Financial debt and default remain established despite no dues letters, NeSL entries and restructuring requests

No dues certificates and charge-satisfaction letters addressed to the Registrar of Companies did not prove that all bank liabilities had been discharged, especially where several charges remained outstanding. NeSL entries for only one account could not displace authenticated records showing default in other loan accounts. Financial statements recorded non-payment of bank dues and classified the loans as non-performing assets, while acknowledgements and restructuring requests further supported the existence of financial debt and default. At the Section 7 admission stage, the Adjudicating Authority needed only a prima facie showing, and the record supported that finding. The challenge to admission therefore failed.

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Issues: Whether the issuance of no dues certificates and satisfaction letters, the NeSL entries, and the financial statements and acknowledgments on record negatived the existence of financial debt and default so as to warrant interference with admission of the Section 7 application.

Analysis: The letters relied upon by the corporate debtor were addressed to the Registrar of Companies for recording satisfaction of particular charges and did not establish that all liabilities towards the bank had been discharged. The record showed that several charges in favour of the bank continued to remain outstanding. The NeSL material produced by the corporate debtor pertained only to one account, while authenticated NeSL records for the other loan accounts reflected default. The financial statements also recorded non-payment of bank dues and referred to the loans being classified as non-performing assets, and the acknowledgement letter and restructuring requests further supported the existence of debt. At the admission stage, the Adjudicating Authority was concerned with prima facie debt and default, and the material on record supported that finding.

Conclusion: The challenge to the admission order failed, and the finding of financial debt and default was upheld against the appellant.

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