Tribunal Classifies Cloud Storage Lease Agreements as Financial Debt under IBC, Initiates Moratorium and Appoints Interim Resolution Professional
In a significant decision dated August 20, 2026, the National Company Law Tribunal (NCLT), Allahabad Bench, has admitted a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by Achhru Ram Jindal and others, financial creditors, against M/s Zebyte Rental Planet Private Limited, the corporate debtor. The petition relates to a default in payment of financial debt arising from lease agreements involving cloud storage units.
The financial creditors had entered into two key agreements with Zebyte and its associate company, M/s Vuenow Marketing Services Limited (VMSL). Under the Asset Sale and Partner Programme Agreement (ASA), the creditors purchased cloud storage units called 'Particles' from VMSL. Subsequently, under the Asset Monetising Program Agreement (AMPA), these Particles were leased back to Zebyte for a fixed tenure of 10 years (120 months), guaranteeing monthly returns.
Zebyte made payments up to September 2024 but defaulted thereafter, with the first default dated October 31, 2024. Despite a demand notice issued in August 2025, no payments or replies were received from Zebyte. Consequently, the financial creditors filed the Section 7 application in October 2025, which was within the three-year limitation period.
The Tribunal extensively analyzed whether the lease agreements amounted to financial debt under Section 5(8)(d) of the IBC. Referring to Indian Accounting Standard (IND AS) 116 on leases, the Tribunal observed that the lease transaction substantially transferred all risks and rewards incidental to ownership of the cloud storage units to the corporate debtor. The lease term covered the major part of the economic life of the asset, thus constituting a financial lease. Clauses in the agreements demonstrated that the creditors waived rights of access and control over the Particles, and the corporate debtor enjoyed exclusive operational control, further confirming the finance lease characterization.
The Tribunal held that the total outstanding amount of Rs. 1.64 crores exceeded the threshold limit prescribed under IBC, and the default was clearly established. Accordingly, the petition was admitted, and the Corporate Insolvency Resolution Process (CIRP) was initiated against Zebyte Rental Planet Pvt. Ltd.
Mr. Dharmendra Kumar Bhasin was appointed as the Interim Resolution Professional (IRP). The Tribunal declared a moratorium under Section 14 of the IBC, prohibiting suits, asset transfers, or enforcement actions against the corporate debtor during CIRP. The IRP was directed to make public announcements, collect claims, constitute the Committee of Creditors, and take necessary steps as per the Code and CIRP Regulations.
This judgment reaffirms that financial lease liabilities qualifying under IND AS 116 are recognized as financial debts under the IBC, enabling financial creditors to initiate insolvency proceedings in case of default. It also highlights the rigorous procedural safeguards, including moratorium and appointment of IRP, designed to protect stakeholders’ interests during insolvency resolution.
Bottom Line:
Insolvency and Bankruptcy Code - Application under Section 7 for initiation of Corporate Insolvency Resolution Process (CIRP) - Financial lease agreements qualifying as "financial debt" under Section 5(8)(d) of the IBC - Existence of debt and default established - Application admitted.
Statutory provision(s):
Section 5(8)(d) of Insolvency and Bankruptcy Code, 2016, Section 7 of Insolvency and Bankruptcy Code, 2016, Section 13 of Insolvency and Bankruptcy Code, 2016, Section 14 of Insolvency and Bankruptcy Code, 2016, Section 15 of Insolvency and Bankruptcy Code, 2016, Section 137 of Limitation Act, 1963, Indian Accounting Standard 116 (IND AS 116)
