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2022 (1) TMI 216 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - The Respondent No. 1 has not been able to prove the existence of the purported loan. Consequently Respondent No. 1 has not been able to establish that he is a Financial Creditor, who is entitled to file application under 7 of IBC. Furthermore, the date of default, which is taken as 31.7.2015 means that section 7 application should have been filed within three years i.e. by 30.7.2018. The section 7 application in this case was filed on 14.9.2018. Hence, even if it is assumed that the transaction between the Corporate Debtor and Respondent No. 1 resulting in financial debt, the section 7 application was not filed within the period of limitation. The Respondent No. 1 has not been able to prove the existence of the purported loan - Respondent No. 1 has not been able to establish that he is a Financial Creditor, who is entitled to file application under 7 of IBC. Furthermore, the date of default, which is taken as 31.7.2015 means that section 7 application should have been filed within three years i.e. by 30.7.2018. The section 7 application in this case was filed on 14.9.2018. Hence, even it is assumed the transaction between the Corporate Debtor and Respondent No. 1 resulting in financial debt, the section 7 application was not filed within the period of limitation. Respondent No. 1 was not able to prove that the loan provided by him to the Corporate Debtor is a financial debt which is due and payable - appeal allowed - decided in favor of appellant.
Issues:
- Appeal under section 61 of the Insolvency & Bankruptcy Code, 2016 challenging an order passed by the Adjudicating Authority. - Claim of financial loan by Respondent No. 1 against Corporate Debtor. - Dispute regarding the nature of the amount transferred by Respondent No. 1 to the Corporate Debtor. - Lack of evidence establishing default and financial debt as per the IBC. - Examination of the authenticity of documents provided by Respondent No. 1. - Determination of whether Respondent No. 1 qualifies as a Financial Creditor entitled to file under section 7 of the IBC. - Analysis of the limitation period for filing the section 7 application. Analysis: The appeal was filed challenging an order passed under section 31 of the IBC by the Adjudicating Authority. The Appellant, an ex-Director of the Corporate Debtor, disputed the claim of a financial loan by Respondent No. 1, alleging that the amount transferred was part of normal business dealings and not a loan. The Adjudicating Authority sought clarifications from Respondent No. 1 regarding the debt claimed, but the evidence provided was deemed insufficient to establish default and financial debt as per the IBC. The Appellant argued that no formal agreement or communication existed regarding the alleged loan, and no notice for repayment was served before initiating IBC proceedings. The authenticity of documents provided by Respondent No. 1, including a discrepancy in dates, raised doubts about the existence of the debt. The definition of "debt" and "default" under the IBC was analyzed to determine the requirements for establishing financial debt and default. Respondent No. 1 contended that a loan was indeed provided to the Corporate Debtor, supported by bank statements and ledger entries. However, discrepancies in dates and lack of acknowledgment from the Corporate Debtor cast doubt on the validity of the claim. The absence of a demand letter or notice further weakened the case for default and financial debt. Ultimately, the Tribunal concluded that Respondent No. 1 failed to prove the existence of the alleged loan, rendering him unable to establish Financial Creditor status under the IBC. Additionally, the application was found to be time-barred, as it was filed after the limitation period. Consequently, the appeal was allowed, the Impugned Order was set aside, and the Corporate Debtor was released from the insolvency resolution process.
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