The allegation of violation of Section 295 of the Companies Act, 1956 (Section 185 of the Companies Act, 2013), Loan to directors, does not in any manner inhibit filing of application u/s 7 of IBC application and take appropriate proceedings under the IBC – Kalpesh Ramniklal Shah Vs. Mundara Estate Developers Ltd. – NCLAT New Delhi
The NCLAT held that the submission of the Suspended Director/Appellant that loan transaction was in violation of Section 295 of the Companies Act, 1956(Section 185 of the Companies Act, 2013), does not help the Appellant to deny the loan transaction and the disbursement of the amount. Even if, the allegation of violation of Section 295 of the Companies Act, 1956 may be there, that does not in any manner inhibit filing of Section 7 Application and take appropriate proceedings under the IBC. The purpose and object of the IBC is entirely different. The violation of provisions of Companies Act, 1956, for example Section 295 has different consequences, which consequences in law can take effect and remedial measures can be taken under Section 295, when the ingredients of Section 295 are proved, but that itself cannot be a ground to reject Section 7 Application filed by the Financial Creditor, where debt and default is proved.
