Loan Claim Rejected For No Demand Before CIRP | NCLAT

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loan claim rejected before CIRP

Case Details: Surender Modi vs. Ashish Singh - [2025] 181 taxmann.com 450 (NCLAT- New Delhi)

Judiciary and Counsel Details

  • Justice Ashok Bhushan, Chairperson & Barun Mitra, Member
  • Anirban Bhattacharya  & Rajeev Choudhary, Advs. for the Appellant.
  • Abhijeet Sinha, Sr Adv., Krishnendu Dutta, Sumant Batra, Abhishek Parmar, Sarthak Bhandari, Ms. Riya Kaur Arora, Saurabh Kalia, Ateendra Saumya Singh & Anand Mishra, Advs. for the Respondent.

Facts of the Case

In the instant case, the corporate debtor was admitted into the CIRP following which RP invited claims from creditors of corporate debtor by way of public announcement. The appellant claimed to be a financial creditor submitted a claim on basis of loan agreement dated 20-12-2007, which was rejected by the RP.

The Adjudicating Authority by the impugned order also rejected claim of the appellant. Thereafter, an appeal was made before the NCLAT.

It was noted that claim filed by the appellant was based on a Loan Agreement which was fundamentally flawed and that absence of vendor stamps, serial numbers and date of purchase undermined its validity.

Further, it was noted that alleged agreement was executed solely by two brothers, both of whom served as directors of Corporate Debtor and that Loan Agreement was devoid of any formal authorization by way of board resolution thus undermining its enforceability. The loan amount was never treated or acknowledged as a loan in books of Corporate Debtor.

The NCLAT observed that the appellant had not demonstrated any efforts made by it to recover loan amount since 2007 until the corporate debtor got admitted into the CIRP. Further, audited balance sheet of the corporate debtor classified amount claimed by the appellant to be ‘Other Advances’ rather than as an unsecured loan as claimed by the appellant.

NCLAT Held

The NCLAT held that the sum was provided as an advance and was treated as a liability and not a borrowing in the balance sheet and therefore did not partake character of the financial debt. Thus, there was no infirmity in the impugned order passed by the Adjudicating Authority.

List of Cases Reviewed

  • NCLT’s order dated 23.9.2025 in I.A. Nos. 3020 of 2022 and 1950 of 2023 in C.P. (IB) No. 983 (ND)/2020 (Para 37) affirmed

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied