AA Rightly Admitted CIRP Plea on Basis of CD’s Balance Sheet Showing Loan Facility Availed from Financial Creditor | SC

Case Details: Vipin Sharma v. Kaliber Associates (P.) Ltd. - [2023] 156 taxmann.com 686 (SC)

Judiciary and Counsel Details

• • Dr Dhananjaya Y. Chandrachud, CJI, J.B. Pardiwala & Manoj Misra, JJ.
  • Neeraj Kishan Kaul, Sr. Adv., Vikas Mishra, Adv., Nagarkatti Kartik Uday, AOR, Ms Aditi Sharma, Sanchit Gawri & Raghav Agrawal, Advs. for the Appellant.
  • Krishnendu Datta, Sr. Adv., Vikas Mishra & Sanchit Gawri, Advs. for the Appellant.
  • Anirban Bhattacharya, Rajeev Chowdhary, Vinod K. Chaurasia & Shivam Pal, Advs. for the Respondent.

Facts of the Case

In the present case, the Financial Creditor filed an application under section 7 of the Insolvency and bankruptcy Code, 2016 against the Corporate Debtor for initiation of Corporate Insolvency Resolution Process.

Consequently, the said application was admitted by the NCLT on the ground that balance sheet of corporate debtor showed that corporate debtor had availed loan facility from financial creditor and there was a financial debt and default.

The Appellant being shareholder and suspended director of corporate debtor aggrieved by NCLT’s order had filed an appeal before NCLAT on the ground that as per MoU, signed between parties, amount advanced by Financial Creditor was only as an investment in corporate debtor and was not a financial debt.

The NCLAT by impugned order held that balance sheet of Corporate Debtor acknowledged loan advanced to Corporate Debtor. Additionally, it was concluded that the financial statement accompanying the section 7 application by the financial creditor explicitly displayed the short-term loan and advance under the Corporate Debtor’s name.

Consequently, the NCLAT found no fault in the NCLT’s order admitting the Section 7 application. Later, the appellant filed instant appeal before Supreme Court.

Supreme Court Held

The Supreme Court held that no error was found in impugned order passed by NCLAT and, therefore, instant appeal was to be dismissed.

List of Cases Reviewed

• • Vipin Sharma v. Kaliber Associates (P.) Ltd. [2023] 156 taxmann.com 685 (NCLAT – New Delhi) (para 1) affirmed [See Annex].