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Issues: Whether the admission of the Section 7 application was unsustainable on the grounds that the no dues certificates and NOCs issued by the bank showed extinguishment of liability, the NeSL record disclosed no actionable default, and the proceedings were barred or otherwise untenable.
Analysis: The letters relied upon by the corporate debtor were addressed to the Registrar of Companies for satisfaction of particular charges and did not establish a waiver or extinction of the entire banking debt. The charge records showed that several charges in favour of the bank remained unsatisfied. The NeSL extract relied upon by the corporate debtor related to only one account, while other authenticated NeSL records and the account statements showed subsisting defaults in the remaining loan accounts. The financial statements and the acknowledgment letter dated 13.06.2022 further evidenced acknowledgment of liability, supporting the bank's case on debt and default. Withdrawal of SARFAESI notices did not affect the bank's right to invoke Section 7, and disputes about the exact quantum of liability were matters for collation at the insolvency stage.
Conclusion: The admission of the Section 7 application was upheld and the challenge to the finding of debt and default was rejected.
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