Tribunal classifies Promissory Note as Financial Debt under IBC, 2016

The Tribunal determined that the amount claimed under the Promissory Note qualifies as a Financial Debt under Section 8 Clause (c) of the IBC, 2016. Despite the absence of a Board Resolution authorizing the loan, the Tribunal found that the Promissory Note met the criteria of Financial Debt and there was a default in payment. Consequently, the Tribunal issued a notice to the Respondent, emphasizing the need to establish the nature of the debt and any defaults before proceeding further under Section 7, directing service through various modes including email.

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Issues:
1. Whether the amount claimed under the Promissory Note constitutes a Financial DebtRs.
2. Whether the Board of Director of Corporate Debtor was authorized to borrow the loan from the applicantRs.

Analysis:
1. The Tribunal heard arguments regarding the nature of the amount claimed under the Promissory Note and its classification as a Financial Debt. The applicant's counsel argued that the amount claimed falls under the definition of Financial Debt as per Section 8 Clause (c) of the IBC, 2016, considering the Promissory Note as an instrument under the N.I. Act. The Tribunal referred to the relevant provisions and concluded that the Promissory Note indeed falls under the definition of Financial Debt, leading to the decision to issue a notice to the Respondent.

2. The Tribunal addressed the issue of the absence of a Board Resolution authorizing the loan borrowing. While the Board Resolution was not submitted, the applicant referred to confirmation of the debt in the Corporate Debtor's balance sheet. The Tribunal emphasized the need to establish whether the amount qualifies as a Financial Debt and if there is a default in payment. Since the applicant successfully demonstrated that the Promissory Note meets the criteria of Financial Debt and there was a default in payment, the Tribunal decided to issue a notice to the Respondent.

3. The Tribunal highlighted the importance of establishing the nature of the debt and any defaults before issuing summons under Section 7. Considering the arguments presented by the applicant, the Tribunal found it appropriate to issue a notice to the Respondent, directing service through various modes including email. An affidavit of service was required to be filed within a week, and the matter was listed for further proceedings on a specified date.

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