Tribunal grants leave for appeals, affirms insolvency resolution, dismisses appeals.

The Tribunal granted the Petitioner/Appellant leave to prefer appeals as an Aggrieved Person under the I&B Code. Additional documents were allowed for proper adjudication. The Tribunal found the amounts advanced constituted a financial debt, leading to default. The impugned order admitting insolvency resolution was upheld, resulting in the dismissal of the appeals.

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Issues Involved:
1. Leave to prefer appeals
2. Admission of additional documents
3. Existence of financial debt and default
4. Validity of the impugned order admitting the insolvency resolution process

Summary:

Issue 1: Leave to Prefer Appeals
The Petitioner/Appellant, a Shareholder and Suspended Director of M/s. Golconda Textiles Private Limited (Corporate Debtor), sought leave to prefer appeals against the impugned order dated 24.01.2023. The Tribunal granted permission to the Petitioner/Appellant to prefer the appeals as an Aggrieved Person in terms of Section 61(1) of the I&B Code, 2016, allowing IA No. 107 of 2023 and IA No. 133 of 2023 without costs.

Issue 2: Admission of Additional Documents
The Petitioner/Appellant requested permission to submit additional documents, including ledger accounts, balance sheets, and bank statements, which were deemed relevant and material for proper adjudication of the appeals. The Tribunal allowed IA No. 110 of 2023 and IA No. 136 of 2023 to receive these additional documents, citing the decision of the Hon'ble Supreme Court in North Eastern Railway Administration, Gorakhpur v. Bhawan Das, to secure the ends of justice.

Issue 3: Existence of Financial Debt and Default
The Tribunal evaluated whether the amounts advanced by the 1st Respondent/Financial Creditor to the Corporate Debtor constituted a financial debt. The Tribunal noted that the definition of financial debt under Section 5(8) of the I&B Code includes interest-free loans advanced to finance business operations. The Tribunal found that the Corporate Debtor had acknowledged the unsecured loan of Rs.13,84,72,064/- in its audited balance sheet and that the 1st Respondent had advanced significant sums to the Corporate Debtor to ease its financial distress, which were utilized for repaying loans under a One-Time Settlement with SBI. The Tribunal concluded that the amounts advanced by the 1st Respondent constituted a financial debt, and the Corporate Debtor had defaulted on repayment.

Issue 4: Validity of the Impugned Order Admitting the Insolvency Resolution Process
The Tribunal addressed the Appellants' contentions that there was no privity of contract, no agreement or document proving the loan, and that the amounts advanced were not for commercial lending but for family business purposes. The Tribunal rejected these arguments, emphasizing that the amounts advanced by the 1st Respondent were acknowledged in the balance sheets and were repayable on demand. The Tribunal affirmed that the debt and default were established, and the Section 7 application was complete. Consequently, the Tribunal upheld the impugned order dated 24.01.2023, admitting the insolvency resolution process against the Corporate Debtor.

Disposition:
The appeals, Comp. App (AT) (CH) (INS.) No. 30 of 2023 and Comp. App (AT) (CH) (INS.) No. 38 of 2023, were dismissed. The connected pending IAs were closed.

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