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of <h1>Debt Proof Essential in Insolvency Proceedings: Tribunal Dismisses Petition</h1> <h3>Janardan Prasad Mahto Versus Durga Developers Pvt. Ltd.</h3> The National Company Law Tribunal, Kolkata Bench, dismissed the petition for initiating Corporate Insolvency Resolution Process under section 7 of the ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Financial Creditor has completely failed to prove any financial debt due and payable by the Corporate Debtor. Whatever documents have been placed on record by the Financial Creditor, do not prove any financial debt against the Corporate Debtor. The petition and documents placed on record by the Financial Creditor are not at all satisfying - there is no substance in this petition for initiation of CIRP against the Corporate Debtor. Petition dismissed. Issues:- Initiation of Corporate Insolvency Resolution Process under section 7 of the Insolvency and Bankruptcy Code, 2016.- Existence of financial debt and default by the Corporate Debtor.- Validity of the petition and documents submitted by the Financial Creditor.Analysis:1. Initiation of Corporate Insolvency Resolution Process: The Financial Creditor filed a petition under section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor, alleging non-payment of a debt amounting to Rs.46,01,000. The Financial Creditor provided various documents, including an undertaking, letters, and acknowledgments, to support the claim.2. Existence of Financial Debt and Default: The Financial Creditor claimed that the Corporate Debtor failed to repay the outstanding debt despite multiple requests and acknowledgments. The Financial Creditor argued that the debt, along with compound interest, amounted to Rs.2,84,15,435, and the default occurred on 11th January, 2009. The Financial Creditor presented documents to establish the debt and subsequent acknowledgments by the Corporate Debtor.3. Validity of the Petition and Documents: The Corporate Debtor contested the petition, alleging that the application was mala fide and the Financial Creditor was not a financial creditor but a home buyer. The Corporate Debtor disputed the existence of a loan and claimed that the Financial Creditor's demand was time-barred. The Corporate Debtor argued that the documents provided did not prove the financial debt owed to the Financial Creditor and highlighted discrepancies in the undertaking submitted.4. Court's Decision: After reviewing the arguments and documents presented by both parties, the Tribunal found that the Financial Creditor failed to establish the existence of a financial debt due from the Corporate Debtor. The Tribunal emphasized the importance of proving the debt, default, and financial creditor status in insolvency proceedings. Consequently, the Tribunal dismissed the petition for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, citing lack of evidence to support the claim.5. Conclusion: The judgment by the National Company Law Tribunal, Kolkata Bench, emphasized the essential elements required for initiating insolvency proceedings, including the need to prove the existence of a financial debt, default, and the status of the creditor. The decision highlighted the importance of substantiating claims with valid documentation and adherence to legal requirements under the Insolvency and Bankruptcy Code, 2016.
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