Case Note & Summary
The present appeal was filed by Desana Impex Limited (Appellant), a Non-Banking Financial Corporation (NBFC) registered under the Companies Act, 2013 and the RBI Act, 1934, against the order dated 21.11.2023 passed by the National Company Law Tribunal, Kolkata Bench (Adjudicating Authority) in CP (IB) No. 342/KB/2022. The Adjudicating Authority had dismissed the Appellant's application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiation of Corporate Insolvency Resolution Process (CIRP) against Brick and Mortar Realty Private Limited (Respondent), a real estate company. The Appellant contended that the Respondent approached it for a loan of ₹1,50,00,000 (rupees one crore and fifty lakhs only) for business expansion and working capital, which was mutually agreed as an Inter Corporate Loan. The loan was to be disbursed as and when required or demanded by the Respondent. The Appellant disbursed the loan amount, and the Respondent executed a loan agreement and acknowledged the debt. However, the Respondent failed to repay the loan, leading to default. The Appellant filed a Section 7 application before the Adjudicating Authority, which was dismissed. The Appellant argued that the dismissal was erroneous as the debt and default were clearly established through the loan agreement and acknowledgment. The Respondent did not appear before the NCLAT. The NCLAT, after hearing the Appellant, set aside the impugned order and remanded the matter back to the Adjudicating Authority for fresh consideration, directing that the Section 7 application be restored and decided on merits.
Headnote
A) Insolvency Law - Section 7 IBC - Financial Debt - Inter Corporate Loan - The Appellant, a Non-Banking Financial Corporation, provided an inter-corporate loan of ₹1,50,00,000 to the Respondent. The loan agreement was executed and the Respondent acknowledged the debt. The Adjudicating Authority dismissed the Section 7 application. Held that the dismissal was erroneous as the debt and default were established. (Paras 1-3)
Issue of Consideration
Whether the Adjudicating Authority erred in dismissing the Section 7 IBC application filed by the Appellant (Financial Creditor) despite the existence of a loan agreement and acknowledgment of debt by the Respondent (Corporate Debtor).
Final Decision
The NCLAT set aside the impugned order dated 21.11.2023 and remanded the matter back to the Adjudicating Authority for fresh consideration, directing that the Section 7 application be restored and decided on merits.
Law Points
- Financial Creditor
- Corporate Debtor
- Default
- Section 7 IBC
- Inter Corporate Loan
- Adjudicating Authority
- Dismissal
- Appeal
- Loan Agreement
- Acknowledgment of Debt
