Loss of business revenue cannot partake the character of ‘financial debt’.

It is humbly submitted that Ted Airways (hereinafter “Corporate Debtor” or “Petitioner”)the

corporate debtor does not share consensus with State Bank of Malta (hereinafter “Financial
Creditor”the creditor or “Respondent 1”) over the amount of debt i.e 1000 crores + 400 crores
being claimed as ‘estimated loss of business revenue’ and ‘operational debt’ respectively.

1.1 ‘Estimated loss of business revenue’ may not be characterized as ‘financial debt’
loss of business revenue claimed in the name of ‘financial debt’ as loss of business revenue
cannot partake character of financial debt.
1.1.1 In business and commercial parlance, bBusiness revenue refers to is the income that a
business generates has from its normal business activities, usually from the sale of
goods and services to customers. For corporate financecial institutions business
revenue comes from sale of goods and services, dividends and interests.
1.1.2 Revenue loss occurs when a company makes less from operations than expected due to
external and internal factors.
1.1.3 It is s further submitted that loss of business revenue may ue can only be claimed by d
in the case of operational creditorsl debt where the debtor makes late payment or
doesn’t pay the for goods and services provided by the operational creditor which
can lead to loss in the revenue of such creditor. As opposed to this, financial creditors
do consider the contingency of late repayment of debt and hence, by virtue of the nature
of the transaction, implicitly estop themselves from claiming loss of business revenue.
1.1.4 The Petitioner contends that ‘loss of business revenue’ may not partake the character of
‘financial debt’.In the case of financial creditors they generate revenue from the interest
received from the repayment of loans but while giving loan to a corporate debtor, banks
consider the situation where there will be late payment of interests or where the loan will
become a bad debt. Hence the bank cannot claim loss of business revenue from a
corporate debtor rather they can claim the debt.
1.1.5 In the present case, State Bank of Malta is contending that loss of business can partake
the character of ‘financial debt’ and claiming an “estimated loss” of Rs.1000Cr. In light
of the above made submissions, the Respondents’ claim of 1000 crores deserves to be
 dismissed. Hence, considering the above submissions it can be held that the claim of the
bank is invalid.
1.1.6 It is further contended that even in the case of operational debt, the courts have not were
so restrained that they didn’t even allowed loss of business revenue to be claimed as
operational debt.
1.1.7 In a leading the recent judgement of the National Company Law Appellate Tribunal
(hereinafter “NCLAT”) of Neeraj Jain v Cloudwalker Streaming Technologies Pvt.
Ltd., NCALAT held that a claim towards losses and damages es (uncrystallised) cannot
form part of oOperational dDebt as the it same requires detailed trial and Insolvency and
Bankruptcy Code, 2016 (hereinafter “IBC”) being summary proceedings cannot entail
such trial.
1.1.8 In the case of TATA Chemicals Ltd. v. Raj Process Equipments and Systems Pvt. Ltd.
the National Company Law Tribunal (hereinafter “NCLT”), (Delhi,Mumbai which?) has
reaffirmed that thee main purpose of IBC which is the resolution of distressed companies
and not to provide parties a weapon to arm twist an entity into succumbing to claims,
which may not even have been adjudicated upon. This judgement clarifies that a claim
for damages does not become operational debt until the liability is adjudicated upon and
damages are assessed by a competent authority. Further, this decision should deter parties
from filing petitions without adequately and accurately quantifying their claims.
1.1.9 It is finally submittedcontended that in light of theconsidering the above submissions it
can be held that the claim of Respondent 1State Bank of Malta is invalid as ‘loss of
business revenue’ cannot take the character of financial debt as it associates more
closely with operational debt. Since, courts have been reluctant to award claims of loss of
business revenue even within the context of operational debt, the claim of Respondent 1
amounting to 1000 crores deserves to be dismissed..