Oral agreements and confirmations can establish financial debt under the IBC, overriding the need for a written contract as per RBI guidelines.

JUDGMENT

(Hybrid Mode) [Per: Arun Baroka, Member (Technical)]

The present Appeal is filed by the Appellant herein namely Desana Impex Limited under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), against the Order dated 21.11.2023 by which the National Company Law Tribunal (Adjudicating Authority), Kolkata Bench, in Company Petition (IB) No. 342/KB/2022 dismissed the Application under Section 7 of the Code.

2. The Appellant is a Non-banking Financial Corporation (NBFC) registered under the Companies Act, 2013, and is registered with the Reserve Bank of India in accordance with Section 45-IA of the RBI Act, 1934, and is recognised as a non-deposit vide certificate dated 20.04.1998. The Respondent Company, namely Brick and Mortar Realty Private Limited, is a real estate company.

3. It is contended by the Appellant that the Respondent approached the Appellant for seeking a loan of ₹ 1,50,00,000/- (rupees one crores and fifty lakhs only) to meet its business expansion and working capital requirement in its usual course of business. This loan was mutually agreed in the form of an Inter Corporate Loan. It was agreed to be disbursed by the Appellant as and when required / demanded by the Respondent at an agreed upon rate of interest of 12% per annum. It was also mutually decided by the parties that the Inter Corporate Loan would become due and payable on demand and, thus, the Respondent will be liable to refund the same.

4. The loan was disbursed in five instalments as per details given below:

5. Appellant also contends that the Respondent, vide a letter dated 01.04.2015, issued a Confirmation of Accounts to the Appellant for the FY 2014-15; thus, admitting its financial debt to the Appellant. In this confirmation of accounts there is a specific entry with respect to interest on the unsecured loan @ 12% per annum. In the light of the same and admitting the interest @ 12% per annum, the Respondent issued a cheque bearing number 076733 dated 31.03.2015 towards a payment of the said interest which is duly reflected in the Appellant’s account statement on 27.06.2015. It is also contended by the Appellant that the Respondent once again issued a confirmation of accounts for the year 2016-17 thereby admitting its liability towards payment. The Respondent also paid an interest amount of ₹ 14,69,688/- (rupees fourteen lakhs, sixty-nine thousand, six hundred and eighty-eight only) on secured loan @ 12% per annum. This is on record wherein confirmation of accounts is done by one Mr Dilip Mohanty.

6. There are emails issued by the designated financial accountant, Mr Dilip Mohanty, who is the authorised accountant of the associate companies falling within the group of companies namely Supreme and Company Private Limited, of which the Respondent is a part, and vide email dated 16.10.2017 informed the Appellant of the Respondent’s ledger account for the FY 2016- 17, along with request to the Appellant to share its ledger account for their records and reference (page 51 of the appeal paper book).It is also contended by the Appellant that Mr Dilip Mohanty had time and again issued various confirmation of accounts to the Appellant for the FY 2017-18, 2018-19 and 2020-21 respectively, admitting its financial liability towards the Appellant (pages 54 to 64 of the appeal paper book).

7. Furthermore, the Respondent has duly deposited the TDS amount on the interest amount calculated @ 12% per annum starting from the FY 2014- 15 till FY 2020-21 under Section 194A of the Income Tax Act, 1961, which is reflected in Form 26AS submitted by the Appellant (pages 65 to 73 of appeal paper book). However, after since 01.04.2017, the Respondent has failed to pay the accruing interest amount.

8. The Respondent has failed to pay the interest amount agreed upon the @ 12% per annum, despite