The Appellant challenged the admission of the Section 7 ...

CIRP: Borrower denied debt liability, but balance sheets proved disbursement & accrued interest.

Case Laws     Insolvency and Bankruptcy

August 29, 2024

The Appellant challenged the admission of the Section 7 application filed by the Financial Creditor, contending no debt was due as the application was premature. The Tribunal held that the Financial Creditor proved disbursement of the loan through bank statements and balance sheets reflecting the loan amount under long-term borrowings, increasing over subsequent years due to interest accrual. The Appellant's claim that the balance sheet entry pertained to a loan from another entity was rejected as false and misleading. Regarding limitation, the Tribunal held that continuous reflection of the debt in balance sheets constituted acknowledgment u/s 18 of the Limitation Act, rendering the application within time. The Appellant's contention of prematurity based on the allegedly fabricated loan agreement was rejected, as the Corporate Debtor cannot deny the disbursement and liability evident from the balance sheets and repayments to the Financial Creditor's family members. The Tribunal dismissed the appeal, concluding that the Corporate Debtor made false and misleading pleas to evade the debt liability and default.

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