Corporate debtor cannot evade repayment of admitted loans/financial debt by claiming violation of deposit rules under Companies Act s.73; such infraction punishable but does not void creditor's enforceable claim under IBC s.7.

JUDGMENT

(4^th February, 2026)

Ashok Bhushan, J.

This Appeal has been filed challenging the order dated 07.01.2022 passed by the Adjudicating Authority (National Company Law Tribunal) Cuttack Bench, Cuttack rejecting Section 7 application CP (IB) No.150/CTB/2019 filed by the Appellants. Appellants aggrieved by the rejection of Section 7 application have come up in this Appeal.

2. Brief facts of the case necessary to be noticed for deciding the Appeal are:-

2.1. Appellants, ten in numbers claim to have granted short-term business loan to the Corporate Debtor- Power Pack Steel Industries Pvt. Ltd. from 2015 to 2017 totalling Rs.1,73,02,690/- being principal sum of Rs.1,57,00,000/- along with interest of Rs.16,02,690/-. Corporate Debtor vide TDS statement being 26AS for the assessment year 2017-18, reflected deduction of tax at source. The Corporate Debtor had also paid interest through bank transfer. Appellants have extended different amount to the Corporate Debtor for example, Appellant No.1 had extended short-term business loan of Rs.40,00,000/- on 29.06.2014. Similarly, other Appellants have extended different amounts details of which have been mentioned in Part IV of Section 7 application. The Corporate Debtor having not returned the amount, the Appellants demanded the payment in March 2018. After demand, the Corporate Debtor had also made certain bank transfers towards interest, amount having not been refunded the Appellant filed Section 7 application claiming the total principal amount of Rs.1,57,00,000/- with interest. The date of default was mentioned in tabular statement reflecting the amount due. Notice was issued by the Adjudicating Authority to Section 7 application. Counter Affidavit to Section 7 application was filed by the Corporate Debtor. Corporate Debtor in the Counter Affidavit admitted the payment received but termed the same as advance payment to the Corporate Debtor for supply of finished steel rounds on basis of verbal orders paid to the Corporate Debtor. In the reply, Corporate Debtor also admitted having paid interest on the amount received after deduction of tax at source. The amount claimed was denied to be a financial debt. It was pleaded that in the reply that notice/letter was issued to the Appellant to take delivery of the goods to which no response was received. It was pleaded that no default has been committed. It was also pleaded that the Corporate Debtor is a private limited company and under Section 73 of the Companies Act, 2013, a private company has no authority to accept any deposit from any unrelated individual. Adjudicating Authority heard the parties and by impugned order rejected Section 7 application taking the view that the amount received by the Corporate Debtor was in violation of bar contained in Section 73(1) of the Companies Act, 2013 and transaction being void under Section 23 of the Contract Act, the claim made by the Appellant is unenforceable and petition liable to be dismissed. Aggrieved by the order rejecting the application, this Appeal has been filed.

3. We have heard Ms. Sonal Shah, Learned Counsel for the Appellants and Shri Saswat K. Acharaya, learned Counsel for the Respondent- Corporate Debtor.

4. Learned Counsel for the Appellants challenging the impugned order submits that the Appellants having successfully proved financial debt owed by Corporate Debtor and Corporate Debtor having defaulted in paying back the amount, the Adjudicatin