The existence of debt has to be clearly stated in section 7 application for which a detailed format is provided in the IBC – Mr. Kalpesh Dineshbhai Patel Director of Kingston Paptech Pvt. Ltd. Vs. Krishna Paper Trading Co. – NCLAT New Delhi
NCLAT holds that Sub-sections 10, 11 and 12 of Section 3 of IBC contain definitions of ‘creditor’ (including Financial Creditor), ‘debt’ and ‘default’. It is clear from the definition of “debt” that it is a liability in respect of a claim due from any person (in this case the Corporate Debtor) and includes financial debt. “Default” is defined as nonpayment of debt when whole or part or instalment of the debt that has become due and payable by the Corporate Debtor. Therefore, the existence of debt has to be clearly stated in section 7 application for which a detailed format is provided in the IBC. The application has to be submitted in the stipulated format and the Financial Creditor has to furnish record of the default with the information utility or such other record or evidence of default as may be specified. Further under section 7 application, the satisfaction of the Adjudicating Authority is necessary to establish that default has occurred and financial debt is due and payable.
