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2022 (9) TMI 536 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor herein is the whole-time Director and Shareholder of the Corporate Debtor - Financial Creditor infused interest free unsecured loan amount in the account of the Corporate Debtor from period March, 2015 to February, 2021 - Financial Debt or not - HELD THAT - The Hon'ble NCLT, Mumbai Bench in Anchor Leasing Pvt. Ltd. v. Euro Ceramics Ltd. 2019 (2) TMI 1762 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI wherein it was observed and held that IBC nowhere prescribed the compulsory existence of an express agreement to prove the loan and its disbursement. The statement of accounts produced on record were held enough to prove the disbursement of loan amount. - the unsecured loan given by the Director of the Company is treated as a Financial Debt under Section 5 (8) of the Insolvency and Bankruptcy Code, 2016. The transactions of providing the unsecured loan amount claimed by the Applicant is shown in the HDFC Bank account of the Applicant and entries of the unsecured loan amount infused by the Applicant in the Company is also reflected in the audited balance sheet of the Corporate Debtor as on 31.03.2021. Therefore, the Applicant has placed sufficient documents on record to show that the money has been infused in the Corporate Debtor. The registry is directed to issue notice to SMID Infrastructure Private Limited, being the Corporate Debtor. Also, the Corporate Debtor is directed to file reply within two weeks from the date of receipt of the notice.
Issues Involved:
- Maintainability of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. Analysis: 1. The application was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by the Financial Creditor against the Corporate Debtor for initiating Corporate Insolvency Resolution Process (CIRP). 2. The Corporate Debtor, engaged in construction and real estate business, received interest-free unsecured loans from the Financial Creditor over a period from March 2015 to February 2021 totaling Rs. 1,45,03,369. 3. Despite a demand for repayment made through a Demand Notice and email, the Corporate Debtor failed to repay the loan amount, leading to default. 4. The Financial Creditor contended that the Corporate Debtor had not paid the due amount, which was Rs. 1,45,03,369 as of March 31, 2021. 5. The issue for adjudication was whether the application under Section 7 was maintainable as per the Insolvency and Bankruptcy Code. 6. Citing relevant case laws, the Tribunal observed that the unsecured loan provided by a Director of the Company could be treated as a Financial Debt under Section 5(8) of the Insolvency and Bankruptcy Code, 2016. 7. The Tribunal noted that the transactions of providing the unsecured loan were supported by documentary evidence, including entries in the HDFC Bank account of the Financial Creditor and the audited balance sheet of the Corporate Debtor. 8. Consequently, the Tribunal directed the registry to issue a notice to the Corporate Debtor, requiring a reply within two weeks, and scheduled further hearings for resolution on 29.08.2022. 9. The Tribunal emphasized the inclusive nature of the definition of "financial debt" under the Insolvency and Bankruptcy Code, highlighting that even transactions not explicitly described could be classified as such. 10. The judgment underscored that the existence of an express agreement was not compulsory to prove the loan and its disbursement, as demonstrated in the statement of accounts produced as evidence in previous cases. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the maintainability of the application under the Insolvency and Bankruptcy Code, 2016.
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