Debt Can Be Established Through Any Documentary Evidence Under Regulation 8(2) Of CIRP Regulations, Written Contract Not Needed: NCLAT

The present appeal has been filed under section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against an order passed by National Company Law Tribunal (NCLT) Kolkata by which it admitted an application under section 7 of the IBC.

The Appellant submitted that the adjudicating authority by order of this tribunal was only directed to examine the question of limitation however it has dwelled on many other issues unnecessarily and completely ignored the fact that there is no financial contract produced before it nor there was any other relevant document with regard to advance of loan.

The Respondent submitted that there is no illegality in the impugned order and keeping in view the clear admission of the Corporate Debtor (CD) with regard to the receipt of financial debt and no substantive evidence has been produced with regard to supply of any material and also the fact that the TDS is shown by the CD to have been paid on the interest accrued thereon.

The Tribunal observed that the Appellant received 50 Lakhs as advance money for the material supply, yet interest at the rate of 9% was provided by the corporate debtor which fortifies the submission of the financial creditor that the money advanced was a financial debt. The plea of defective fabric is untenable since no supply was made nor any communication exists regarding quality. TDS was deducted on interest till 2015-2016, and the amount is also reflected in the corporate debtor's financial statements. The Adjudicatory Authority rightly held that the amount was a financial debt considering the documentary evidence.

It further observed that Regulation 8(2) of the CIRP Regulations does not require all documents to prove existence of debt, the word "or" indicates that any of the documents mentioned under the Regulations may be provided to prove the debt. Therefore, the financial debt can be proved by various documents mentioned in the Regulation and mere absence of a written contract does not negate the existence of validly payable financial debt.

It relied on the NCLAT's judgment in 'Agarwal Polysacks Limited vs K.K. Agro Foods and Storage Limited, 2023 where it was held that “financial debt can be proved from other relevant documents and it is not mandatory that written financial contract can be only basis for proving the financial debt. We, thus, answer Issue No. 1 holding that it is not necessary that written financial contract be the only material to prove the financial debt.”

It concluded that in the present case, acknowledgment by the corporate debtor in its balance sheet, TDS deduction certificate, demand notice and matching figures of loan and interest in both the demand notices prove the existence of a legally payable debt.

Accordingly, the present appeal was dismissed.

Case Title: Bijendra Prasad Mishra Versus M/s HS Mercantile Pvt. Ltd. and Ors.

Case Number: Company Appeal (AT) (Insolvency) No. 2364 of 2024

Judgment Date: 15/09/2025

For Appellant : Mr. Krishnendu Datta, Sr. Advocate along with Mr. Ritesh Agrawal & Ms. Priyanshi Sharma.

For Respondent : Mr. Sunil Choraria, for R-1/RP. Ms. Pooja Agrawal, for R-2.

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