Documentary proof of debt and cheque presumption can sustain a repayment claim despite missing tax returns and internal records.

A power agent may appear and argue before the NCLT where authority is given in writing and the Tribunal permits such representation. The lender's failure to file income tax returns did not, by itself, defeat a repayment claim when the loan was supported by an acknowledgment letter, pronote, cheque and cash book. Alleged cash loan dealings were not treated as void for want of compliance with the RBI Master Direction or FEMA where no foreign remittance or proved regulatory breach was shown, and a borrower could not rely on its own default to avoid an acknowledged liability. The Tribunal also held that the acknowledgment, signed cheque and other documents established a legally enforceable debt despite no separate board resolution or complete debtor records.

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Issues: (i) Whether a duly authorised power agent could appear and argue for the applicant before the Tribunal; (ii) Whether non-filing of income tax returns by the lender disentitled the claim for repayment of the loan; (iii) Whether the alleged cash loan transactions were void for non-compliance with the RBI Master Direction and FEMA framework; (iv) Whether the claim was admissible on the basis of the acknowledgment letter, pronote and cheque despite absence of entries in the corporate debtor's books of account and absence of a separate board resolution.

Issue (i): Whether a duly authorised power agent could appear and argue for the applicant before the Tribunal.

Analysis: The Tribunal relied on the statutory scheme permitting a party to authorise a representative in writing and noted that the NCLT Rules recognise an authorised representative for appearance before the Tribunal. It also relied on the power of a court or tribunal to permit a non-advocate to appear in a particular case. The contrary reliance on the earlier High Court decision was found inapplicable because the relevant provisions were not considered there.

Conclusion: The issue was answered in favour of the applicant.

Issue (ii): Whether non-filing of income tax returns by the lender disentitled the claim for repayment of the loan.

Analysis: The Tribunal held that absence of income tax returns, by itself, could not defeat the claim where the loan was supported by contemporaneous documents such as the acknowledgment letter, pronote, cheque and cash book. It treated the lender's tax compliance as not decisive once the borrowing and liability were otherwise evidenced. The plea that the lender's source of funds was unproved was rejected in light of the documentary record and the debtor's own acknowledgment.

Conclusion: The issue was answered in favour of the applicant.

Issue (iii): Whether the alleged cash loan transactions were void for non-compliance with the RBI Master Direction and FEMA framework.

Analysis: The Tribunal found that the factual record did not show any inflow of funds from abroad or any legally established breach of FEMA or the RBI Master Direction. It further held that, even assuming some regulatory infraction, the transactions would not become void and the debtor could not take advantage of its own wrong after accepting the money and issuing documents acknowledging liability.

Conclusion: The issue was answered in favour of the applicant.

Issue (iv): Whether the claim was admissible on the basis of the acknowledgment letter, pronote and cheque despite absence of entries in the corporate debtor's books of account and absence of a separate board resolution.

Analysis: The Tribunal relied on the acknowledgment letter signed by the managing director, the pronote, the dishonoured cheque and the cash book, and held that these materials together established a legally enforceable debt. It further applied the statutory presumption arising from a signed cheque and held that the debtor had failed to rebut it. The absence of a board resolution and omission from the books of account were treated as matters of internal management that could not override the documentary proof of liability.

Conclusion: The issue was answered in favour of the applicant.

Final Conclusion: The claim was held to be proved and the rejection orders were set aside, with the applicant being entitled to repayment of the principal along with interest as determined by the Tribunal and to appropriate treatment in the resolution process.

Ratio Decidendi: A debt supported by contemporaneous acknowledgment, pronote and cheque cannot be defeated merely because the lender's income tax return is not produced or because the corporate debtor's internal records are incomplete, and the borrower cannot rely on its own regulatory default to avoid a liability it has expressly acknowledged.

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