The Insolvency Code (IBC) nowhere prescribes that there should be a written agreement between the parties to prove the loan and its disbursement to be treated as Financial Debt – Satish Balan Director of Balan and Chheda Developers Pvt. Ltd. Vs. Mrs. Neeta Navin Nagda – NCLAT New Delhi

The only issue which has been raised and need to be decided by NCLAT is that whether money contributed by the Respondent No. 1 along with her nominees was in nature of financial debt or investment by way of equity in the Corporate Debtor. NCLAT held that (i) It is for the Adjudicating Authority to look into the various documents, records and evidence of default as furnished in part V of Form 1 of the application filed under Section 7 of the Code. (ii) The Code nowhere prescribes that there should be a written agreement between the parties to prove the loan and its disbursement to be treated as financial debts. (iii) If there are acknowledgments by the Corporate Debtor and where the statements of accounts of the Corporate Debtor are in position to proof disbursement of loan and payment of interest, the absence of formal written agreement would not bar the Financial Creditor from initiating the CIRP.

Related Posts

Scroll to Top