financial lease. In this case, the position obtaining is the converse situation. None of the features in Rules 63 and 64, advance the case of the appellant that the lease in question is a financial lease. No doubt, a perusal of Rule 65 does give an impression that the most important criteria is that the lease must effect, substantially, the transfer of all the risks and the rewards incidental to ownership. The example, which is given in Rule 65, is based on transfer of ownership at the end of the lease for a payment, which is equal to the fair value at the time of transfer and which is variable. The other example furnished is variable lease payment, as a result of which, the lessor does not substantially transfer all the risks and the rewards.

83. Rule 66 provides that the classification of the lease must be made at the inception date, for which, there is no claim made by the appellants. Reclassification is permitted only, if there is a modification of the lease. Changes in estimates, which is again related to in the example to the changes in the estimates of the economic life or the residual value of the underlying asset, will not occasion a new classification of the lease for accounting purposes. So also, changes in circumstances, such as default by the lessee would not warrant a new classification being effected. The appellants have, admittedly, not classified the lease in question at the inception date as a finance lease. This, undoubtedly, is a circumstance, which would militate against the lease of the appellant being treated as a finance lease.

84. Rule 67 again provides that at the commencement date, which means the date of commencement of the lease, the lessor should recognise the assets under a finance lease in its balance sheet and the asset so recognised must be presented as a receivable. The matter does not end there. The asset must be presented as an amount equal to the net investment of the lease. There is nothing on record to establish that the underlying asset has been dealt with in the aforesaid manner by the appellants.

85. Having made a survey of the various situations and examples under the Statutory Rules, which would persuade the Court to ‘deem’ a lease as a finance lease and, having found that none of the situations or indicators suit the case of the appellant, the case should rest and the point must be answered against the appellant. However, the time is now ripe to examine the contents of Rule 62 and Rule 65. They declare as to when a lease is to be classified as a financial lease. It provides that a NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] lease may be so classified as a financial lease, if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. The converse position applies to an operating lease and a lease is to be classified as an operating lease, if the lease does not substantially transfer all the risks and the rewards incidental to the ownership of the underlying asset.

86. The concept revolves around the transfer substantially of risks and rewards incidental to the ownership of the leasehold property. Therefore, we must deal with what constitutes ownership of an asset. We may notice the following discussion regarding the ‘idea of ownership’ in Salmond on Jurisprudence, 12th Edition: “Ownership denotes the relation between a person and an object forming the subject matter of his ownership. It consists in a complex of rights, all of which are rights in rem, being good against all the world and not merely against specific person(a). Though in certain situations some of these rights may be absent, the normal case of ownership can be expected to exhibit the following incidents(b).”

87. Thereafter, the following are treated as the rights associated with ownership. An owner of a property will have the right to possess the thing which he owns, it is stated. Secondly, the second principle is described as follows: – “Secondly, the owner normally has the right to use and enjoy the thing owned: the right to manage it, i.e., the right to decide how it shall be used; and the right to the income from it. Whereas the right to possess is a right in the strict sense, these rights are in fact liberties: the owner has a liberty to use the thing, i.e., he is under no duty not to use it, in contrast with others who are under a duty not to use or interfere with it.”

88. The third right is described as follows: – “Thirdly the owner has the right to consume, destroy or alienate the thing. The rights to consume and destroy are straight-forward liberties. The right to alienate, i.e., the right to transfer his rights over the object to another, involves the existence of a power. A non-owner even though he has possession, cannot normally transfer the rights of ownership over a thing to another; for the law acts on the principle nemo dat quod habet. To this principle there are certain exceptions: for example, the Factors Acts enable non-owners in possession to transfer ownership in certain circumstances.”

89. Fourthly, the right is one associated with the indeterminate duration of the right. It is here that we find the following discussion in this regard: – “Fourthly, ownership has the characteristic of being indeterminate in duration. The position of an owner differs from that of a non- owner in possession in that the latter’s interest is subject to be determined at some future set point, whereas the interest of the owner can endure theoretically for ever. The interest of a bailee or lessee comes to an end when the period of hire or of the lease determines; the owner’s interest is perpetual, being determined neither by any set point nor by the owner’s death, because the property owned can descend to the owner’s heir or next-of-kin, and if he had sold the property prior to his death, then the new owner’s interest would continue unaffected by the previous owner’s death.”

90. Fifthly, there is a residual nature, in regard to the concept of ownership, and it is described as follows: – “If, for example, a landowner gives a lease of his property to A, an easement to B and some other right such as a profit to C, his ownership now consists of the residual rights, i.e., the rights remaining when all these lesser rights have been given away. Moreover, in English law the general rule is that the extinction of such lesser rights will revive in the owner all his original rights.”

91. A question may arise as to whether in approaching the subject, we are to be guided by an examination of the question as to whether the lessee in this case possesses the rights incidental to ownership or the expression ‘rewards incidental to ownership’ is different from rights incidental to ownership. Can there be rewards if the rights which we have indicated herein before are not transferred? Can there be rewards which must be interpreted in a different manner from the idea of rights? In this regard, we must also remind ourselves that to constitute a lease, a financial lease, it is not indispensable that the ownership is in all cases transferred from the lessor to the lessee. However, we have noticed the example hereinbefore wherein the said concept is declared. That is, it is NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] relevant when the lease termis for the major part of the economic life. Undoubtedly, ordinarily a financial lease would be a lease which is born as a lease but ends as a sale. The lease does involve transfer of ownership from the previous owner, namely the lessor to the lessee. In this context, Parliament has defined financial lease in two enactments through Amendment Act no. 44/2016 as hereinbefore noticed.

92. We may at once bear in mind two concepts, in the overarching principle. The two concepts are “substantially” and “all”. In other words, substantially all the risks and rewards incidental to ownership must be transferred under the lease. While we do agree with the appellants that an element of flexibility is allowed by the presence of the concept ‘substantially’, at the same time, it cannot be a case where predominantly all the risks and rewards incidental to ownership are not transferred. In other words, on a conspectus of all the terms of the lease and the reference to the situations and examples which have already been set out, if there is for the most part, a transfer of all the risks and rewards incidental to ownership, in effect, it can be treated as a finance lease.

93. In Black’s Law Dictionary 11th Edition the word “substance” to begin with, is defined as follows:- “(i) The essence of something; the essential quality of something, as opposed to its mere form (ii) Any matter, esp. an addictive drug illegal.”

94. The word “substantial” is defined as follows:- “(i) Of, relating to, or involving substance; material. (ii) Real and not imaginary; having actual, not fictitious, existence. (iii) Important, essential, and material; of real worth and importance (iv) Strong, solid, and firm; large and strongly constructed (v) At least moderately wealthy; possessed of sufficient financial means (vi) Considerable in extent, amount, or value; large in volume or number (vii) Having permanence or near-permanence; long-lasting (viii) Containing the essence of a thing; conveying the right idea even if not the exact details (ix) Nourishing; affording sufficient nutriment.”

95. We would find the word ‘substantially’ occurring in the provision in question would mean that what matters is not the form but the substance. In other words, largely and in substance all the risks and rewards incidental to ownership is to be transferred in a lease to constitute it as a finance lease.

96. In the context of the word ‘incidental’, the contention that with reference to the definition of the word incidental in Black’s Law Dictionary which is referred by the appellant, namely that it is subordinate to something of greater importance or having a minor role, and therefore the interpretation must be that it can be less than the absolute, does not appear to us to be correct. No doubt, the word incidental has been defined as follows: – “Subordinate to something of greater importance; having a minor role”

97. In this case we may notice the definition of the word “incident to employment” in Black’s Law Dictionary wherein it has been defined as follows: – “A risk that is related to or connected with a worker’s job duties.”

98. The words “incident of ownership” itself has been defined as follows: – “Any right of control that may be exercised over a transferred life-insurance policy so that the policy’s proceeds will be included in a decedent’s gross estate for estate-tax purposes. The incidents of ownership include the rights to change the policy’s beneficiaries and to borrow against, assign, and cancel the policy.” (Emphasis supplied)

99. In Stateof Orissaand Another V. M/S. Chakobhai Ghelabhai and Company,7 one of the questions which arose was whether under Section 29 of the Orissa Sales Tax Act, 1947, the State had power to provide for fee on the memorandum of appeals and applications in revision. Section 29 of the said Act inter alia provided for the power to make rules providing for the procedure and other matters including fees incidental to the disposal of appeals and applications for revision and for review under Section 23. While dealing with the scope of the word “incidental”, this Court held as follows: – “The fees imposed are not taxes at all; they come within the expression “other matters (including fees) incidental to the disposal of appeals and applications for revision etc. We are unable to agree with the High Court that the word ‘incidental’ has reference 7 AIR 1961 SC 284 NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] to a matter of casual nature only. The procedure for disposal of an appeal includes as a necessary incidental matter the filing of an appeal on a proper fee.” (Emphasis supplied)

100. In State of Tamil Nadu V. Binny Ltd., Madras,8 the question arose whether the sales of provisions effected by the assessee in a workman store, was assessable to tax under a State law. Section 2(d)(ii) defined business as including any transaction in connection with or incidental or ancillary to the trade, commerce, manufacture, adventure or concern which formed the subject matter of section 2(d)(i). The contention taken by the assessee was that it was necessary that the connection between the sales of the provisions in the store and manufacture of the goods in question must be direct and that direct connection was missing. In other words, the assessee was carrying on manufacture and sale of textiles. It was also running a store in question. The word “business” was defined as including trade and manufacture inter alia in the first limb of Section(2)(d) and also any transaction incidental to such trade and manufacture. This Court took the view that there is no justification in the contention of the assessee. We notice the following exposition: – “It is indeed difficult to see how it can at all be said that the activity of selling provisions to the workmen in the Store was not incidental to the business of manufacture of textiles in the factory. The sales which were effected in the Store were to the workmen employed in the factory where textiles were being manufactured and the provision of this facility to the workmen was certainly incidental to the carrying on the business of manufacture of textiles. This view finds support from the decision of this Court in Royal Talkies, Hyderabad v. Employees State Insurance Corporation where the question was as to whether a canteen maintained by a cinema owner in the premises of the cinema could be said to be incidental to the business of running the cinema. Krishna Iyer, J., speaking on behalf of the court, pointed out that (SCC p.212 : SCC (L&S) p. 505) “a thing is incidental to another if it merely appertains to something else as primary. Surely, such work should 8 1980 Supp SCC 686 not be extraneous or contrary to the purpose of the establishment but need not be integral to it either.” (Emphasis supplied)

101. The proper interpretation in the context of the word “incidental” is not that it is subordinate to an absolute, as it is sought to be made out. In M/s. Shroff and Co. v. Municipal Corpn. of Greater Bombay and Another,9 this Court reiterated the view that the expression incidental means ‘necessary’ in certain contexts which does not mean a matter of causal nature only.

102. In the context of the provision in question, the expression “incidental to” would mean arising out of or otherwise connected with. In other words, the risks and rewards must flow out of ownership. The rewards must be those arising out of ownership. This in fact is central to understanding the concept of a finance lease.

103. An argument is raised that paragraphs 15A to 17 of the Indian Accounting Standards (in IND AS) 17, it becomes evident that finance leases are contemplated in respect of lands. We may notice paragraphs 15A to 17, which read as follows: – “15A. When a lease includes both land and buildings elements, an entity assesses the classification of each element as a finance or an operating lease separately in accordance with paragraphs 7- 13. In determining whether the land element is an operating or a finance lease, an important consideration is that land normally has an indefinite economic life. 16. Whenever necessary in order to classify and account for a lease of land and buildings, the minimum lease payments (including any lump-sum upfront payments) are allocated between the land and the buildings elements in proportion to the relative fair values of the leasehold interests in the land element and buildings element of the lease at the inception of the lease. If the lease payments cannot be allocated reliably between these two elements, the entire lease is classified as a finance lease, unless it is clear that both elements are operating leases, in which case the entire lease is classified as an operating lease. 9 1989 Supp 1 SCC 347 NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] 17. For a lease of land and buildings in which the amount that would initially be recognised for the land element, in accordance with paragraph20, is immaterial, the land and buildings may be treated as a single unit for the purpose of lease classification and classified as a finance of operating lease in accordance with paragraphs 7-13. In such a case, the economic life of the buildings is regarded as the economic life of the entire leased asset.” 104. It is clear that the subject matter of the lease mentioned in paragraphs 15A to 17 is not merely land alone. It contemplates a situation where the lease relates to land and buildings. It is no doubt true that in paragraph 15A it is stated that in determining whether the land element is an operating or finance lease, an important consideration is that the land normally has an indefinite economic life. What is significant is that what the provision contemplates is finding out whether the land element in a composite lease can be treated as a finance lease or as an operating lease. In a lease which has only a land element, the concept of a limited economic life, which is apposite in the context of assets which have a life limited by time and which ordinarily depreciate over time, would not be relevant. We need not deal with the case of the lease of land at the end of which there is a sale. There may be instances of such leases entered into by developmental authorities. It would then turn upon the terms of the lease. 105. The lease in question, is a lease of the plot of land, as already found by us. The underlying asset is the plot of land. Therefore, we cannot treat the subject matter of the lease, as containing both land and building elements. We have already noticed, while dealing with Rule 63(b) that the case of the appellant before the NCLAT, was only that, apart from the land, the right to develop or construct the building, is the underlying asset. It is not the case of the appellant that the buildings, which are to be put up by the lessee, are also the subject matter of the lease. In fact, it is, no doubt, true that the lease actually contemplates that, as regards the build-up area/plot or land, the transfer to the allottee is to be made only by way of a sub-lease. The sub-lease of the land in favour of the apartment owners, is also contemplated under Section 9 of the Uttar Pradesh Apartment Owners Act, 2010. The lease, indeed, does contemplate the execution of a tripartite sub-lease. The form and the format are to be dictated to by the lessor. The sub-lease can be executed subject to the fulfilment of certain conditions, which we have already adverted to. This is, indeed, a case where the lease is of the plot and the interest or the right to enjoy the lease is by way of construction of residential buildings only and the use, both by the lessor and lessee and even the sub-lessee is regulated and circumscribed by the terms of the lease and the sub-lease. Even, according to the appellant, it is the lessee, who is to find out the allottees and to transfer the rights in the building, also the land, only by way of a sub-lease. The consideration for the transfer of apartments is subject to the transfer fee being paid, to be appropriated by the lessee. The lease, therefore, contemplates a sub- lease, whereunder, the rights over the apartments, are regulated. Not unnaturally, therefore, the appellant cannot project the case that the flats/ apartments, would constitute part of the underlying asset. We notice this, as though it was not argued, we did toy with the idea that if the lease is a composite lease of land and building, the Rules made under the IAS, may have to be appreciated differently. However, we need not explore that line of thought any further. 106. The NCLAT has found that while all risks are transferred, the rewards are not transferred, therefore, we need consider only whether this is correct. While we are on the concept of the rewards incidental to ownership, we must record the assistance which was provided by the fairness of Shri Ritin Rai, learned Senior Counsel, who drew our attention to the Clause B53 of IAS 116 which is as follows: – “B53:”The classification of leases for lessors in this Standard is based on the extent to which the lease transfers the risks and rewards incidental toownership of an underlying asset. Risks include the possibilities of losses from idle capacity or technological obsolescence and of variations in return because of changing economic conditions. Rewards may be represented by the expectation of profitable operation over the underlying asset’s economic life and of gain from appreciation in value or realisation of a residual value.” 107. There is reference to ‘idle capacity or technological obsolescence’. In the context of risk, it appears to be irrelevant, in the context of land. Rewards are again predicated with reference to the expectation of profitable operation over the underlying asset’s economic life and the gain from appreciation in value or the realisation of a residual value. The concept of ‘economic life’ in the first place is inapposite in the case of lease of land alone. The residual value is predicated again NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] with the expiry of the term of the lease which is predicated with reference to the end of the lease. In other words, it would be the value of an asset predicated with reference to the end of the useful life of the asset [see in this regard definition of residual value in para 77] at the expiry of the term of the lease. The lease in question contemplates a period of 90 years. The lease is only of the land. 108. We may now turn to the provisions of the lease and the contentions in the context of Section(5)(8)(d). Undoubtedly, the lessee is put in possession of the land. Call it a right or a reward incidental to ownership, possession, or the right to possession has been transferred to the lessee. The lessee is entitled to hold the plot. The lease further proclaims that the lessee shall use the allotted plot for the purpose indicated. Possession being in the context of a lease does not partake of a liberty to not use as would be the case of an owner. In fact, the manner of the use is stipulated. Non-use even entails penalty and even cancellation. In fact, things could not be clearer when Clause 13 under ‘other clauses’ is borne in mind. The said clause unequivocablly declares that the lessor in larger public interest may take back the possession of the land/ building and making payment at the prevailing rate. This, no doubt, is subject to what we will pronounce on its impact on the fate of this case. 109. Next, we may notice whether there is right with the lessee to transfer the leasehold property. In this regard, it is relevant to notice that under the law which is as contained in the Transfer of Property Act, 1882, Section 108, thereof, provides for rights and liabilities of a lessor and lessee. It declares that in the absence of the contract or local usage to the contrary, the lessor and lessee of immovable property would possess rights and be subject to liabilities as provided therein. Section 108(j) reads as follows: – “(j) the lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease: nothing in this clause shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee:” 110. Therefore, in the case of a lease where there is no contract placing restrictions on the right of the lessee, the lessee can transfer absolutely or by way of mortgage or sub lease, the whole or any part of his interest in the property and any transferee of such interest or part may again transfer. This is no doubt subject to the clause which deals with the category of untransferable right of occupancy and the other categories mentioned therein. In this context the lease in question must be probed in order to find out whether there is a contract placing restrictions on the right of the lessee to transfer. As far as an absolute assignment by the lessee,Clause 12 under ‘other clauses’, clearly prohibits any assignment by the lessee. It declares that the lessee shall not be allowed to assign or change his role. The lessee would be liable to be visited with the penalty of cancellation of the lease itself for breach. It further provides that the entire money which the lessee would have deposited would stand forfeited. Therefore, while it may be that this clause is to enable the proper and successful implementation of the objective of the appellant which is tasked with the planned development of the area and the use of the property for the laudable purpose of construction of group housing, it cannot detract from our finding that there is a prohibition on assignment of the right within the meaning of a contract which is contrary under Section 108. Jurisprudentially, a right which is the soul of ownership and which is clearly incidental or arising out of ownership is denied to the lessee, that is, the right to transfer the leasehold right. 111. Undoubtedly, in law, generally the lessee can assign his rights as a lessee which amounts to assignment of his right. A lessee may create a sub-lease. A lessee can also create a mortgage. All of these rights vest with a lessee, subject to a contract to the contrary. In the lease in question what is prohibited in Clause 12 under other clauses is the right to assign his rights as lessee. Any reward which the lessee could have obtained if it wished to absolutely assign its right, is clearly denied by virtue of the provision in the lease which acts as a contract to the contrary. 112. No doubt, the lease deed would show that the subject matter of the lease is Plot No.GH-05/B Sector-137, Noida. It is further shown as measuring 22565.77 Sq. mts. The purpose of the lease is constructing the residential flats. It is no doubt true that under the head ‘transfer of plot’ it is indicated that without obtaining the completion certificate the NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] Lessee will have the right to sub-divide the allotted plot into suitable smaller plots as per the planning norms and to transfer the same to interested parties. This can be done upto 30.09.2010 with prior approval of the appellant-Lessor on payment of transfer charges at the rate of 2% of the allotment rate. However we notice that there is a stipulation that the area of each of the sub-divided plot should not be less than 20,000 sq.mtrs. We have already noticed that the total extent of the lease property is only 22565.77 square mtrs. Thereafter, it is no doubt mentioned that individual flat /plot will be transferrable with prior approval of the Lessor, subject to various conditions which include execution of the lease deed and the sub-lessee undertaking to put the premises for residential use only. Even though there is reference to transfer of plot which is to consist of not less than 20,000 sq.meters with the prior approval of the Lessor, it was to be done before 30.09.2010. It is difficult to conceive how when the total extent is little over 20,000 sq. meter i.e., 22565.77 sq. metres and when the condition for transfer of the plot is that the area of the sub divided plot should not be less than 20,000 sq. meter and the construction has to be completed in the manner provided and yet the transfer in the aforesaid manner is permitted only upto 30.09.2010. The parties contemplated transfer only if there is prior approval of the plot of not less than 20,000 sq. metres before 30.09.2010. At least it is not a case before us that this clause has been invoked or worked. The transfer of the first sale/transfer of a flat/ plot to an allottee is to be done through sub-lease/ lease deed.No doubt, we have already noticed the difference in area in the lease in the connected appeal and the lease which is the subject matter of the sub-leaseprovided before us. 113. As far as the right to mortgage is concerned the lessee is indeed permitted to mortgage the land. However, the mortgage can be effected only with prior permission of the lessor. The right to mortgage which flows as an incident of ownership is one of the bundle of rights which vests with an owner. It is undoubtedly a lesser right and the owner would be possessed of the residual right. However, it is one of the many rights which is incidental to ownership but there is no absolute right to create a mortgage. 114. The requirement of prior permission to create a mortgage would mean that the permission may be forthcoming or it can be denied. If there is a denial of the right to create a mortgage, then it would impliedly mean that to the said extent the right to raise funds for the purpose of financing the investment is impaired. Depending on whether or not the right is permitted actually the rewards incidental to ownership is transferred. In other words, if we were to imagine that the lessee stood in the shoes of an owner of the property, he would be in a position to create a mortgage, raise funds as he chose and deal with the property in the manner, he felt advised to. The clause relating to mortgage, in fact, indicates that the purpose contemplated,is that the mortgage can only be for the purpose of raising loan or for the purpose of financing the lessee’s investment in the project. This in turn is to be on receipt of the payment by the allottee or on receipt of assurance of payment by the bank or under any other suitable arrangement. In this regard, the lease contemplated a mutual settlement amongst the lessor, the developer and the financial institution/bank. It clearly constitutes a foray into the right of a person ‘if an owner’ to deal with the property including the right to create a mortgage. The suitable arrangement in mutual settlement contemplates the lessor giving its consent to the terms of the mortgage. It includes the right of the lessor to prevail upon, in regard to the terms of the mortgage. Its object may be lofty and in keeping with its role as a statutory authority but its impact on the true interpretation of the lease and as to whether it involves transfer of rewards incidental to ownership is another matter. The terms and conditions of the NOC which is contemplated as necessary for mortgaging the land to facilitate housing loans of final purchaserwill be as decided by the lessor. Still further we may notice that under the proviso if there is a sale or a foreclosure of the mortgaged property, the lessor is given the right tosuch percentage of the unearned increase in value as will be decided by the lessor. 115. Moving on to the transfer of the plot having regard to the purpose of the lease it is as follows:- The lease contemplates the lessee is to put up construction of group housing. The lessee is entitled to allot the dwelling units on sub- lease basis to its allottee and shall provide space for facilities which are indicated which include roads, parks, etc. It is further indicated that however transfer/ sub lease shall be governed by the transfer policy of the lessor. No doubt, restrictions are put in regard to how allotment can be made. Allotments can be made only to citizens of India competent to contract. This means that if the law permits (Barring citizens of certain countries, the law does permit citizens of other countries to acquire property in India) the allotment of what is constructed by the lessee by NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] way of group housing to persons who are not citizens and make profits on such transfer, this clause indeed impacts such right and also takes away the profits which it could make thereunder. The lease further indicates that there will be no permission to part transfer of plot. In this regard, it must be noticed that what is permitted under the lease is the creation of a sub-lease of the dwelling units to the allottee. No doubt there would be a sub-lease over the plot as well. The lease goes on to state that the lessee shall not be entitled to complete transaction for sale, transfer, assign or otherwise part with the possession of whole or part of any of the buildings constructed thereon, before making payment in terms of the schedule under the lease. Though it is described as sale, transfer, assignment or otherwise as all of it relates to the building which is constructed on the underlying leased property. We must not lose sight of the fact that the subject matter of the lease is the plot described as plot no. GH-05/B Sec.137, Noida consisting of22565.77 square metres. What is essentially and in reality permitted apparently is the creation of only the sub-lease. Undoubtedly by the lessee the transfer of the built-up area is permitted subject to payment of transfer charges in terms of the policy. The lessor is given an absolute right to reject any application for transfer. The lessee is to pay the transfer charges in terms of the policy which is determined. The transfer of the built-up flats is to be premised on a tripartite sub lease. The terms of such a sub-lease will be dictated to by the lessor. The sub-lease interchangeably is described as sale by the lease. The sale in turn is to be captured in the terms of a sub-lease for it is clear that the lessee is obliged to execute a sub-lease. We have referred to the lease and the terms of a sample sub lease.The sub lessee also can use the premises only for residential purposes. In this case it must be noticed that being a part of the fulfilment of its goal under the act to transfer plots for residential purposes inter alia and the lease in question being one for developing group housing, the lessee can transfer the built-up flats only for residential purposes. The argument of the appellant is that being a necessary corollary of the lease being one to effectuate the appellants duty and being a reasonable restriction, it is undoubtedly the duty of the appellant in the context of the purpose that a regulatory and the restrictive mechanism in question is put in place. As to whether there is a substantial transfer of all the rewards incidental to ownership as an owner or whether the lessee would stand in the shoes of a person resembling an owner is another matter. Were the lessee to enjoy the right as owner, there would be liberty to transfer the premises subject to the law of the land for any purpose. Being limited to only residential purpose indeed robs the lessee of one of the cardinal rights of a person who can be described as an owner. The lease, read as a whole, contemplates the transfer to enjoy/use the leasehold property for the period of 90 years for the purpose limited to the construction of the residential complex only. This is apart from all the concomitant constraints and restrictions which have been put in place to achieve the goal of the appellant in its statutory role. 116. It is no doubt true that the appellants correctly point out that the lessor does not purport to seek any sharing of the consideration which may be received by the lessee from the allottees.In that sense ‘rewards’ are transferred. We have in this regard noticed the qualifications and conditions such as forbidding transfer to non-citizens and the purpose for which the said property can be used.The other aspects, which even limit the rights and therefore, dampen the prospect of profit, have been adverted to. 117. Though the rules under the Uttar Pradesh Ownership of Flat Act, 1975 is referred to in the lease as noticed by us earlier, the Uttar Pradesh Apartments (Promotion of Construction, Ownership and Maintenance) Act, 2010 (hereinafter referred to as ‘the UP 2010 Act’, for short) repealed the 1975 Act. The UP Act 2010 came into force on 21.07.2010. The lease deed, in this case, came to be executed on 30.07.2010. We notice that in the UP 2010 Act, Section 2 provides that the Act applies to all buildings having four or more apartments in any building constructed or converted into apartment and land attached to the apartment whether freehold or held on lease excluding shopping malls and multiplexes. Section 3 defines common areas and facilities as including the land on which the building is located and all easements, rights and appurtenances belonging to the land and building. Section 5(1) declares that every person to whom any apartment is sold or otherwise transferred by the promotor, shall, subject to the provisions of the Act, be entitled to the exclusive ownership and possession of the apartment so sold or otherwise transferred to him. The person, who is entitled to the exclusive ownership and possession of the apartment, is also declared entitled to such percentage of the undivided interest in the common areas and facilities as may be specified in the deed of apartment. The percentage is to have a permanent character and cannot be altered except with a written consent of all the apartment owners. Section 7 reads as follows: NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] “Section 7 – Apartment to be heritable and transferable Each apartment, together with the undivided interest in the common areas and facilities appurtenant to such apartment, shall, for all purposes constitute a heritable and transferable immovable property within the meaning of any law for the time being in force, and accordingly, an apartment owner may transfer his apartment and the percentage of undivided interest in the common areas and facilities appurtenant to such apartment by way of sale, mortgage, lease, gift, exchange or in any other manner whatsoever in the same manner, to the same extent and subject to the same rights, privileges, obligations, liabilities investigations, legal proceedings, remedies and to penalty, forfeiture or punishment as any other immovable property or make a bequest of the same under the law applicable to the transfer and succession of immovable property. Provided that where the allotment, sale or other transfer of any apartment has been made by any group housing cooperative society or association in favour of any member thereof, the transferability of such apartment and all other matters shall be regulated by the law, which may provide a transfer fee at a maximum rate of 2 percent but not less than 1 percent in any case of the sale value, applicable to such group housing cooperative society or association whosoever maintains the common areas and facilities. The transfer fee shall no be leviable in case of heritability.” 118. The most crucial provision is Section 9. It reads as follows: “Section 9 – Right of re-entry (1) Where any land is given on lease by a person (hereafter in this section referred to as the lessor) to another person (hereafter in this section referred to as the lessee, which term shall include a person in whose favour a sublease of such land has been granted), and any building has been constructed on such land by the lessee or by any other person authorised by him or claiming through him, such lessee shall grant in respect of the land as many subleases as there are apartments in such building and shall execute separate deeds of sub lease in respect of such land in favour of each apartment owner before handing over the possession of apartment in such building to him. The lessor shall be duty bound to supply the plans and other legal documents to the lessee. Provided that no sublease in respect of any land shall be granted except on the same terms and conditions on which the lease in respect of the land has been granted by the lessor and no additional terms and conditions shall be imposed by the lessee except with the previous approval of the lessor. (2) Where the lessee has any reason to suspect that there had been any breach of the terms and conditions of the sublease referred to in subsection (1), he may himself inspect the land on which the building containing the concerned apartment has been constructed, or may authorise one or more persons to inspect such land and make a report as to whether there had been any breach of the terms and conditions of any sublease in respect of such land and, if so, the nature and extent of such breach, and for this purpose, it shall be lawful for the lessee or any person authorised by him to enter into, and to be in, the land in relation to which such breach has been or is suspected to have been committed. (3) Where the lessee or any person authorised by him makes an inspection of the land referred to in subsection (1), he shall record in writing his findings on such inspection [a true copy of which shall be furnished to the apartment owner by whom such breach of the terms and conditions of sublease in respect of the land appurtenant to the apartment owned by him has been committed (hereinafter referred to as the defaulting apartment owner)] and where such findings indicate that there had been any breach of the terms and conditions of the sublease in respect of such land, the lessee may, by a notice in writing, require the defaulting apartment owner to refrain from committing any breach of the terms and conditions of the sublease in respect of such land, or to pay in lieu thereof such composition fees as may be specified in the notice in accordance with such scales of composition fees as may be prescribed. (4) The defaulting apartment owner who is aggrieved by any notice served on him by the lessee under subsection (3) may, within thirty days from the date of service of such notice, prefer an appeal to the Court of the District Judge having jurisdiction (hereinafter referred to as the District Court), either challenging the finding of the lessee or any person authorised by him or disputing NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] the amount of composition fees as specified in the notice, and the District Court may, after giving the parties a reasonable opportunity of being heard, confirm, alter or reverse those finding or may confirm, reduce or increase the amount of composition fees or set aside the notice. (5) Where, on the breach of any terms and conditions of any sublease in respect of any land, any composition fees become payable, the defaulting apartment owner shall be deemed to have been guilty of such breach and in default of payment thereof it shall be lawful for the lessee to recover the amount of the composition fees from the defaulting apartment owner as arrears of land revenue. (6) Where any composition fees are paid whether in pursuance of the notice served under subsection (3) or in accordance with the decision of the District Court or a higher court on appeal, no further action shall be taken by the lessee for the breach of the terms and conditions of the sublease in respect of the land in relation to which payment of such composition fees has been realised. (7) If the defaulting apartment owner omits or fails to refrain from committing any breach of the terms and conditions of the sublease in respect of the land or, as the case may be, omits or fails to pay the composition fees in lieu thereof- (i) in accordance with the notice issued by the lessee under subsection (3); or (ii) where the finding of the lessee or the person authorised to inspect the land about any breach of the terms and conditions of any sublease in respect of the land or the amount of composition fees specified in the notice issued by the lessee are altered by the District Court on appeal or by any higher court on further appeal, in accordance with the decision of the District Court or such higher court, as the case may be; the lessee shall be entitled,- (a) where no appeal has been preferred under subsection (4), within sixty days from the date of service of the notice under subsection (3), or (b) where an appeal has been preferred under subsection (4), within sixty days from the date on which the appeal is finally disposed of by the District Court or, where any further appeal is preferred to a higher court, by such higher court, to exercise the right of reentry in respect of the undivided interest of the lessee in the land appurtenant to the apartment owned by the defaulting apartment owner, and where such right of reentry cannot be exercised except by the ejectment of the defaulting apartment owner from his apartment, such right of reentry shall include a right to eject the defaulting apartment owner from the concerned apartment: Provided that no such ejectment shall be made unless the defaulting apartment owner has been paid by the lessee such amount as compensation for such ejectment as may be determined in accordance with the prescribed scales of compensation. (8) No appeal preferred under subsection (4) shall be admitted, unless twentyfive per cent of the composition fees specified in the notice served on the defaulting apartment owner has been deposited to the credit of the District Court in savings bank account to be opened by the District Court in any branch of an approved bank: Provided that the District Court may, on sufficient cause being shown, either remit or reduce the amount of such deposit, and the interest accruing on such deposit, shall ensure to the credit of defaulting apartment owner by whom such deposit has been made: Provided further that the amount of such deposit together with the interest due thereon shall be distributed by the District Court in accordance with the decision in such appeal, or where any further appeal has been preferred against such decision, in accordance with the decision in such further appeal. (9) The defaulting apartment owner, who is aggrieved by the amount offered to be paid to him under the proviso to subsection (7) as compensation for ejectment from his apartment may, within thirty days from the date of such offer, prefer an appeal to the District Court and the District Court may, after giving the parties a reasonable opportunity of being heard, maintain, increase or reduce the amount of compensation. NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] (10) On the ejectment of the defaulting apartment owner from the apartment under subsection (7), the lessee by whom such ejectment has been made may make a fresh allotment of the concerned apartment to any other person on such terms and conditions as he may think fit. (11) Where any lessee omits or fails to take any action either in accordance with the provisions of subsection (2) or subsection (3) or subsection (7) the lessor may, in the first instance, require the lessee by a notice in writing to take action against the defaulting apartment owner under subsection (2) or subsection (3) or, as the case may be, under subsection (7), within a period of ninety days from the date of service of such notice, and in the event of the omission or failure of the lessee to do so within such period, the lessor may himself take action as contained in subsection (2) or subsection (3) or subsection (7), and the provisions of subsection (4) to subsection (6) and subsection (8) to subsection (10), shall, as far as may apply to any action taken by him as if such action had been taken by the lessee. (12) For the removal of doubts, it is hereby declared that no work in any apartment by the owner thereof shall be deemed to be a breach of the terms of the sublease in respect of the land on which the building containing such apartment has been constructed unless the work is prohibited by subsection (2) of section 6.” (Emphasis supplied) 119. Section 5 contemplates a sale or transfer otherwise of an apartment by the promoter. Then subject to the other provisions of the Act, the buyer or transferee becomes entitled to exclusive ownership and possession. He becomes entitled to a percentage of the undivided interest in the common areas. Section 8 is a provision which conditions ownership based on amounts remaining to be paid. Still further Section 9 is another provision which conditions Section 5. 120. The mere fact that Section 7 declares that each apartment, together with the undivided interest in common areas, is to be heritable and transferable, would not amount to creating a freehold right over the land, which is the subject matter of the sub-lease, in favour of the apartment owner, under Section 9 of the UP Act of 2010. In other words, no enlargement of the rights of the sub-lessee into that of a freehold owner of the land is contemplated. The mere fact that an undivided interest in the common area, is created including the land (the definition of ‘common area’ includes land) and is made heritable and transferable, would only mean that the specific right, which the sub-lessee (apartment owner) has under the sub-lease executed within meaning of Section 9, both over the land and the apartment, will be heritable and transferable. In fact, Section 10 of the UP Act of 2010 provides for a declaration to be given by a promotor containing, inter alia, the statement as to whether, land is freehold or leasehold. No doubt, the effect of Section 7 of the UP Act is that the proviso in Section 7 does contemplate that in the case of any allotment, sale or other transfer made by any group housing cooperative society or association, the transferability of the apartment and all other matters, will be as regulated by the law and it may include the transfer fee at the maximum rate of two per cent. Section 7, no doubt, permits the apartment owner the right to transfer the apartment with the common area including the right in the land by way of sale, mortgage, lease, gift, in the same manner and to the same extent and subject to the same rights, privileges, obligations and liabilities, inter alia, under the law applicable to the transfer and succession of an immovable property. Also since Section 9 contemplates sub-lease over the land, there cannot be claims of enlargement overthe same vide either Section 5 or Section 7. The case of sale if it relates to landin the balance sheet projected by the appellant represented by Ms. Madhavi Divan cannot but be rejected. 121. We have noticed that the lessee has no power to cancel the lease. However, cancellation of lease deed under various contingencies is permitted to the lessor. They include allotment obtained through misrepresentation/ suppression of material facts inter alia violation of directions issued or rules and the regulations framed by the lessee or any other statutory authority, default on the part of the lessee on the terms and conditions of registration/ allotment lease. The provisions provide for the extent to which the premium can be forfeited in the event of cancellation among the other clauses. This is apart from the earlier reference to the power to cancel in specified contingencies. It is relevant to notice that the lessor is clothed with an absolute power to make additions/ alterations or modifications in the terms of the lease deed inter alia apart from the sub lease. One clause which we have already noticed is Clause 13 falling in other clauses. It empowers the lessor to take back possession of the land/ building. The only limitation is NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] that larger public interest must justify such taking back of the possession. It also must be attended/ accompanied by the lessor becoming liable to only make the payment at what is described as the ‘prevailing rate.’ It is clear that it is incompatible with the lessee enjoying rights/rewards incidental to ownership. The only requirement then being what the lessor perceives as larger public interest, the overriding power constitutes a shadow over the rights of the lessee which is clearly incompatible with the rights and therefore even rewards which would follow the normal exercise of rights as an owner. The right to possession and the rewards associated with it can be extinguished upon the lessor invoking the said power. Therefore, we would find on the whole that the appellant is not the financial lessor under section 5(8)(d) of the IBC. No doubt we would observe that we have arrived at the findings based on the prevailing statutory regime. Needless to say there is always power to amend the provisions which essentially consist of the Indian Accounting Standards in the absence of any rules prescribed under Section 5(8)(d) of the IBC by the Central Government. THE CASE UNDER SECTION 5(8)(f) 122. Section 5(8) defines ‘financial debt’ as meaning ‘a debt along with interest, if any, which is disbursed against the consideration of time value of money’. Thereafter, Clauses (a) to (i) deal with transactions which are included as financial debt. It is, thereafter, that Clause (f) provides that a financial debt includes any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing. To further simplify the concept, in Section 5(8)(f), we may eclipse the words ‘includes any forward sale or purchase agreement’, and then, the provision would read as ‘any amount raised any other transaction having commercial effect of a borrowing’. The word ‘transaction’ has been defined in Section 2(33) to include ‘an agreement or arrangement in writing for the transfer of an asset, or funds, goods or services from or to the corporate debtor. At this very juncture, we may notice that ‘operational debt’ has been defined in Section 5(21), which means ‘a claim in respect of provision of goods or services including employment’. Operational debt also means a debt in respect of payment of dues arising under any law for the time being in force and payable to any Local Authority, inter alia. ‘Operational creditor’ is defined in Section 2(20) as meaning ‘a person to whom operational debt is owed and includes any person to whom such debt has been legally assigned or transferred’. 123. ‘Transaction’, as defined in Section 3(33), would, undoubtedly, include an agreement or arrangement in writing or the transfer of funds. The transfer of funds may take place from a corporate debtor. A transfer can also take place when there is transfer of funds to the debtor. A transfer may include a transfer of assets in writing again from or to the corporate debtor. The definition of the word ‘debt’ in Section 3(11) is intertwined with the definition of the word ‘claim’ in Section 3(6). The impact of these provisions has been considered by this Court in Pioneer Urban Land and Infrastructure Limited and Another v. Union of India and Others10. It may be profitable to advert to the same. “68. Thus, in order to be a “debt”, there ought to be a liability or obligation in respect of a “claim” which is due from any person. “Claim” then means either a right to payment or a right to payment arising out of breach of contract, and this claim can be made whether or not such right to payment is reduced to judgment. Then comes “default”, which in turn refers to non-payment of debt when whole or any part of the debt has become due and payable and is not paid by the corporate debtor. The learned counsel for the petitioners relied upon the judgment in Union of India v. Raman Iron Foundry [Union of India v. Raman Iron Foundry, (1974) 2 SCC 231], and, in particular relied strongly upon the sentence reading: (SCC p. 243, para 11) “11. … Now the law is well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a court or other adjudicatory authority.” 69. It is precisely to do away with judgments such as Raman Iron Foundry [Union of India v. Raman Iron Foundry, (1974) 2 SCC 231] that “claim” is defined to mean a right to payment or a right to remedy for breach of contract whether or not such right is reduced to judgment. What is clear, therefore, is that a debt is a liability or obligation in respect of a right to payment, even if it arises out of breach of contract, which is due from any person, notwithstanding that there is no adjudication of the said breach, followed by a judgment or decree or order. The expression “payment” is again an expression which is elastic enough to include 10 (2019) 8 SCC 416 NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] “recompense”, and includes repayment. For this purpose, see H.P. Housing & Urban Development Authority v. Ranjit Singh Rana [H.P. Housing & Urban Development Authority v. Ranjit Singh Rana, (2012) 4 SCC 505 : (2012) 2 SCC (Civ) 639] (at paras 13 and 14 therein), where Webster’s Comprehensive Dictionary (International Edn.), Vol. 2 and Law Lexicon by P. Ramanatha Aiyar (2nd Edn., Reprint) are quoted.” 124. The question, which fell for consideration in Pioneer(supra) was whether a homebuyer, who made advances to the real estate developer, utilising which, the real estate developer puts up the project and what the homebuyer got in return or was expected to get in return was a developed flat or an apartment, would be covered as a financial creditor. It would be apposite to refer to the following observations: “75. And now to the precise language of Section 5(8)(f). First and foremost, the sub-clause does appear to be a residuary provision which is “catch all” in nature. This is clear from the words “any amount” and “any other transaction” which means that amounts that are “raised” under “transactions” not covered by any of the other clauses, would amount to a financial debt if they had the commercial effect of a borrowing. The expression “transaction” is defined by Section 3(33) of the Code as follows: 3. (33) ”transaction” includes an agreement or arrangement in writing for the transfer of assets, or funds, goods or services, from or to the corporate debtor; As correctly argued by the learned Additional Solicitor General, the expression “any other transaction” would include an arrangement in writing for the transfer of funds to the corporate debtor and would thus clearly include the kind of financing arrangement by allottees to real estate developers when they pay instalments at various stages of construction, so that they themselves then fund the project either partially or completely. 76. Sub-clause (f) Section 5(8) thus read 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. We were referred to Collins English Dictionary & Thesaurus (2nd Edn., 2000) for the meaning of the expression “borrow” and the meaning of the expression “commercial”. They are set out hereinbelow: “borrow.—vb 1. to obtain or receive (something, such as money) on loan for temporary use, intending to give it, or something equivalent back to the lender. 2. to adopt (ideas, words, etc.) from another source; appropriate. 3. Not standard. to lend. 4. (intr) Golf. To putt the ball uphill of the direct path to the hole: make sure you borrow enough.” “commercial.—adj. 1. of or engaged in commerce. 2. sponsored or paid for by an advertiser: commercial television. 3. having profit as the main aim: commercial music. 4. (of chemicals, etc.) unrefined and produced in bulk for use in industry. 5. a commercially sponsored advertisement on radio or television.”” 125. In the said example, therefore, the homebuyer, by providing amounts to the real estate developer, was found to be entitled to be treated as a financial creditor on the basis that the real estate developer must be treated as having raised money under the transaction in question. In other words, it was a case of a transaction by reason of the fact that there was transfer of funds to the corporate debtor. The transfer of funds was in the form of the advance payments and the installments payable by the homebuyer under the agreement to the developer. Thus, this Court concluded that it must be treated as a case falling under Section 5(8)(f), even without the aid of the Explanation added by an amendment, which was challenged in the said case. The real estate developer, in other words, raised amounts within the meaning of Section 5(8)(f) under the transfer of funds by the homebuyer to the developer and it was found to possess a commercial effect. In this regard, the discussion is as follows: “77. A perusal of these definitions would show that even though the petitioners may be right in stating that a “borrowing” is a loan of money for temporary use, they are not necessarily right in stating that the transaction must culminate in money being given back to the lender. The expression “borrow” is wide enough to include an advance given by the homebuyers to a real estate developer for “temporary use” i.e. for use in the construction project so long as it is intended by the agreement to give “something NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] equivalent” to money back to the homebuyers. The “something equivalent” in these matters is obviously the flat/apartment. Also of importance is the expression “commercial effect”. “Commercial” would generally involve transactions having profit as their main aim. Piecing the threads together, therefore, so long as an amount is “raised” under a real estate agreement, which is done with profit as the main aim, such amount would be subsumed within Section 5(8)(f) as the sale agreement between developer and home buyer would have the “commercial effect” of a borrowing, in that, money is paid in advance for temporary use so that a flat/apartment is given back to the lender. Both parties have “commercial” interests in the same—the real estate developer seeking to make a profit on the sale of the apartment, and the flat/ apartment purchaser profiting by the sale of the apartment. Thus construed, there can be no difficulty in stating that the amounts raised from allottees under real estate projects would, in fact, be subsumed within Section 5(8)(f) even without adverting to the Explanation introduced by the Amendment Act.” 126. It is, therefore, the appellants case that if the home buyer could be treated as covered under Section 5(8)(f), and therefore, a financial creditor, the appellant also should be treated as a financial creditor under the lease. Instead of approaching a bank or a financial institution, the lessee is facilitated to pay the consideration for the lease in the following manner: The lessee would pay ten percent of the total premium upfront. The balance of the premium is to be paid in sixteen half-yearly installments with interest falling due after the expiry of the period of moratorium, which consisted of two years from the date of the commencement of the lease. During the moratorium, the lessee, would, no doubt, have to pay the lease amount and the interest which is not to be confused with the premium. In other words, the lease contemplated payment of the named sum of premium and also lease rent. The rent could be paid on an annual basis or it could be paid at one go as provided in the agreement. There was, thus, amount raised by the lessee in the manner in that, while no amount was paid or disbursed in the conventional sense by the appellant-lessor to the lessee, by permitting the lessee under the lease to effect the payments due from it under the lease after the moratorium was over in a staggered manner, viz., by payment of sixteen half-yearly installments with interest, it had the effect of raising of funds in the sense that it operated as a tool for raising finance. The expression ‘raising funds’ employed in Section 5(8)(f), it is the case of the appellant, must receive an expansive interpretation. In the modern world myriad manifestations not to be pigeonholed to any set or finite number of transactions, may be contemplated. The legislative intention is to provide a catch-all or residuary provision. It is emphasised, in this context, before us that the Court must adopt a purposive interpretation. The concept of a financial creditor is that of a person who is not merely interested in recovery of the money, which perhaps characterises an operational creditor. The appellant, being an Authority under the UPIAD Act, charged with the duty of developing the land for various purposes, including residential purposes, has a long-term perspective and interest in the lease property like a conventional financial creditor who would do deep and due diligence and undertake careful and elaborate study before entering into a transaction. The appellant also has a binding stake or interest in the transaction. What is involved is public money. The land, which is subject matter of the lease, came to vest with the appellant on the strength of acquisition of land after payment of huge amounts as compensation. The said amount would represent the cost of the land. It is such land, which is the subject matter of the lease. When the appellants have such an interest, as described earlier, excluding the appellant from the decision-making process itself by not including it in the Committee of Creditors, is described as illegal and a manifest absurdity. 127. Per contra, apart from pointing out that this Court is being asked to overturn the concurrent findings rendered by the NCLT and NCLAT, the prevarication in the stand of the appellant is emphasised. Apart from the fact that originally appellant claimed as operational creditor in Form B and filed the Form-C later, declaring it as a financial creditor, it is pointed out that the appellant has attempted to shift its stand at different stages. Initially, the stand was that appellant fell under Section 5(8)(d) on the basis that what was involved was a finance lease. Finding itself unable to fulfil the requirement of being a financial lessor before the NCLAT, the focus shifted to Section 5(8)(f). Since, the case was initially set up under Section 5(8)(d), the case of the appellant involved NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] reliance being placed on a specific provision, and simultaneously, on a general provision. In other words, resort to Section 5(8)(d) would preclude invoking of Section 5(8)(f). It is pointed out that there is no disbursement under the lease deed. With reference to the Judgment of this Court in Anuj Jain, Interim Resolution Professional forJaypee Infratech Limited v. Axis Bank Limited and Others11, it is contended that there is no disbursement by the appellant, an indispensable element under the main provisions of Section 5(8) without which the appellant could not rely upon Section 5(8)(f).On facts, it is pointed out that the treatment given to the appellant under the Resolution Plan dated 30.10.2019, is better than that of a financial creditor, i.e., forty-one percent of the amount claimed. 128. In the context of the Explanation to Section 5(8)(f), inter alia, by which, homebuyers were expressly brought within the scope of Section 5(8)(f), this Court in Pioneer (supra), inter alia, laid down as follows: “70. The definition of “financial debt” in Section 5(8) then goes on to state that a “debt” must be “disbursed” against the consideration for time value of money. “Disbursement” is defined in Black’s Law Dictionary (10th Edn.) to mean: “1. The act of paying out money, commonly from a fund or in settlement of a debt or account payable. 2. The money so paid; an amount of money given for a particular purpose.” 71. In the present context, it is clear that the expression “disburse” would refer to the payment of instalments by the allottee to the real estate developer for the particular purpose of funding the real estate project in which the allottee is to be allotted a flat/ apartment. The expression “disbursed” refers to money which has been paid against consideration for the “time value of money”. In short, the “disbursal” must be money and must be against consideration for the “time value of money”, meaning thereby, the fact that such money is now no longer with the lender, but is with the borrower, who then utilises the money. Thus far, it is clear that an allottee “disburses” money in the form of advance payments made towards construction of the real estate project. We were shown the Dictionary of Banking Terms (2nd Edn.) 11 (2020) 8 SCC 401 by Thomas P. Fitch in which “time value for money” was defined thus: “present value: today’s value of a payment or a stream of payment amount due and payable at some specified future date, discounted by a compound interest rate of discount rate. Also called the time value of money. Today’s value of a stream of cash flows is worth less than the sum of the cash flows to be received or saved over time. Present value accounting is widely used in discounted cash flow analysis.” (Emphasis supplied) That this is against consideration for the time value of money is also clear as the money that is “disbursed” is no longer with the allottee, but, as has just been stated, is with the real estate developer who is legally obliged to give money’s equivalent back to the allottee, having used it in the construction of the project, and being at a discounted value so far as the allottee is concerned (in the sense of the allottee having to pay less by way of instalments than he would if he were to pay for the ultimate price of the flat/ apartment). 72. Shri Krishnan Venugopal took us to ACT Borrower’s Guide to the LMA’s Investment Grade Agreements by Slaughter and May (5th Edn., 2017). In this book “financial indebtedness” is defined thus: “Definition of Financial Indebtedness (Investment Grade Agreements) “Financial indebtedness” means any indebtedness for or in respect of: (a) moneys borrowed; (b) any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with GAAP, be NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] treated as a balance sheet liability [(other than any liability in respect of a lease or hire purchase contract which would, in accordance with GAAP in force [prior to 1-1-2019]/[prior to []]/[] have been treated as an operating lease)]; (e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); (f) any amount raised under any other transaction (including any forward sale or purchase agreement) of a type not referred to in any other paragraph of this definition having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price [and, when calculating the value of any derivative transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that derivative transaction, that amount) shall be taken into account]; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and (i) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in Paras (a) to (h) above.” 73. When compared with Section 5(8), it is clear that Section 5(8) seems to owe its genesis to the definition of “financial indebtedness” that is contained for the purposes of investment grade agreements. Shri Venugopal argued that even insofar as derivative transactions are concerned, it is clear that money alone is given against consideration for time value of money and a transaction which is a pure sale agreement between “borrowers” and “lender” cannot possibly be said to fit within any of the categories mentioned in Section 5(8). He relied strongly on the passage in Slaughter and May’s book which is extracted hereinbelow: “Any amount raised having the “commercial effect of a borrowing” A wide range of transactions can be caught by Para (f), including for example forward purchases and sales of currency and repo agreements. Conditional and credit sale arrangements could also be covered here as could certain redeemable shares. The precise scope of this limb can be uncertain. Ideally, from the borrower’s perspective, if there are additional categories of debt which should be included in “financial indebtedness”, these should be described specifically and this catch-all paragraph, deleted. A few strong borrowers do achieve that position. Most, however are required to accept the “catch all” and will therefore need to consider which of their liabilities might be caught by it, and whether specific exclusions might be required.” We have already referred to paragraphs 75 and 76 above and hence do not refer to it. 129. It is thereafter, while dealing with the impact of the employment of the word ‘means’ followed by certain words and finally followed by the word ‘includes’, be found in Section 5(8), this Court in Pioneer(supra), inter alia, held as follows: “82. This statement of the law, as can be seen from the quotation hereinabove, is without citation of any authority. In fact, in Jagir Singh v. State of Bihar [Jagir Singh v. State of Bihar, (1976) 2 SCC 942 : 1976 SCC (Tax) 204] , SCC paras 11 and 19 to 21 and Mahalakshmi Oil Mills v. State of A.P. [Mahalakshmi Oil Mills v. State of A.P., (1989) 1 SCC 164 : 1989 SCC (Tax) 56] , SCC paras 8 and 11 (which has been cited in P. Kasilingam [P. Kasilingam v. PSG College of Technology, 1995 Supp (2) SCC 348] ), this Court set out definition sections where the expression “means” was followed by some words, after which came the expression “and includes” followed by other words, just as in Krishi Utpadan Mandi Samiti case [Krishi Utpadan Mandi Samiti v. Shankar Industries, 1993 Supp (3) SCC 361 (2)] . In two other recent judgments, Bharat Coop. Bank (Mumbai) Ltd. v. Employees Union [Bharat Coop. Bank (Mumbai) Ltd. v. Employees Union, (2007) 4 SCC 685 : (2007) 2 SCC (L&S) 82], SCC paras 12 and 23 and State of W.B. v. Associated Contractors [State of W.B. v. Associated Contractors, (2015) 1 SCC 32 : (2015) 1 SCC (Civ) 1] , SCC para 14, this Court has held that wherever the expression “means” is followed by the expression “and includes” whether with or without additional words separating “means” from “includes”, these expressions indicate NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] that the definition provision is exhaustive as a matter of statutory interpretation. It has also been held that the expression “and includes” is an expression which extends the definition contained in words which follow the expression “means”. From this discussion, two things follow. Krishi Utpadan Mandi Samiti [Krishi Utpadan Mandi Samiti v. Shankar Industries, 1993 Supp (3) SCC 361 (2)] cannot be said to be good law insofar as its exposition on “means” and “includes” is concerned, as it ignores earlier precedents of larger and coordinate Benches and is out of sync with later decisions on the same point. Equally, Dr Singhvi’s argument that clauses (a) to (i) of Section 5(8) of the Code must all necessarily reflect the fact that a financial debt can only be a debt which is disbursed against the consideration for the time value of money, and which permeates clauses (a) to (i), cannot be accepted as a matter of statutory interpretation, as the expression “and includes” speaks of subject-matters which may not necessarily be reflected in the main part of the definition.” 130. It is, therefore, the case of the appellant that it is not the law that in order that a creditor is found entitled to be treated as a financial creditor under any of the inclusionary clauses, he must also satisfy the requirements in the main provision. In other words, the concept of disbursement of the debt to be found in Section 5(8), is not to be rigorously insisted upon in appreciating the scope of Section5(8)(f). 131. The stand of the respondents, on the other hand, is the decision of this Court in Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited v. Axis Bank Limited and Others12, wherein a Bench of two learned Judges of this Court, inter alia, held as follows: “46. Applying the aforementioned fundamental principles to the definition occurring in Section 5(8) of the Code, we have not an iota of doubt that for a debt to become “financial debt” for the purpose of Part II of the Code, the basic elements are that it ought to be a disbursal against the consideration for time value of money. It may include any of the methods for raising money or incurring liability by the modes prescribed in clauses (a) to (f) of Section 5(8); it may also include any derivative transaction or counter-indemnity obligation as per clauses (g) and (h) of Section 5(8); and it may also be the amount of any liability in respect of 12 (2020) 8 SCC 401 any of the guarantee or indemnity for any of the items referred to in clauses (a) to (h). The requirement of existence of a debt, which is disbursed against the consideration for the time value of money, in our view, remains an essential part even in respect of any of the transactions/dealings stated in clauses (a) to (i) of Section 5(8), even if it is not necessarily stated therein. In any case, the definition, by its very frame, cannot be read so expansive, rather infinitely wide, that the root requirements of “disbursement” against “the consideration for the time value of money” could be forsaken in the manner that any transaction could stand alone to become a financial debt. In other words, any of the transactions stated in the said clauses (a) to (i) of Section 5(8) would be falling within the ambit of “financial debt” only if it carries the essential elements stated in the principal clause or at least has the features which could be traced to such essential elements in the principal clause. In yet other words, the essential element of disbursal, and that too against the consideration for time value of money, needs to be found in the genesis of any debt before it may be treated as “financial debt” within the meaning of Section 5(8) of the Code. This debt may be of any nature but a part of it is always required to be carrying, or corresponding to, or at least having some traces of disbursal against consideration for the time value of money.” 132. Under Section 5(8)(f), the words used, inter alia, are ‘any amount raised under any other transaction’. In our quest for similar words, namely, any amount raised, we discover that similar words are used namely ‘any amount raised’ specifically in clauses 5(8)(b) and 5(8)(c). We may notice that, in fact, Section 5(8)(a) specifically deals with money borrowed against the payment of interest. We have already found that under the main provision an interest free loan has been held by this Court to entitle the unpaid creditor to describe himself as a financial creditor. The words ‘any amount raised pursuing to any note purchase facility or issue of bonds, notes, debentures, loans stocks’ are followed by the words or by any similar instrument. Since, Part II of the IBC deals with resolution and liquidation for corporate persons and the definition of financial debt is found in Section 5(8) falling under Part II, we may bear in mind that Section 3(8) defines corporate debtor as a corporate person who owes a debt to any person. The word corporate person has in turn been defined under Section 3(7) as a company under the Companies Act as defined in Section 2(20) of the Companies Act, NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] 2013, a limited liability partnership as defined in the Limited Liability Partnership Act, 2008 or any other person incorporated with limited liability but under any law for the time being in force but will not include any financial service provider. In fact, a perusal of Part III of IBC which deals with Insolvency Resolution for individuals and partnership firms will show that it does not contain the concept of financial debt as indicated in Section 5(8). Section 5(8)(c) comprehensively refers to raising of any amount based on note purchase facility, issue of bonds, notes, debentures, loan stock or any similar instrument. Thus, what is contemplated is ordinarily the corporate debtor raises funds by issuing bonds, notes, debentures or loan stock which are well known instruments usually used by corporate bodies to generate funds for its needs. These instruments are ordinarily transferable. It is after enumeration of such instruments specifically that the words ‘similar instrument’ are employed. The expression ‘similar instrument’ came to be considered by this Court in the decision reported in State of Orissa v. State of A.P.13. Therein the question related to the jurisdiction of the Supreme Court under Article 131 of the Constitution. The proviso to Article 131 operates to oust the jurisdiction of this Court. It reads as follows: “Provided that the said jurisdiction shall not extend to a dispute arising out of any treaty, agreement, covenant, engagement, sanador other similar instrument which, having been entered into or executed before the commencement of this Constitution, continues in operation after such commencement, or which provides that the said jurisdiction shall not extend to such a dispute.” (Emphasis supplied) In the context of the said provision, we notice the following discussion. “15. The word “or” indicates that the succeeding phrase “other similar instrument” is to be read disjunctively. At the same time the word “similar” means that the instrument must be of the same nature as those preceding. An instrument, to fall within this phrase would, in the context, have to be a formal writing by which a right or liability, is or purports to be, created, transferred, limited, extended, extinguished, or recorded. Thus a document 13 (2006) 9 SCC 591 acknowledging title in a third person has been held to be an instrument in Biswambhar Singh v. State of Orissa [1954 SCR 842 : AIR 1954 SC 139] .” (Emphasis supplied) 133. We need not further explore the scope of the said clause 5(8)(c) except to notice that the word similar instrument would indicate instruments similar to the instruments which are specifically enumerated. It is unnecessary for us to expound the different types of instruments which answer the description of similar instruments and we need only notice that the golden thread that runs through the specific instruments is that they all contain an acknowledgement of debt. They are debt instruments ordinarily issued by corporate bodies. They also are transferable in the market and the holder can indeed bring an action on the same even if he is not the person who has made the initial disbursement of funds to the corporate debtor. A glance at another immediate neighbour which is the immediate predecessor of Section 5(8)(f), throws some light on the mind of the Law-Giver. Section 5(8)(e) deals with receivables sold or discounted other than any receivable sold on non-recourse basis. It will be noted that the receivables are treated as current assets. Ordinarily, they represent the value of goods or services for which the creditor can expect payment within a short time, ordinarily,during the balance period of the financial year. If it were mere receivables, then it would rightly belong to the fold of an operational debt as such debt includes a claim in respect of the provision of goods or services including employment. However, what legitimises its presence as a financial debt is the sale or assignment of the receivables or its discounting. In other words, when amounts are due to the seller of goods or services which represent receivables in his accounts, should he need payment immediately, it is open to such a creditor to assign the right to recover the amount to a third party. The third party can recover it from the debtor.He can also have recourse from the assignor of the receivables. When there is a non-recourse clause, it is taken outside the category of financial debt. It is also after providing explicitly for raising of funds under clause (b) which deals with acceptance of or under any acceptance credit facility and through the issuance of various instruments and further providing for a residuary clause through the medium of similar instruments in Section 5(8)(c), seemingly exhaustive transactions, and further including the category of financial debt in section 5(8)(e) that the legislature has thought it fit to provide for the catch-all or residuary provision in section NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] 5(8)(f). In section 5(8)(g), the legislature has included any derivative transaction entered into or in connection with protection against or benefit from fluctuation in any rate or price as also a financial debt. Derivative transactions are essentially instruments which involve the deriving of the value of the instrument with respect to and in relation to an underlying asset. It could be a commodity or a shareor any other asset having a value.Ordinarily derivatives comprehend within its scope forward contracts, futures, options and swaps and an instance of a swap would be an interest rate swap (IRS). The derivative market is a gigantic financial market. They also share the quality of marketability not unlike instruments which are specifically dealt with in Section 5(8)(c). While on any derivative transaction, a derivative transaction is ordinarily intended to hedge risk. This means it is intended to potentially protect the person from the ill-effects of the fluctuation in the price or the rate of an underlying asset. A resort is also made to derivatives as a matter of speculation in which case it partakes of a benefit. The words used in Section 5(8)(g) appear to suggest that the law giver has contemplated any derivative transaction, in connection with the protection of the benefit from fluctuation in the rate or price. There appears to be an intricate and complex web of transactions which can take place under a derivative transaction. The important aspect is, however, a debt in the context of its mention as a financial debt. 134. While there may be again a brooding omnipresence of a disbursement at some level as between the parties very often in such transactions referred to as counter parties, there may not be a disbursement. It is clear that the law-giver has provided for calculation purposes, the market value of the transaction for determining the value of the derivative transaction. We are making these observations only to indicate that the device of the definition of the clause which employs the word ‘means’, followed by certain elements, and thereafter, ending with an inclusionary clause, providing for various distinct categories would indicate that for invoking the specified categories, there may not be a need for the presence of all the elements included in the main provision. 135. However, this is different from holding that the conditions in section 5(8)(f) would stand fulfilled even without a person falling within its four walls by satisfying even the requirements indicatedtherein. In other words, as we have indicated the raising of any amount under any other transaction having the commercial effect of a borrowing is indispensable to apply Section 5(8)(f). 136. The contention of the appellant on the one hand is that the terms of the lease under which as far as it provides for a moratorium for two years after the initial upfront payment and facility of payment of the balance amount of the premium with interest and spread over 16 half- yearly instalments, amounts to raising funds by the lessee from the appellant and it has the commercial effect of a borrowing from the perspective of the lessee. This is to counter the case of the respondents that having regard to itsposition as a statutory authority and a public authority under the UPIAD, the transaction does not have the commercial effect of borrowing. In other words, the case of the respondent is being indispensable requirement under Section 5(8)(f) that the amount raised under any other transaction referred to must have a commercial effect of a borrowing, it would bring in its train a profit motive which is incompatible with the position of the appellant as a public authority charged with the sublime duty it claims of planned development of the area. Shri Madhavi diwan would apparently point out along with the learned solicitor general that from the point of view of the lessee, there is a commercial effect. She also submits that the appellant hasalso charged interest. 137. We have already noticed the view expressed by this Court in Pioneer (supra). The view propounded is that the presence of profit as the main aim is essential for the commercial effect of a borrowing. This Court found that both the real estate developer and the homebuyer are actuated by profit motive as underlying the transaction. 138. We are of the view that in the facts of the appeals before us, we are unable to hold that the lessee has raised any amounts from the appellant. The question, therefore,of considering the last limb of Section 5(8)(f), namely, whether it has commercial effect of a borrowing could not arise. But we can safely say that the obligation incurred by the lessee to pay the rental and the premium cannot be treated as an amount raised by the lessee from the appellant. It may be noticed that it is reasonably possible to find that the lessee has raised this amount which it had to pay to the appellant from some other sources. The reliance on the concept of ‘a tool of raising finance’canvassed by the appellants would be carrying things too far and to allow them to invoke it carries with-it far-reaching implications and bears dangerous portent for the purpose of Section 5(8)(f). We would think that the concept of disbursement as present in the main provision appears to be mandatory in Section 5(8)(f). The purport of Section 5(8)(f) is to provide for an exhaustive catch-all provision. NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] 139. One of the contentions raised on behalf of the respondent that, since the Law Giver has referred to lease in Section 5(8)(d) of the IBC and defined ‘financial lease’, as limited only to finance lease and capital lease, deemed, as such, under the Indian Accounting Standards, no recourse can be made by the appellants to Section 5(8)(f), which is a residuary provision. On the other hand, the appellant, while agreeing that all cases of financial or capital lease, covered by Section 5(8)(d), cannot be considered under Section 5(8)(f) contends thatthere can be no embargo on the Court, considering whether, in the lease in question, any amount is raised, having the commercial effect of a borrowing. The case of the respondent can be understood differently by applying the principle that, when there is a special provision, no light must be allowed to emanate from the general provision. Another allied issue, which, at this juncture, we must address is, whether the words, ‘any amount raised under any other transaction, in Section 5(8)(f), would involve attributing the presence of a transaction on the preceding provisions of Section 5(8). To put it differently, the use of the word, ‘any other’, before the word, ‘transaction’, would involve the presumption that the preceding sub-clauses of Section 5(8), embodied specific transactions. Going by the wide definition of the word ‘transaction’ in Section 2(33), we find that there is merit in the argument of the appellant. Section 5(8)(a) to Section 5(8)(e) proceed on the basis that there is a transaction, as conceived by the Law Giver. As far as the contention that, since the words, ‘lease or hire-purchase contract’, is specifically confined to, what is deemed as finance or capital lease, falling under the Indian Accounting Standards, and, therefore, any liability under such a lease, is not falling under Section 5(8)(f). 140. It is, no doubt, true that in Section 2(33), a transaction can be an arrangement in writing, under which, there is transfer of assets, funds, goods and services, from or to the corporate debtor. A perusal of the terms of lease contemplate that the appellant must not make available financial facility to the lessee. The appellant has, admittedly, not made available any loan to the lessee. No advance payment is made by the appellant. It is for the lessee to fund the project and make the payment from its own sources. It is entirely for the lessee to finance the payment of the rent, premium and interest due to the appellant under the lease. The claim of the appellant, it must be noticed, is for the amount due by way of premium and interest, besides the lease amount due as on the date of the claim. As far as these amounts are concerned, they are not amounts, which have been raised by the lessee from the appellant. They would have been either from its own sources or by availing financial facilities from others. It is vital to notice that as far as the amount saved by the corporate debtor, to pay the amounts to the appellant, there would be a financial debt incurred by the lessor to its lender. The acceptance of the appellants argument would involve that for the said amount the possibility of two financial creditors being present. This is unacceptable. In fact, the provision relating to limited power of mortgaging, available to the lessee, is for the purpose of financing the construction of the flats over the leasehold property. While, under the lease, the lessee may have incurred debt towards third party, which may be a financial debt. We are of the view that we would be placing a wholly strained and unreasonable interpretation on Section 5(8)(f), if we were to hold that lessee has raised funds from the lessor (appellant) under the lease in question. Merely granting a moratorium, followed by the staggered payment in sixteen half-yearly installments of the balance of premium, cannot possibly lead to the conclusion that the respondent has raised the funds, under the lease, from the appellant. 141. We may notice that what Section 5(8)(d) of the IBC provides for is, any liability in respect of any lease, inter alia, which is, however, confined to a finance or capital lease. We are not ruling out the possibility that, in a lease, not a finance or a capital lease, falling under Section 5(8)(d), if it otherwise fulfils the requirements of Section 5(8)(f), it would not fall under the definition of the word ‘financial debt’. In other words, Section 5(8)(d) includes only a finance or a capital lease, which is deemed, as such, under the Indian Accounting Standards. Section 5(8)(f) is a residuary and catch all provision. A lease, which is not a finance or a capital lease under Section 5(8)(d), may create a financial debt within the meaning of Section 5(8)(f), if, on its terms, the Court concludes that it is a transaction, under which, any amount is raised, having the commercial effect of the borrowing. All that we are finding, in the facts of this case, is that the lease in question does not fall within the ambit of Section 5(8)(f). This is for the reason that the lessee has not raised any amount from the appellant under the lease, which is a transaction. The raising of the amount, which, according to the appellant, constitutes the financial debt, has not taken place in the form of any flow of funds from the appellant/lessor, in any manner, to the lessee. The mere permission or facility of moratorium, followed by staggered payment in easy installments, cannot lead us to the conclusion that any amount has been NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.] raised, under the lease, from the appellant, which is the most important consideration. WHETHER THE APPELLANT IS AN OPERATIONAL CREDITOR? 142. As far as the case of the respondents that the appellant is a Local Authority goes, the case of the respondent was largely premised on the Judgment of this Court in Union of India and Others v. R.C. Jain and Others14. In short, the case of the respondent was that the appellant is a Local Authority and the rental and premium in question, claimed by the appellant, constitutes amount due to the appellant under a law, viz., the UPIAD, read with Section 40 of the UP Act of 1973, made applicable to the UPIAD. Upon this Court pointing out the decision of this Court reported in New Okhla Industrial Development Authority v. Chief Commissioner of Income Tax and others15, wherein this Court has taken the view in the case of the appellant itself, that it is not a Local Authority. The parties would point out that the said Judgment, may not apply, as it was rendered in the context of the Income Tax Act. It is also pointed out that Judgments, which have been rendered after R.C. Jain (supra), which includes HousingBoard of Haryana v. Haryana Housing Board Employees’ Union and Others16 and Commissioner of Income Tax, Lucknow v. U.P. Forest Corporation17, are also distinguishable. It is contended that of the five tests propounded in R.C. Jain (supra), there is substantial fulfilment of the same qua the appellant. 143. It was pointed out that under Section 3(r) of the UP Act of 2010, a cognate law, the appellant is treated as a Local Authority. It is also pointed out that the appellant does provide civic amenities to the local inhabitants and, for the purpose of the IBC, it is, indeed, a Local Authority. It is also pointed out that the appellant is treated as a Local Authority under the Goods and Services Act. Prima facie the decision in Noida (supra) may not detract from the appellant being found to be a local authority for the purpose at hand. No doubt, we do notice that in the context of the proviso to Article 131 of the Constitution of India, this Court did notice the distinction between the words ‘arising out of’ and the words ‘arising under’ and held that the words ‘arising under’ bears 14 (1981) 2 SCC 308 15 (2018) 9 SCC 351 16 (1996) 1 SC 95 17 (1998) 3 SCC 530 a narrower meaning (See also the discussion of the meaning of the word ‘arises’ as meaning ‘coming into existence’, in a Judgment of this Court by Justice Mukherji in Re: Rogers Pyatt Shellac Co. v. The Secretary of State for India in Council18, which stands approved in The Commissioner of Income Tax, Bombay v. Ahmedbhai Umarbhai and Co., Bombay19. 144. The appellant would, in fact, point out that it is not necessary to probe the matter further, in view of the concurrent findings that the appellant is an operational creditor. No doubt, Smt. Madhavi Divan does point out that the words ‘arising under any law’, may not be the same as amounts being made recoverable under a law. Of course, she would point out that as far as the rental part of the claim, it may be relatable to the first limb of an operational debt. When questioned further, as to what her position is, if this Court found that the appellant is not a financial creditor,the appellant may be entitled, at least, to be treated as an operational creditor. We would think that, having regard to the fact that both the NCLT and NCLAT have proceeded on the basis that the appellant is an operational creditor, we need not stretch the exploration further and pronounce on the questions, which may otherwise arise. We must not be oblivious to the following prospect, should we find that the appellant is not an operational creditor, even under the IBC Regulations apart fromclaims by financial creditors and operational creditors, claims can be made by other creditors. However, there are, undoubtedly, certain advantages, which an operational creditor enjoys over the other creditors. We would proceed on the basis that, while the appellant is not a financial creditor, it would constitute an operational creditor. 145. The upshot of the above discussion is that the appeals must fail. The appeals are, accordingly, dismissed. Parties to bear their own costs. Devika Gujral Appeals dismissed. (Assisted by : Mahendra Yadav, LCRA) 18 AIR 1925 Calcutta 34 19 AIR 1950 SC 134 NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY v. ANAND SONBHADRA [K. M. JOSEPH, J.]