Financial creditor's Section 7 application upheld as loan disbursement proven through bank statements and balance sheets

NCLAT Principal Bench dismissed the appeal challenging admission of Section 7 application filed by financial creditor. The tribunal found that loan disbursement was proven through bank statements and balance sheet entries from 2010-11, with subsequent years showing increasing amounts due to interest accumulation. Corporate debtor's claim that loan agreement was fabricated was rejected as misleading, particularly since debtor acknowledged disbursement in balance sheets but failed to prove repayment. The tribunal held continuous acknowledgement existed through balance sheet entries, making the application not time-barred under Limitation Act. Corporate debtor's contention of premature application was dismissed as inconsistent with their own claim of forged agreement.

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Issues Involved:
1. Admissibility of Section 7 Application
2. Acknowledgment of Debt
3. Prematurity of the Application
4. Authenticity of the Loan Agreement
5. Reflection of Debt in Balance Sheets
6. Limitation Period
7. False and Misleading Pleas by the Appellant

Detailed Analysis:

1. Admissibility of Section 7 Application
The Appeal was filed by a Suspended Director of the Corporate Debtor challenging the order dated 20.04.2022, which admitted a Section 7 Application filed by the Financial Creditor. The Adjudicating Authority found that the debt and default were clearly established and within limitation, thus admitting the Section 7 Application.

2. Acknowledgment of Debt
The Financial Creditor disbursed a loan of Rs.2 crores to the Corporate Debtor on 23.06.2010, which was reflected in the balance sheet for the year ending 31.03.2011. The subsequent balance sheets continued to reflect this debt, including the interest component. The Adjudicating Authority held that the acknowledgment of liability in the balance sheet ending on 31.03.2014 was valid, thus supporting the Financial Creditor's claim.

3. Prematurity of the Application
The Appellant argued that the Section 7 Application was premature as the loan was repayable on or before 23.06.2020. However, the Corporate Debtor had issued a repayment notice on 18.12.2019, which was not honored. The Tribunal noted that the loan could have been repaid before 23.06.2020, and thus the application was not premature.

4. Authenticity of the Loan Agreement
The Corporate Debtor denied the execution of the Loan Agreement dated 31.12.2010, alleging it was a forged document. However, the balance sheets reflected the loan, and the Adjudicating Authority found the Loan Agreement to be genuine, with stamp duty paid as per the Maharashtra Stamp Act, 1958.

5. Reflection of Debt in Balance Sheets
The balance sheets from 2010-11 to 2017-18 consistently reflected the loan under 'long term borrowing,' including the interest component. The Tribunal found that the balance sheets provided continuous acknowledgment of the debt, which supported the Financial Creditor's claim.

6. Limitation Period
The Appellant argued that the application was barred by time since the loan was disbursed on 23.06.2010, and the Section 7 Application was filed on 22.04.2020. However, the Tribunal held that continuous acknowledgment of the debt in the balance sheets extended the limitation period under Section 18 of the Limitation Act, making the application timely.

7. False and Misleading Pleas by the Appellant
The Appellant claimed that the amount of Rs.10,01,16,474/- reflected in the balance sheets was a loan from Romell Real Estates Pvt. Ltd. rather than the Financial Creditor. The Tribunal found this claim to be false and misleading, as the balance sheets clearly showed that the amount included the loan from the Financial Creditor. The Appellant's attempt to mislead the Tribunal by filing false affidavits was noted, and a cost of Rs.1,00,000/- was imposed on the Appellant.

Conclusion
The Tribunal dismissed the Appeal, confirming the Adjudicating Authority's order admitting the Section 7 Application. The Tribunal imposed a cost of Rs.1,00,000/- on the Appellant for filing false and misleading affidavits. The judgment emphasized the continuous acknowledgment of debt in balance sheets and the validity of the Loan Agreement, rejecting the Appellant's claims of forgery and prematurity.

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