Admissions and financial records established debt and default, leading to admission of the section 7 insolvency application.

Admissions in loan-related correspondence, the Facility Agreement, balance-sheet disclosures and repayment records established a financial debt and disbursal despite the corporate debtor's denial. The tribunal held that the materials showed an existing lending relationship and default, and that later objections to disbursement could not displace the documentary record. On that basis, the section 7 insolvency application was admitted, moratorium was ordered, and CIRP commenced against the corporate debtor.

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Issues: (i) Whether there was a loan agreement between the Financial Creditor and the Corporate Debtor; (ii) Whether the Financial Creditor did not disburse any amount to the Corporate Debtor.

Issue (i): Whether there was a loan agreement between the Financial Creditor and the Corporate Debtor

Analysis: The Facility Agreement, the borrower details reflected in the petition record, the Corporate Debtor's replies to the recall notices, the request for restructuring, and the later reply admitting a loan facility collectively showed that the Corporate Debtor had availed a loan arrangement from the Financial Creditor. The balance sheet also reflected the Financial Creditor under term loans, supporting the existence of a lending relationship.

Conclusion: The issue was decided against the Corporate Debtor and in favour of the Financial Creditor.

Issue (ii): Whether the Financial Creditor did not disburse any amount to the Corporate Debtor

Analysis: The correspondence seeking restructuring on account of inability to pay EMI, together with the loan records and the admitted payments made towards the loan account, was inconsistent with the plea that no disbursal had taken place. The materials on record established disbursement and consequent default, and the petition satisfied the threshold of debt and default under the Code.

Conclusion: The issue was decided against the Corporate Debtor and in favour of the Financial Creditor.

Final Conclusion: The application under section 7 of the Code was admitted, moratorium was directed, and CIRP was set in motion against the Corporate Debtor.

Ratio Decidendi: Admissions in loan-related correspondence and supporting financial records can establish the existence of a financial debt and default for admission of a section 7 insolvency application, even where the debtor disputes disbursal later.

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