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2025 Supreme(Online)(NCLT) 2341
NATIONAL COMPANY LAW TRIBUNAL
MAHENDRA KHANDELWAL, DR. SANJEEV RANJAN, JJ
SIDHVANDAN FINANCE LIMITED – Appellant
Versus
ADONIA SYSTEMS PRIVATE LIMITED – Respondent
CP (IB) NO. 711/ND/2023 | I.A. 4682/ND/2024
For the Appellants/Petitioners: Mr. Pradeep Kumar, Mr. Gaurav Garg
For the Respondents: Mr. Saurabh D. Karan Singh
The court ruled that an unsigned loan agreement cannot establish financial debt under the Insolvency and Bankruptcy Code, thus dismissing the application for Corporate Insolvency Resolution Process.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 7 - Corporate Insolvency Resolution Process - Application dismissed due to lack of substantiation of financial debt - The alleged loan agreement was unsigned and could not establish a debt liability - The Corporate Debtor's sale purchase agreement was duly executed and valid. (Paras 10, 11, 14, 20)
(B) Fraudulent Initiation of Proceedings - Section 65 - No evidence of malicious intent established against the Financial Creditor; mere inconsistencies in documents do not suffice. (Paras 15, 19)
Facts of the case:
The Applicant sought to initiate CIRP against the Corporate Debtor for defaulting on a loan of INR 1,00,00,000/-; the Corporate Debtor contended that the alleged loan was based on an unsigned agreement and claimed the proceedings were initiated fraudulently.
Findings of Court:
The petition was dismissed as the Financial Creditor failed to substantiate the existence of financial debt due to the unsigned loan agreement; the Corporate Debtor's valid sale purchase agreement was upheld.
Issues: The primary issues involved whether a valid financial debt existed and if the proceedings were initiated with fraudulent intent.
Ratio Decidendi: The court determined that the unsigned loan agreement could not establish a debt under the Code, and the Corporate Debtor's claims of fraud were unsupported.
Result: Application dismissed.
| Table of Content |
|---|
| 1. jurisdiction and petition details. (Para 1 , 2 , 3) |
| 2. arguments of both parties regarding loan and agreements. (Para 5 , 6) |
| 3. court's analysis of debt and default. (Para 7 , 8 , 9 , 10 , 11) |
| 4. determination of financial debt validity. (Para 12 , 13 , 14) |
| 5. analysis of fraudulent intent in proceedings. (Para 15 , 16 , 17 , 18) |
| 6. final dismissal of the petition. (Para 19 , 20) |
ORDER
PER: MAHENDRA KHANDELWAL, MEMBER (JUDICIAL)
1. This is a Company Petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity “the Code”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, by Sidhvandan Finance Limited (hereinafter referred to as ‘Applicant Financial Creditor’), represented by Mr. Rupanshu Jain authorized vide Board Resolution dated 21.09.2023, seeking to initiate Corporate Insolvency Resolution Process (“CIRP”) against Adonia Systems Private Limited (“Corporate Debtor/Respondent”).
2. The Applicant Financial Creditor was incorporated on 23.04.1990, bears the Corporate Identification No. U65100DL1990PLC039958. The Corporate Debtor was incorporated on 30.08.2012, having CIN: U74110DL2012PTC241398 registered under the Companies Act, 1956. Its registered office is at Plot No-5, BN Block (W), Central Market, IInd Floor, Adjoining Bank of Baroda, Shalimar Bagh, New Delhi-110088. Therefore, this Bench has jurisdiction to entertain this petition. The Authorized Share Capital of the Corporate Debtor is INR 8,00,00,000/- (Eight Crores Only). The Paid-Up Capital of the Corporate Debtor is INR 8,00,00,000/- (Eight Crores Only).
3. The present Petition was filed on 31.10.2023 before this Adjudicating Authority on the ground that the Corporate Debtor has defaulted to make a payment of a sum of INR 1,24,20,000.00 inclusive of interest (Rupees One Crore Twenty-Four Lacs Twenty Thousand Only) and the alleged date of default is stated in Part IV as 01.11.2023.
4. Further during the course of proceedings, the Corporate Debtor has filed an Interlocutory Application bearing I.A. No. 4682 of 2024 under Section 65(1) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016. The Respondent Corporate Debtor has sought the following reliefs.
a. Pass an appropriate order issuing show cause to the original Applicant namely M/s Sidhvandan Finance Limited (formerly M/s Jatalia Finance Company Ltd.) in terms of Section 65(1) of the Insolvency and Bankruptcy Code, 2016 and, if found fit, thereafter to impose extraordinary and exemplary penalty upon the original Applicant; and
b. Pass such other and further orders that this Hon'ble Court deems fit and proper in the present circumstances.
5. Submissions of Learned Counsel appearing for the Applicant Financial Creditor are as under:
a. The Corporate Debtor through its directors (Mr. Tarun Gupta, Mr. Manoj Kumar and Mrs. Promila Kumari) approached the Applicant Financial Creditor on 20.07.2018 for financial assistance as an unsecured loan of INR 1,00,00,000/- (Rupees One Crore Only) for working capital @17% interest per annum.
b. Subsequent to the terms and Conditions finalized between the Applicant Financial Creditor and the Corporate Debtor, the Applicant signed the Loan Agreement dated 04.08.2018 and delivered the original copy of agreement by hand to the Respondent, However, the Respondent has never returned the same to the applicant Pursuant to request of Corporate Debtor, the Financial Creditor had transferred the fund of INR 1,00,00,000/- in three tranches i.e., INR 50,00,000/- on 24.07.2018, INR 25,00,000/- on 25.07.2018 and INR 25,00,000/- on 26.07.2018. The Corporate Debtor had booked TDS on the interest paid to the Financial Creditor every year since 2019.
c. On 04.10.2021, the Corporate Debtor had paid interest of INR 7,40,000/-, however, failed to deposit the remaining balance interest of INR 16,20,000/-. Several verbal reminders were made to Corporate Debtor on 01.11
