Corporate Debtor's Statement To Enter Into OTS With Financial Creditor Indicates Existence Of Debt And Default: NCLAT
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that the Corporate Debtor's submission before the Adjudicating Authority regarding entering into a One Time Settlement with the Financial Creditor itself amounts to an admission of debt and default. The present appeal has been filed under section...
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that the Corporate Debtor's submission before the Adjudicating Authority regarding entering into a One Time Settlement with the Financial Creditor itself amounts to an admission of debt and default.
The present appeal has been filed under section 61 of the Insolvency and Bankruptcy Code against an order passed by National Company Law Tribunal (NCLT) Mumbai by which it admitted an application under section 7 of the IBC.
The Appellant submitted that although Adjudicating Authority has held that the Corporate Debtor is in default of Rs.100 Crores but neither any evidence has been referred to nor any reasons have been given. NeSL Report which is relied is not conclusive proof of evidence. Proper and complete statement of accounts were not produced, hence, the application under Section 7 could not have been admitted.
Per contra, the Respondent submitted that the State Bank of India has filed the statement of account before the Adjudicating Authority which clearly gives detail statement from 01.01.2019 of all credit facilities including the term loan and cash credit which proved default on the part of the Corporate Debtor.
The Tribunal observed that the statement of account was filed by the SBI along with section 7 application in which all the transactions were mentioned. The Appellant did not dispute that the default existed on the relevant date nor that the facilities were regularly serviced or free of default. The Appellant seeks to rely on earlier theft of records during the currency of the earlier CIRP. However, the bank's records, NeSL certificate and the corporate debtor's own confirmation letter issued on 30.04.2020 leave no ground to question the Adjudicating Authority's findings that the debt and default existed.
It further observed that the balance confirmation has been issued by the Corporate Debtor. It is not open for the Corporate Debtor to contend that there were no dues at the relevant time.Furtermore, there is no proof of any receivables by the Corporate Debtor nor there is any material to indicate that receivables were received by the Corporate Debtor due to which it can be said that no default committed by the Corporate Debtor.
It further held that the Appellant's own statement with respect to entering into an OTS with the Corporate Debtor further establishes the existence of debt and default. The Appellant's counterclaim before the DRT does not bar insolvency proceedings under section 7 of the IBC which is a distinct remedy available to the financial creditors. The Adjudicating Authority after examining all records rightly concluded that the corporate debtor was in default. Accordingly, the present appeal was dismissed.
Case Title: Rajratan Babulal Agarwal Versus State Bank of India & Anr.
Case Number: Company Appeal (AT) (Insolvency) No. 244 of 2023
Judgment Date: 12/09/2025