In the matter of AKSH OPTIFIBRE LIMITED

NATIONAT COMPANY LAW TRIBUNAL JAIPUR BENCH CP (IB) No.45l7/JPRl2023 (An applicati filed under Section 7 of the Insolvency and Banlcruptcy Code, 2016)

M/S. SHANT U INVESTMENTS PRIVATE LIMITED Ree. Office: 7/17 Roop N, , Delhi- 110007 .......Applicant/Financial Creditor. Versus M/S AKSH O IRE LIMITED Res. Office: F-1080, Phase- I, RIICO Industrial Area, Bhiwadi, Raj ........Respondent/Corporate Debtor Order pronounced on: 09,06,2026 Coram: : Sh. Praveen Member (Judicial) Appeurunces: : Sh. Tanmay Adv. along with For the Financial Creditor Sagar Chawla, Sh. Sonal A Adv. along with : For the Corporate Debtor Surbhi Singh Pranay Rathore, Advs. ORDER Per: Praveen Gupta, Member (Judicial) 1. The Company Petition has been filed under Section 7 of the Insolven and Bankruptcy Code, 2016 ('IBC/Code') seeking initiation of Corporate nsolvency Resolution Process ('CIRP') against the Corporate

CP (IB) No.45/7/JPW2023 IN THE NAIIONAL COMPANY LA TRIBUNAL JAIPURBENCH Page I of45

Debtor, in of which reply and rejoinder have also been filed by the respective arties. Thereafter, vide separate orders passed on 21.01 .2026by the Hon'bl Judicial Member and Hon'ble Technical Member of the NCLT, Jaipur h, whereby dissenting judgments have been given and accordingl, the matter has been referred to me for adjudication under section 419 (s) of Companies Act, 2013 read with Rule 60 (2) & (3) of NCLT Rules,201 vide order dated 18,03.2026, File No. 06/1312026-NCLT (JPR). 2. I Accordin, have heard the matter on various dates through physical hearing as ell as virhral mode. I have also carefully perused the pleadings, documents placed on record, and submissions advanced with the able assistance by the Learned Counsels appearing on behalf of the respective

BRIEF F 3. In order to out the factual and legal premise, it would be worthwhile to notice the ts briefly hereunder: i. The company petition has been filed by M/s Shantanu In ts Private Limited (Petitioner/Financial Creditor) under Secti 7 of the IBC for initiating CIRP against M/s Aksh Optifibre Limi (Respondent/Corporate Debtor). As per the disclosures made in part of the petition, it has been mentioned that the principal amount of lt is Rs.2,00,00,0001-,lhe interest amount is Rs. 7,05,15,476/-

CP (IB) No.45/7/JPR/2023 IN THE NAIIONAL COMPANY LA TRIBUNAL JAIPURBENCH S{.- and t penal interest amounts to Rs. 27,98,599/-, thus the total outs ing amount is stated to be Rs. 3,33,14,0751-. lt. It is bmitted that in the year 2010-2011, the Corporate Debtor app the Financial Creditor for certain financial assistance in the form unsecured loan of Rs. 2,00,00,000/- and promised that it shall repay e said unsecured loan along with interest calculated @l|Yo per ann from the date of payment till the date of refund. Further, as submi the Corporate Debtor also assured that in case it was unable to the said amount, interest would be calculated @2a%per annum on the utstanding interest amount from the date of payment till the date of lll. It is submitted that the amount of unsecured loan of Rs. 2,00, ,000/- was reflected as long-term loan and advance under the head her Loans and Advances" attached with the balance sheet ofthe Appli and as short-term borrowings under the head "Inter Corporate t from Others" as on 31.03.2021 in the balance sheet of the Co Debtor. tY. It has so been mentioned that a recall notice was sent on 12.08.2019 the outstanding principal amount of Rs. 2,00,00,000/- along with of Rs. 13,38,899/- upto 31.07.2019, calling upon the te Debtor to pay the amount along with interest within 15 days. F, a demand notice was also sent on 22.01.2022 wherein the amo : of Rs. 2,00,00,000/- has been claimed as the outstanding prmc 1 amount. Certain documents have been attached as mentioned inp of the petition, including ledger accounts, confirmation letters, TDS uction by Aksh Optifibre, recall of unsecured loan, financial ts of the Respondent/Corporate Debtor for various financial years, the record of default attached by the Financial Creditor issued

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBUNAL JAIPUR BENCH S4- bvN wherein the stafus has been shown as "Deemed to be Au ated" and the date of default, as per NeSL, is stated to be 01.09 t9. RATE DEBTOR: 4, A reply h been filed by the Respondent/Corporate Debtor, inter alia, taking several a as follows: i. Itiss that the present petition is nothing but an abuse of the process of law that there is no debt or financial debt as defined under Section 2(rr) r Section 5(8) of the IBC which is due and payable by the Debtor to the Petitioner/Financial Creditor. lt. It is averred that the legal notice dated 22.0L.2022 issued by the Appli has been duly replied to on 09.02.2022 and it has been clarifi by the Corporate Debtor that the Applicant was rather liable to pay amount of Rs. 46.79 lakhs as on 31.08.2019 to the Corporate Deb It has also been stated that even interest was liable to be paid by the Fi ial Creditor to the Corporate Debtor. lll. It thus been contended that the amount which is claimed by the Fi al Creditor as debt is a disputed amount and that the present petiti is barred by limitation in view of the fact that the loan in questi was obtained during the period between 2010-2012, whereas the rate Debtor had duly notified its dispute vide e-mail dated 24.07.

12 itself, and therefore the presentpetition, which has been filed in Au 2022, is clearly barred by limitation. iv. It has been contended by the Corporate Debtor that the Petitioner has sed material facts and that no financial debt has been ng in the balance sheet of the Corporate Debtor and that the CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBUNAL JAIPUR BENCH S4- reli placed by the Petitioner on the two entries appearing in the ba sheet filed by the Corporate Debtor for the financial year 2020- 2l arc ing but old entries, and therefore such information cannot be relied by the Petitioner to its advantage and in the subsequent Fina al Year, it has been shown as adjusted thus reflecting nil ng. v. It is al fuither submitted on behalf of the Corporate Debtor that it is a very o company running for the past 37 years, is ISO certified, and has been isted company on the BSE and NSE since August 2000, and the public areholding presently is stated to be to the extent of 73.05%. The Corpo Debtor is stated to be engaged in the manufacture of optical fibre les and fibre reinforced plastic rods with facilities available at diffi locations. vi.

It has rther been contended by the Respondent/Corporate Debtor that the P itioner is being represented through one of its Directors and :ers, who is also a partner in a parhrership firm, and that Mr. Arun Sood f the Petitioner and Dr. Kailash Chaudhary of the Corporate Debt are old friends and had great interpersonal rapport. vll. , taking advantage of the friendship, Mr. Arun Sood had o to the Corporate Debtor one of his properties on rent, which was in the of his partnership firm, and the said premises was taken on 1i by the Corporate Debtor with an agreement between the parties that electricity bill for the use of the said premises would be paid by the Debtor subject to the reading from the sub-meter to be instal at the premises. viii. It has her been averred and contended that Arun Industries, on the other, started raising invoices for electricity consumption in the name f the Petitioner Company for the licensed premises and since the CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBL]NAL JAIPURBENCH 94- were friends, the Corporate Debtor never raised any obi s to the same. tx.

It has so been stated that this was however, being done with ulterior by Mr. Arun Sood, as instead of providing the actual bills with meter ings, the Petitioner used to raise invoices by manually menti ing the units allegedly consumed by the Corporate Debtor witho providing the actual electricity bills. Later on, Mr. Arun Sood was inted as an Additional Director of the Corporate Debtor in the month f May 2010. Ho r, since invoices were being raised by the Petitioner for electri ity consumption by the Corporate Debtor, the amount reflected 1n invoices was paid diligently by the Corporate Debtor from time tot and in that process the Petitioner was raising highly inflated invoi for electricity consumption whereas the actual consumption by the C Debtorwas much less. Meanwhile, some loan was offered by Mr Arun Sood to the Corporate Debtor to the tune of Rs. 4.55 crores, which paid on different dates, for which no documents however, were ecuted in writing as both parties enjoyed mutual confidence. xl. Later, e Corporate Debtor vacated the concerned premises in the mon f October 2073, and therefore the license agreement came to an end.

Corporate Debtor also pointed out to the Petitioner the inco: tly raised invoices for alleged electriciry consumption by the Debtor, and such concern was raised by the Corporate Debtor an e-mail dated 24.07.2012, whereafter several rounds of ions took place. It is further stated by the Respondent that later on, it found that the Petitioner had received excess payment towards el ity charges.

CP (IB) No.45/7/JPW2023 IN THE NATIONAL COMPANY LA TRIBLINAL JAIPUR BENCH S{- xii. It was mutually agreed that the Corporate Debtor would continue to make payment of the unsecured loan (ICD) obtained from the Petiti. However, at the same time, the Petitioner would refund the amount charged from the Corporate Debtor with respect to ex ve invoices raised on account of electricity consumption al lyby the Corporate Debtor.Later,Mr. Arun Sood was also asked to from the Corporate Debtor on27 .09.2013 itself. The Corporate however, continued making repayment of the loan amount until tt.07. 019 with the clear understanding that the excess amount received by the etitioner towards electricity charges would be reimbursed. xiii. Since amount had been overcharged by the Petitioner on account of electri ty dues, the Corporate Debtor therefore stopped making further repa with respect to the Inter Corporate Deposit and also keeping 1n of the previous cordial relations between the parties, the te Debtor continued to reflect the outstanding loan amount of Rs.2 in its balance sheet records as the Applicant had promised to the excess amount. xtv. It was further submitted that the Applicant had promised to reimburse the ex amount and upon repayment of the same, the entry of Rs. 2.0 crores to be removed from the records as settled. It was thereafter, somet. after the Covid period was over, during which period in fact, the ionality/manufacturing activity of the Corporate Debtor remal paralyzed, that the Corporate Debtor was surprised to receive al notice dated 22.01.2022 alleging a debt of Rs. 2.0 crores g in the financial statements of the Corporate Debtor. A was duly given by the Corporate Debtor vide letter dated 09.02 022, wherein it also demanded an amount of Rs. 46.79 lakhs along ith interest from 01.09.2019.

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBI.'NAL JAIPI.JRBENCH S.l-xv. The Debtor has further contended and avened that the Audit rs of the Corporate Debtor had pointed out that when no amount was and payable to the Applicant/Petitioner, the entry of Rs. 2.0 crores could not continue in its books as the same would incorrectly portra the liabilities of the Corporate Debtor, and accordingly the said entry 'as removed from the financial statements for the year 202112 o as adjusted amount. xvi. It thus been contended that the Applicant/Petitioner has not ed this Tribunal with clean hands and has made false ts regarding the alleged loan amount of Rs. 2.0 crores and that the liable to be adjusted by the Corporate Debtor and the excess pay t made on account of electricity charges remains unadjusted. It isa contended that the present petition was initially filed in August 2022 was registered only on 31.08,2023, which reflects that the Petiti er was not serious enough in pursuing the present petition. It is also inted out that the Corporate Debtor is a solvent entity and a going c having many projects in hand and is a listed company with imately 73.05% public shareholding. F THE APPLICANT: 5. A rejo has been filed by the Petitioner whereby the reply filed by the Corporate ;or has been disputed making the following submissions: i. It has submitted that the Corporate Debtor had taken an unsecured loan Rs. 4.55 crores wherein the Applicant/Petitioner has contended that Corporate Debtor, by way of its reply dated 09.02.2022 sent in to the statutory notice dated 22.01.2022 issued by the Appli t/Petitioner, has for the first time stated a concocted narrative ofa xisting dispute of alleged over charging of electricity

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBT'NAL JAIPUR BENCH S{- charges by the Petitioner. It has also been submitted that the Debtor has failed to produce any e-mail/communication or from the Corporate Debtor showing any document with respect to the leged liability of a sum of Rs. 1.0 crore on account of alleged elr ty dues. ii. It has lso been contended that the reliance placed by the Corporate on an e-mail communication dated 24.07.20t2 is misleading, in view the fact that the said e-mail communication was withdrawn by the C rporate Debtor itself vide another e-mail subsequently sent on 02.08 0I2. Further, the Corporate Debtor has unequivocally ackno ledged the unsecured debt of Rs. 2 crores in the Corporate 's balance sheet, letter issued by the Corporate Debtor to the Tax Department in reply to a notice, confirmation issued by the Debtor, and the regular payments of interest being made by the Debtor. iii. It has us been contended by the Applicant/Financial Creditor that it is all itted case of the Corporate Debtor that the Corporate Debtor had taken unsecured loan which has been consistently reflected in the sheets from F.Y. 201 l-72 to F .Y. 2020-2l,lhe details of which have been furnished in para no. 72 of the rejoinder in a tabulated. Further, the Corporate Debtor has duly paid interest on the loan amo t from time to time, and therefore reliance has been placed on the jud t in Anuj fain, ffierim Resolution Professional for Jaypee In Ltd. v. Axis Bank Ltd. l(2020) 8 SCC 4011, wherein for the of Part II of the Code, the basic elements required to be met for fina al debt are disbursal against consideration for the time value of. mo The Financial Creditor has also relied upon certain other j.rd cited as fnnoventive Industries Pvt, Ltd, v. ICICI Bank &

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBI.INAL JAIPURBENCH g 4--

Anr. I 2018) 1 SCC 4071and E.S. Krishnamurthy v. Bharuth Hi-Tech B (P) Ltd.l(2022) 3 SCC 1611. iv. It has lso been contended in the rejoinder as wellas in the submissions made behalf of the Petitioner that, as an afterthought, the Corporate has made a concocted story regarding the alleged amount due on t of excess payment of electricity bills made by the Corporate to the Petitioner/Financial Creditor and that such excess amount is lir e to be adjusted against the amount of loan disbursed by the Petiti Y. It has been contended that as per the documents, the default is duly on the relevant platform, as issued by NeSL, where the debt i shown as "Deemed to be Authenticated." vl. It has so been submitted that the present application was registered on r 31.08. 23 andthat the delay caused in getting the application registered is not ttributable to the Petitioner. It is further submitted that when the Petiti inancial Creditor issued notice to the Corporate Debtor, the Debtor, in order to provide some legitimacy to its fabricated, suddenly extinguished the debt in the subsequent financial r for the year 2021-22without any basis, which is nothing but a self-ing document of the Corporate Debtor itself. DIFF MEMBERS OF THE 6. As briefly to in the opening of this order, it is noticed that the Hon'ble (Judicial) and Hon'ble Member (Technical) of NCLT, Jaipur h have passed orders on the same date i.e. 21.01.2026 by giving

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TzuBI'NAL JAIPIJRBENCH g.l-separate divergent findings. The concluding paras of the order passed by the Hon'bl Member (Judicial) are reproduced as under: ,8 On perusal of communication dated 24.07.2012 and 09 2.2022, it is evident that there is a pre-existing dispute the parties, the reconciliation of account has been ied out and with mutual consent the amount of Rs. 46, 9,908/- has been stated to be due by the Petitioner to the dent. Therefore, in view of its preliminary submissions I the present petition deserves to be dismissed.

Therefore, after having perused the documents placed on and the contention of both tlte counsels, this court is of th considered opinion that the Petitioner in the present case h failed to bring the most relevant facts and necessary d, ts on record namely:-director of the Petitioner was one of the directors in the ,dent Company. B) t the time of disbursal of the loan, he was on the board of ih, t Company. He entered into deed of license with the Respondent ,y and leased out the premises of sister concern Arun tries. D) invoices qua electricity charges were raised in the name of he Petitioner Company instead of Arun Industries, the lic E) Petitioner has been raising electricity charges invoice up the Respondent which were duly paid. F) 're were issues with respect to the inflated electricity c between the parties. G) The said issued of inflated charges was raised by the R, t vide email dated 24.07.2012.

CP (IB) No.45l7/JPW2023 IN THE NATIONAL COMPANY LA TRIBLTNAL JAIPURBENCH g"/.-

Hl recall noticewas duly responded to by the Respondent email dated 09,02,2022 and the detailed response gave out entire background of the transactions between the parties. document makes it conspicuous that in 2019 after iliation of the accounts by both the parties, an amount of 46,79,908/- was stated to be pending to be paid to the Corporate Debtor by the Petitioner/ Financial

1t The aforementioned conscious non-disclosure of relevant f, and necessary documents by the Petitioner itself CS ishes that the Petitioner has not approached this 'icating Authority with clean hands. T2 At this juncture, this Court consider it appropriate to refer to judgment of the Hon'ble coordinate bench in the case of Finlease Pvt. Ltd. vs. Mothers Pride Dairy India Pvt. Lt wherein the Hon'ble Court in a similar set of cit 'tances has been pleased to hold that: - "Since the alleged loan was disbursed and defoulted during the Directorships of Mr. Kaushal Mittal and Mr, Yug Mittal in the Corporate Debtor, who are the "Current Directors" in the Petitioner Company M/s Santoshi Finlease Pvt. Ltd., and at whose behest the Petition (IB)662(ND)/2022 under Section 7 has been filed, it is evident that the petition is not filed with an intent of seeking resolution of the Corporate Debtor rather it is for causing mlury to the Corporate Debtor M/s Mothers Pride Dairy India Private Limited by its own Ex-Directors." The aforementioned judgment has been upheld by the Hon'ble NCLAT. Thefacts of the present case are identical to thefacts in the aforementioned\ judgment and thus, ihe same it frlly applicant to the present case. Further, on perusal of the record, it transpires that an has been made to mislead the court into initiating the of an otherwise solvent entity.

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perusal of the documents, it is evident that the Respondent ist an insolvent company. The present Petition has beenJiled by the Petitioner not for the resolution of the Respondent Cc ry but for recovery of the amount. The Court has also n informed that a recovery suit stands filed by the Petitioner the same is pending before the Hon'ble Delhi High Court ch further establishes the foct that the interest of the itioner lies in recovering the amount and not in the of the Respondent Company. Thus, keeping in view the totality of circumstances and the of the Petitioner, this Court does not consider it priate to grant any indulgence in the present case. Thus, t Company Petition bearing CP No. 45/7/JPN2023 stands " di, issed. 7, The relev concluding paras of order passed by the Hon'ble Member (Technical are reproduced as under: After perusing the order of Judicial Member and idering the abovestatedfacts in the pleadings, documents, binding precedents, I am satisfied that: - ,) nancial debt exists; b) 'efault has occurred; and tion is complete and maintainable as per section 7 of ") rBC 2016. 25, The objections raised by the Corporate Debtor involve ted questions of fact and accounting, which cannot be icated in summary proceedings under Section 7 of IBC, 20 26, In my view, rejection of the petition would amount to €llt ing the jurisdiction of the Adjudicating Authority beyond t is contemplated under the Code.

Accordingly, I hold that Company Petition deserves admission. I would therefore: - a) Admit the Company Petition under Section 7 of the In, lvency and CP (IB) No.45/7/JPR/2023 INTHENATIONALCOMPANY TRIBUNAL JAIPURBENCH Sol.- lcruptcy Code, 2016; b) 'lare moratorium under Section 14 of the Code; c) int an Interim Resolution Professional in accordance wi law; and d) Direct public qnnouncement qs per the Code and, R ations. 2, In view of the same, let the matter be placed before the Ht 'ble President, NCLT, New Delhi fo, appropriate " I tions. 8. It is in aforesaid background of difference of opinion given by the Hon'ble mbers vide their respective judgements/order that the present matter has me before me to hear and decide with respect to the difference of opinion the orders passed by the Hon'ble Members. FINDINGS: 9. I have the Ld. Counsels for the Petitioner and the Respondent and perused records, exhibits/annexures. I have also heard the Ld. Counsels on the ts of difference arising from the separate orders passed by the Hon'ble

10. Upon 1 perusal of the judgments passed by the Hon'ble Members, I find that points of difference of opinion arising from the two judgments, which determination by me, can be culled out and configured in the form of questions in the following manner: 'there is a debt and default.

CP (IB) No.45/7/JPR/2023 INTHENATIONALCOMPANY TRIBUNAL JAIPIJRBENCH 94-- b. Whe at the stage of adjudication under Section 7 of the Code, the t of pre-existing disputes can be considered. Whet the concealment of surrounding facts and circumstances as alleged are of any material relevance under the given facts and ofthe present case. i. Whether ere is debt and default. 11. As re the question of existence of "financial debt" and occurrence of "default" the purposes of Section 7 of the Code, the Financial Creditor has submi that the Corporate Debtor had approached it in the financial year 201 11 for financial assistance in the form of unsecured loan of Rs.2,00, '-. In support ofthe said contention, the Financial Creditorhas also on record certain documents as already discussed inparu 3(iv) of this order.

12. At this, in order to determine whether the financial debt and default stand es ished, it becomes necessary to examine the balance sheet entries and the ri contentions of the parties with regard to acknowledgment of liability. I: this regard, it is seen that the Financial Creditor has annexed copies of Corporate Debtor's Balance Sheets from Financial Year 20LL- 12 to Fin ial Year 2020-21and has submitted that the claim amount of Rs. 2,00,00, '- had been continuously acknowledged in the Balance Sheets of It the Debtor. has further been submitted that subsequent to CP (IB) No.45/7/JPR/2023 INTHENATIONALCOMPANY TRIBUNAL JAIPI.JRBENCH SC-

Financial ear 2021-22, the Corporate Debtor unilaterally wrote off the aforesaid rount. The details of the same are tabulated herein below:

S. No. Fin: ncial Year Amount reflected in the Head/remark under which the Balance Sheet of the amount is reflected in the Corporate Debtor Balance Sheet 1. 201 -2012 3.55 Crore Short-term borrowings Unsecured Loans Deposits (unsecured) l5o/o Inter Corporate Deposit from others repayable on demand 2. 201 .13 2.30 Crore Short-term borrowings 3. 201 -14 2.00 Crore Unsecured Loans Deposits (unsecured) 4. 207, -15 2.00 Crore l5o/o Inter Corporate Deposit 5. 201 .16 2.00 Crore from others repayable on 6. 20lt -17 2.00 Crore demand 201 -18 2.50 Crore 8. 201 .19 4.00 Crore Inter Corporate Deposits from others are repayable on demand and carries rate of interest @ 11.50%to liYop.a. 9. 20tl .20 2.50 Crore Inter Corporate Deposits from others are repayable on demand and carries rate of interest @ 11.50%to l6Yop.a. 10. 2021 .21 2.00 Crore Inter Corporate Deposits from others are repayable on demand

13 Per contra the Corporate Debtor has submitted that no such financial deb appears in ts balance sheets for Financial Years 2021-22 and2022-23 an< that the er ries relied upon by the Petitioner are merely old entries. It har further be n contended that after the meeting held in September 20lS between tl ) parties, the Petitioner, instead of refunding the excess amoun

CP (IB) No.45/7/JPR/2023 INTHENAIIONI\LCOMPANYLA TRIBI,INAL JAIPURBENCH s+ charged electricity dues, proceeded to issue a legal notice dated 22.0t. , which was duly replied to by the Respondent vide reply dated 09.02.202, whereby an amount of Rs. 46.79 lakhs along with interest was demanded the Petitioner allegedly in lieu of excess payment made on account o lectricity bills.

14. It has also submitted by the Respondent that upon receiving no response to the id reply, the auditors of the Corporate Debtor pointed out that since no was due and payable, the entry of Rs. 2 crores could not continue i the books of accounts of the Corporate Debtor and accordingly the same' 'as written off from the balance sheets of the Corporate Debtor from Fi ial Year 2021-22 onwards.

15. Since the ntention of the Corporate Debtor is that subsequent removal of entries the books of accounts reflects that no debt is due and payable, it becomes to examine whether such a write-off in the books of accounts the Corporate Debtor results in discharge of liability. In this regard, re may be made to the judgment of the Hon'ble Supreme Court in Akbarali Nanji vs. Union of India & Ors. t(2006) 5 SCC 3021, w it was observed as follows: ,rl '. ...The write off is only an internal accounting procedure to up the balance sheet, and it does not affect the right of creditor to proceed against the borrower to realize his

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16. Further, Ld. Counsel for the Petitioner has placed reliance on the judgment Hon'ble NCLAT in Subrata Sardar v. Central Bunk of India and Anr., 'Company Appeal @D Qn{ No. 45 of 2025) to support its argument :what is relevant is acknowledgment of the debt by aparty and not how it treated the debt in the books of accounts. The relevant excerpts in this are reproduced hereinbelow: .1 ......The respondent explains that in the balance sheet of tor-CD for 2 0 I 9-2 0 2 0, 2 0 2 I -2 0 2 2, and 20 2 2-2 0 2 3, acknowledged its liability arising out of its contract of tee and hence its petition under Sec.7 is within time. But the appellant would contend that in its balance-sheet the lia, ility to the respondent is disclosed only as 'contingent lia, ility' and that it would not amount to an aclcnowledgement. 13. This argument is impressive but itfails to hide thefallacy ... wit in. ....1t is an unilateral and a self-serving t which the appellant has made in its boolcs merely. llant and not how ribe it in the ri, thus, this tribunal holds that the appellant indeed has ac wLedged ils liability within the period of limitation, and 'ily it has to be held that the petitionfiled under Sec.7 is not barred by time." 17. Similarly, Petitioner also relied on the judgment of the Hon'ble Delhi High Cou in Arti Mittal vs. State (Crl. M.C. No. 1525/2003) wherein it as follows: ,B. First of all these annual returns are in the nature of self-ing documents in as much as they arefiled by the party or Company Secretary or any other fficial of the company.

CP (IB) No.45/7/JPR/2023 IN THE NAIIONAL COMPANY LA TRIBUNAL JAIPUR BENCH 94- of the fundamental principles of evidence as enunciated u Section 21 of the Evidence Act is that although a SC harming admission is relevant because no person would e an admission against his own interest unless and until it to be true but as a self-favouring admission on the of the same analogt is held to be not admissible and not. If that is permitted to be done then a party can 'acture as muclt of evidence in his favour as is possible his means to save him or her from the clutches of law. bre, on this analogt the annual return cannot be a basis _fo, hing the complaint or the summoning order. Further, in of the annual returns there is a detail of the share 'ing in respect of the present petitioner and her husband Am Mit::l which is given apart.from holdings of the other

18. Further, Hon'ble Supreme Court in State Bunk of India vs Doha Bank Q.P.S.C & (Civil Appeal No. 8527 Of 2022) observed as under: ,r2, It is pertinent to note that in the communication dated 19. 3.2019 sent by the counsel of the CD, it is stated that res about the corporate guarantees have been made by the in theirfinancial statements on an ongoing basis. In any, mere non-disclosure of corporate guarantee in the rt ial statements of CD for financial years 2016-17 and '-18, 20 cannot deprive the appellantsfrommaking a claim on the is of the said guarantees. At best, it could be treated as 't committed by the CD." d., 19. In ioner of Income-Tox, West Bengal II vs. Durgu Prasud More (Civil Ap Is Nos. 1898 and 1899 at 1968) the Hon'ble Supreme Court observed follows: I, ...It is true that an apparent must be considered real until it shown that there are reasons to believe that the apparent is the real. In a case of the present kind a party who relies

CP (IB) No.45/7/JPIV2023 IN THE NATIONAL COMPANY LA' TRIBUNAL JAIPUR BENCH

0n recital in a deed has to establish the truth of those recitals otl it will be very easy to make self-serving statements in either executed or taken by a party and rely on recitals. If all that an assessee who wants to evade tax is ve some recitals made in a document either executed by or executed in his favour then the door will be left wide to evade tax. A little probingwas sfficient in the present to show that the apparent was not the real. The taxing ities were not required to put on blinkers while looking at e documents produced before them. Th"y were entitled to t, into the surrounding circumstances to find out the reality of recitals made in those documents." 20. The Hon Appellate Tribunal for Forfeited Property, New Delhi in Shri Ajaib vs. Competent Authority (FPA No. 3l/Delhi of 1991) observed as under:

the ultimate analysis, the petitioner has relied mainly the so-called balance-sheets or statements of assets and 'lities as on March 3I, 1970, to March 3 I, 1976, to explain only the investments made by him in the nao forfeited, viz., Vasant Vihar House at Delhi, and 116 kanals of d in village Sabowal, District Jalandhar, but also the int 'tment of Rs. 2,95,000 made by his wife, Smt. Rajinder Ka ', in the purchase of 12lK-I9M of land on September 17, t9. These balance-slteets are at best self-serving statements red by the appellant and are not at all substantiated by any of account or documentary evidence and, therefore, t be relied Ltpon." 2L. From the foresaid judgments, discussed hereinabove, the settled legal position ch emerges is that while books of accounts and balance sheet entries itute relevant material for determining the existence of liability, greater ev value is attached to admissions made against the interest

CP (IB) No.45/7/JPR/2023 IN THE NAIIONAL COMPANY LA' TRIBLINAL JAIPUR BENCH q- I of a party to documents subsequently created in its own favour. It has also been that aunilateral act of changing the accounting treatment, removing tries, or altering the manner in which liabilities are reflected in the fina statements does not, by itsetf, determine the non-existence of a debt. Lik ise, self-serving documents or self-favouring declarations in the balance rt cannot be regarded against the Financial Creditor and in favour of the who has created the document, as otherwise a party would be permitted create evidence in its own favour through its own unilateral acts. This bec s all the more important in the facts and circumstances of the present where in the financial statement of the previous years the corporate ,btor has continued reflecting the financial debt while making due entries in financial statement/ balance sheets and thereafter suddenly has shown the bility as nil in the later year of its financial statement.

22. Applying aforesaid principles to the facts of the present case, it is seen that the Fi ial Creditor has relied upon disbursal of the loan amount, continuous yment of interest by the Corporate debtor year after year for establishin the debt in question as also has relied upon the financial statements records of the Corporate Debtor, wherein the amount in question continuously been reflected from Financial Year 20ll-12 tlll Financial ear 2020-21 as an' outstanding unsecured loan/inter-corporate deposit'. S ch entries were made by the Corporate Debtor in its own records

CP (IB) No.45/7/JPR/2023 IN THE NAIIONAL COMPANY LA TRIBUNAL JAIPUR BENCH 94'-- over a nsiderable period of time. Such documents amount to acknowled emanating from the Corporate Debtor itself and, being admissions its own interest, carry considerable evidentiary value.

23. The C Debtor, on the other hand, seeks to rely upon the subsequent financial for Financial Year 2021-22 onwards, wherein the earlier entries ing the said entries ever since from the year 20ll onwards were written off the basis that the auditors had advised that no amount remained due and ble after taking into account the alleged adjustment of electricity dues. r, such subsequent financial statements admittedly came to be prepared disputes had arisen between the parties and after legal notices had alread been exchanged. 24. In view of aforesaid judicial precedents, these subsequent omissions or deletions m the books of accounts by the Corporate Debtor, being self-serving in re, cannot be placed on the same footing as the earlier consistent gements made over several years. Further, in the absence o arry independent material demonstrating actual discharge, settlement, reconciliation, or extinguishment of liability, the subsequent removal o ies appears to be an unilateral and self-serving creation by the Corporate, hence, the Corporate Debtor cannot defeat the effect of earlier ledgements which establish the debt merely by relying upon documents sequently generated in support of its own stand. Therefore, the CP (IB) No.45/7/JPR/2023 INTHENATIONALCOMPANY TRIBUNAL JAIPURBENCH -- consistent flection of the said amount of Rs. 2 crores under the head of 'inter-corporate unsecured deposits repayable on demand and carrying interest itutes a valid acknowledgement of debt by the Corporate Debtor.

25. Additi y, to establish the debt, the Financial Creditor has also placed on record the Account maintained with the Corporate Debtor for the period 01.04.2010 ti1l 22.07.2022, attached as Annexure-l with the petition, ing that payments were indeed made to and received from the C te Debtor, with remaining outstanding balance reflected as Rs. '-. 2,00,00, Further, the Financial Creditor has also placed on record a letter 03.09.2018 issued by the Corporate Debtor addressed to the Income Ta Officer, wherein the Corporate Debtor also provided a summary of the led accounts relating to the loan transaction evidencing the interest paid on loan at the rate of 15% since Financial Year 2010-11 (page no. 47 of the ition). In the said communication, the Corporate Debtor had also categorica acknowledged that the amount of Rs. 2,00,00,000/- advanced by the Fi ial Creditor was in the nature of an 'unsecured loan'. The relevant ex of the said communication are as follows:

Sir, Wii reference to your notice dated 28-08-2018 received by our offi on 3I-08-2018 in assessment proceedings of Mh

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TzuBI]NAL 94.- tanu Investments Private Limited, we are attaching below tails as required by you- Ledger statements (Electricity Reimbursement A/c, Loan A/c Interest A/c) of Mh Shantanu Investments Private Limited 'm F.Y. 2010-11 till date - Annexure 'A', 'B' and 'C'. Nature of transaction held with above said company during Y. 2010-11 - Aksh OptiJibre Limited has taken unsecured Rs. 2 521.00 in Y. 2010-11 and deducted l0% TDS on the same At6h ,.fibre Limited has reimbursed electricity charges of Rs. 3 ',27,661.00 to M/s Shantanu Investments private Limited. )) 26. It would .lso be relevant to mention that the Corporate Debtor has not denied receipt o funds from the Financial creditor but instead has acknowledged the same various instances in its reply and the corporate Debtor's principal defence not that no amount was ever advanced, but that the amount allegedly stood adjusted against excess electricity dues. The relevant in this regard from the reply of the corporate Debtor are reproduc hereinbelow:

.....The loan in question was obtained during the period 'n 2010 to 2012. However, the CD had duly notified its ute vide its email dated 24.07.2012 itself I k) In the meantime, Mr. Arun Sood also offered the CD C, 'y qn unsecured loan of'{4,55,00,000/- (Rupees Four C, and Fifty Five Lacs) through the Applicant Company paid the same on various dates between 21.09.2010 to 02.2012 as Inter Corporate Deposit ("ICD"). Since the 'ers were good friends, no documents were executed in ng. The CD was making regular payment including the CP (IB) No.45/7/JPR/2023 INTHENATIONALCOMPANY TRIBI.INAL JAIPURBENCH t agreed between the parties towards repayment of the '-mentioned ICD,... (h) ....1t was further agreed that for the qccounting 'es, the CD would continue to make repayment of the red loan (ICD) obtained from the Applicant, however, Applicant at the same timewould refund the excess amount by them to the CD.,.. (i) Based on the above understanding, the CD continued king repayment of the loan amount till tt.0l.20tg. The id repayment was being made with a clear ing that the excess amount received by the Applicant electricity charges would be reimbursed and the Applicant continuously assuring the CD that the said payment would released by them. ....Its mala fide intentions are also evident from the mere it that has falsely stated that the loan amount was 00,00,000 (Rupees Two Crores) whereas the actual amount {4,55,00,000/- (Rupees Four Crores and Fifty Five Lacs

27. Having idered the material placed on record regarding the existence and acknowl t of the transaction, it would now be appropriate to examine the tion regarding the absence of any formal written agreement between' parties and whether such absence, by itself, would negate the existence f a financial debt. The law in this regard is well settled. rnAgarwal Polysa Ltd. v. K.K. Agro Foods and Storage Ltd. (2023 SCC Online NCLAT ), wherein the Hon'ble NCLAT held that a written financial contract i not the only basis for proving a financial debt, and that debt can be prov by other relevant documents. The relevant excerpts from the judgment reproduced below:

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY TRIBI.]NAL JAIPURBENCH ..H-

Whenwe lookinto the statutory scheme as reflected in the 'ication to Adjudicating Authority Rules, 2016 and CIRP 'qtions, 2016, it is clear thatfinancial debt can be proved f, other relevant documents and it is not mandatory that en financial contract can be only basis for proving the fi ial debt. We, thus, answer Issue No.l holding that;!!_!; t no be the onl al to the 28. Similarly, n Arunkumur layuntilal Muchhala v. Awuitu Properties 2024 SCC OnIi NCLAT 428, the Hon'ble NCLAT observed as follows: The Adjudicating Authority, however, took a view that 'e should be afinancial contract between the parties which idate the rate of interest and date of repayment. The ting Authority took a view that there is no written 'ment to establish the nature of transaction between the ies, hence, Appellant failed to prove the debt. We have held ial contract is 29. Applying e aforesaid principles to the facts of the present case, although admittedly no formal written loan agreement was executed between the parties, h, the additional material placed on record evidencing the existence an unsecured loan, prima facie indicates that the transaction was not merel a simple transfer of funds devoid of any commercial ng, particularly when the fact that the loan was advanced has also not been ied by the Corporate Debtor and interest thereon was continued to be paid the Corporate debto r year after yearsince the time the disbursal was made hich remains an undisputed fact on the part of the Corporate debtor. A itionally, the contemporaneous documents placed on record,

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBUNAL JAIPI'RBENCH ,|"L '-' including accounts, financial statements, confirmation letters and communi ions issued by the Corporate Debtor itself, independently lend support to nature of the transaction as a financial debt. Therefore, merely because written agreement was executed between the parties, the transaction of automatically be deprived of its character as a financial debt and absence of a formal written agreement by itself cannot be treated ive of the nafure of the transaction.

30. On the bas of the material placed on record by the Financial Creditor, the amount continuously reflected as an unsecured loan/inter-corporate deposit in financial statements of the Corporate Debtor, the amount of loan bein specifically acknowledged by the Corporate Debtor in its communi ion dated 03.09.2018 as an unsecured loan carrying interest and the i actually being paid year after year, and in the absence of any cogent ial produced by the Corporate Debtor demonstrating discharge or exti of liability, I am satisfied that the amount in question constitutes "financial debt" within the meaning of Section 5(8) of the Code.

31. As regards default" under Section 3(12), the same means non-payment of a financial when it has become due and payable, in whole or in part, and is not paid the debtor or the Corporate Debtor. In the present case, the Financial itor has placed on record the recall notice dated 12.08.2019 recalling t outstanding principal amount of Rs. 2,00,00,000/- along with CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA' TRIBI'NAL JAIPUR BENCH )I'- accrued i calling upon the Corporate Debtor to repay the amount within the ulated period. Thereafter, Iegal notice dated 22.01.2022 was also i ing repayment of the outstanding dues. It is the case of the Financial itor that despite such recall and subsequent demands, the Corporate failed to repay the amount claimed to be due and payable. 32. It is true t the Corporate Debtor, in response to the legal notice dated 22.01. issued a reply dated 09.02.2022 raising objections and alleging adjustmen f electricity dues against the amount claimed by the Financial Creditor. , as already discussed hereinabove, the defence of the Corporate r is not that no amount was ever received from the Financial t Creditor, rather that the same stood adjusted against alleged excess electricity 'ges. Further, apart from such assertions, no independent material been placed on record by the Corporate Debtor demonstrating actual disc settlement, reconciliation, or extinguishment of the liability. Rather, Debtor itself, in its reply, has admitted as follows: (il On account of continuous failure of the Applicant to the excess amount received by them, despite repeated ts, tlte CD was constrained to stop making any further ent with respect to the ICD which was even otherwise be ,.g made only for accounting purposes as it was the Ap, ,licant who owed money to the CD...." 33. Hence, the id admission regarding stoppage of payments particularly the in on the loan amount, coupled with the mere assertion of adi n the absence of any supporting material evidencing a concluded CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBLINAL JAIPUR BENCH SL-reconcili n or settlement between the parties shows that the Corporate Debtor fail to repay the amount due and payable.

34. The Fi Creditor has also placed on record the Record of Default issued by NeSL ' in the status of the debt has been reflected as "Deemed to be Authentic " as per Form-D wherein the date of the default has also been reflected 1st September 2019. Hence, although the Corporate Debtor disputes th liability and raises issues relating to adjustment of accounts, once the exi of financial debt and recall of the amount stand prima facie establi and mere dispute with regard to the quantum or alleged adjustmen that too at the stage of Section 7, cannot,in itself displace the material p on record indicating non-payment of the recalled amount. Therefore, ima facie, the record indicates occuffence of default within the meaning o Section 3(12) of the Code. J3. To su ze the findings discussed hereinabove, I conclude, upon cumulati evaluation of the material placed on record, that the Financial Creditor h established: (i) disbursal of funds to the Corporate Debtor, (ii) the transacr on being in the nature of a financial debt, notwithstanding the absence o a written loan agreement, in view of the surrounding and material placed on record, (iii) continuous acknowled nt of liability by the Corporate Debtor in its financial statements Financial Year 20ll-12 till Financial Year 2020-21, (iv)

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA' TRIBI.INAL JAIPUR BENCH - J\/toL-issuance recall notice and subsequent legal notice seeking repayment of the due, (v) failure on the part of the Corporate Debtor to repay the recalled nt, and (vi) the Record of Default placed on record issued by the ion Utility reflecting the status as "Deemed to be Authenticated". Further, Corporate Debtor has failed to place arry cogent and con material establishing actual discharge or extinguishment of the liabili by way of adjustment of electricity dues. 36. Thus, in v of the aforesaid analysis and findings, I am satisfied that the Financial reditor has established the existence of "financial debt" and occuffe "default" within the meaning of Sections 5(8) and 3(12) of the IBC,2016 pectively. ii. Whether the stage of adjudication under Section 7 of the Code, the argument pre-existing dispute can be considered. 37. As regards issue whether, atthe stage of adjudication under Section 7 of the IBC,2 16, disputes relating to the debt, including alleged adjustment of electricity as contended by the Respondent herein, are required to be considered it becomes necessary to examine the nafure of the defence raised by the te Debtor and the scope of enquiry permissible under Section 7 of the 38. It is the of the Corporate Debtor that it subsequently came to know that inflated ices had allegedly been raised towards electricity consumption

CP (IB) N o.4517 I JPR|2023 IN THE NAIIONALCOMPANY LA TRIBI'NAL JAIPUR BENCH '/ Sil by the P in respect of electricify supplied on the licensed premises belonging the partnership firm of the Petitioner's Director. According to the te Debtor, upon detecting such discrepancies, an email dated 24.07.201 was addressed to the Petitioner wherein day-wise details of electricity ion along with particulars of the alleged discrepancies and ex amounts charged were furnished, and according to the the excess amount allegedly charged was to the tune of more than Rs.1, ,00,000/-. It has fuither been submitted that no response thereto was receiv from either Arun Industries or Mr. Arun Sood. 39. The Co Debtor has fuither submitted that pursuant to the aforesaid commun ion, meetings were held between the representatives of both parties for lution of the issue and after several rounds of discussions, it was al y agreed that excess amounts had been received by the Petitioner towards icity charges and the same would be reimbursed to the Corporate ;or. It has also been contended that for accounting pu{poses, the Co Debtor was to continue repaying the unseeured loan/inter-corporate it obtained from the Petitioner while the Petitioner was to allegedly taneously refund the excess electricity amount to the Corporate 40. It has ,r been contended that another meeting was held in September 2019 w n the parties once again allegedly agreed that the excess amount

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBT'NAL JAIPUR BENCH 54.- would be funded and since the promoters of both entities had friendly relations, formal documentation was executed in this regard. However, apart such assertions, no minutes of meetings, correspondence, settlement reconciliation statements, or any contemporaneous record evi mg such arrangement have been placed on record by the Corporate

41. In this re the settled legal position governing admission of an application under 7 of the Code is that the Adjudicating Authority is only required t satisff itself regarding the existence of financial debt and occu1Tence of default and is not required to enter into an adjudication of disputes i the manner contemplated under Section 9 of the Code wherein the issue o pre-existing dispute is also available to the Corporate Debtor to ratse as a bnce against the alleged debt and default. In this context, the observati of the Hon'ble Supreme Court in Innoventive Industries 'CICI Limited Bunk and another (2018) 1 SCC 407 are of relevance and hereinbelow: t. On the other hand, as we have seen, in the case of a te debtorwho commits a defoult of afinancial debt, the icating authority has merely to see the records of the 'mation utility or other evidence produced by thefinancial to satisfy itself that a defoult has occurred. It is of no that the debt is disputed so long as the debt is "due" i.e. ble unless interdicted by some law or has not yet become in the sense that it is payable at somefuture date. It is only this is proved to the satisfoction of the adjudicating CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA' TRIBI'NAL JAIPUR BENCH )r- -' ority that the adjudicating authority may reject an ication and not otherwise." 42. Similarly, the Hon'ble Supreme Court in Catalyst Trusteeship Limited versus Reulty Pvt. Ltd. (Civil Appeal No. 7424 Ot 2025) while reiterating principles laid down in fnnoventive Industries (supra), observed follows: , I ..... Thus, the concept of a pre-existing dispute, which may be stumbling block for admission of an application filed Utlt Section 9 of the Code by an operational creditor, has no on an application filed by a financial creditor under 7 of the Code." 43. From the id judgments, the legal position which emerges is that the concept of isting dispute", which assumes signifi cance in proceedings under 9 of the Code, does not by itself constitute a ground to reject an appli on under Section 7 filed by a Financial Creditor. The scope of enquiry Section 7 is confined to determining whether a financial debt exists and ether a default has occurred in relation thereto.

44. However, en assuming for the sake of argument that the defence relating to adi t of electricity dues raised by the Corporate Debtor is examined on merits, it is seen that the same primarily rests upon alleged oral and purported meetings between the parties. Though reliance has been upon email dated 24.07.2012 raising concerns regarding electricity rges, the subsequent case of the Corporate Debtor regarding an alleged understanding for adjustment and reimbursement of amounts is CP (IB) No.45/7/JPR/2023 IN THE NAIIONAI COMPANY LA TRIBUNAL SL/ JAIPUR BENCH n0t ed by any written settlement, reconciliation statement, board or resoluti corespondence, any independent material evidencing conclusi f such arrangement. 45. The has further submitted that the amount of Rs. 46.79 lakhs claimed reply dated 09.02.2022 had been arrived at after making adjustmen towards the loan amount and other payments allegedly due from the Petitio. In support of the plea of adjustment and set-off, reliance has been pl on the judgment of the Hon'ble Supreme Court in Bharti Airtel Limited Another vs. Vijuykumar V. Iyer and others (Civil Appeal Nos. 3088-3089 f 2020) wherein the following was observed: ,r5 On the aspect of mutual dealings and also equity, it is to be ted that adjustment of the inter-connect cltarges are under a rate and distinct agreemenL The telephone service Prt 'iders use each other'sfacilities as the caller or the receiver be using a different service provider. Accordingly, tments of set-off are made on the basis of contractual set- These are also justified on the ground of e:quitable set-off, set-offto this extent has been permitted and allowed by the Re, ution Professional. The transaction for purchase of the rip t to use the spectrum is an entirely dffirent and ected transaction............For the same reason, we will reject the argument tltat by not allowing set-off,new rights being created and, therefore, Section l4 of the IBC will not be tive and applicable. Moratorium under Section 14 is to t protection and prevent a scramble and dissipation of the assets of the corporate debtor. The contention that the a nt" to be set-off is not part of the corporate debtor's in the present facts is misconceived and must be " ted.

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46. However, reliance placed upon the aforesaid judgment does not appear to the case of the Corporate Debtor. In Bharti Airtel (supra), the set-off w considered in the context of mutual dealings arising out of contractua affangements between parties and founded upon independent agreemen governing such transactions. In the present case, no such indepen agreement or established arrangement regarding adjustment of electricity against the loan amount has been placed on record. Hence, mere ions regarding an oral understanding or friendly relationship between, without any contemporaneous material establishing a concluded ement, cannot by themselves establish a legally enforceable adj or extinguishment of liability. 47. Also, the itioner has specifically denied the existence of any such arralrge and has disputed the Corporate Debtor's assertions regarding reconcili and adjustment of accounts. Thus, the rival stands taken by the parties wo ld necessarily require detailed examination of disputed questions of fact, i cluding oral understandings, meetings between the parties, reconciliat of accounts and adjustment of mutual claims, which cannot be undertak within the limited scope of proceedings under Section 7 of the Code. 48. Accordi: ,in view of the judicial precedents discussed hereinabove and the settl legal principles governing the limited scope of enquiry under CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBUNAL I't JAIPIJRBENCH

Section 7 f the Code, I am of the considered view that the plea of pre-existing spute raised by the Corporate Debtor cannot defeat the maintaina of the present proceedings. Even otherwise, the alleged adjustme of electricity dues is not supported by any contemporaneous material lishing extinguishment of the liability. Therefore, in the facts of the case, such defence cannot displace the material placed on record a y establishing the existence of financial debt and occurrence of default as iscussed in the preceding paragraphs of this order. ll1. Whethe the concealment of surrounding facts and circumstances as alleged re of any material relevance under the given facts and crrcu nces ofthe present case. t 49. The has contended that the Petitioner has suppressed and concealed facts, inasmuch as (i) the Corporate Debtor had raised a dispute wi the Petitioner as far back as in the year 2012, which was again reiterated September 2019, (ii) in response to the legal notice dated 22.01.20 vide reply dated 09.02.2022 the Corporate Debtor had specificall stated that the Applicant was liable to pay a sum of Rs.46.09 lakhs a with interest after making necessary adjustments towards the loan and bsequent payments made thereafter, (iii) the promoters of both entities friendly relations and taking advantage of such relationship, Mr. Arun had permitted use of premises belonging to Arun Industries

CP (IB) No.45/7/JPR/2023 INTHENAIIONALCOMPANY TzuBLINAL JAIPURBENCH JA-- under a of License, whereafter disputes allegedly arose regarding electricity, and (iv) the Petitioner has incorrectly reflected the loan amount as .2,00,00,000/- whereas according to the Corporate Debtor the aggregate amount was Rs.4,55,00,000/- 50. In of the contention that the Petitioner has not approached this Tribunal clean hands, reliance has been placed by the corporate debtor on a jud t of the Hon'ble Supreme Court in Kishore Sarurite vs State Of U,P, & (Criminal Appeal No.L406 of 2012) relating to suppression of material ts and concealment of relevant circumstances on the judgment wherein Hon'ble Court observed as under: ,r3 ......A litigant is bound to make 'full and true disclosure of f,

35 No litigant can play 'hide and seek' with the courts or 'pick and choose'. Truefocts ought to be disclosed as the knows law, but not facts. One, who does not come with id facts and clean breast cannot hold a writ of the court soiled hands. Suppression or concealment of material is impermissible to a litigant or even as a technique of '. In such cases, the Court is duty bound to discharge nisi and such applicant is required to be dealt with for tempt of courtfor abusing the process of the court..." 51. Further, Respondent also relied on the judgment of the Hon'ble NCLAT Shree Am Rice Mill vs. Kaneri Agro Industries Ltd. (Company Appeal (AO (I cy) No.143 of 2021) to contend that while considering an app under Section 7 ,the Adjudicating Authority is not precluded from CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBTINAI JAIPURBENCH exammlng true nature of the underlying transaction and the surrounding The relevant observations are reproduced hereinbelow: ,rr, ue No. (i) l{hether the Adjudicating Authority has exceeded tn jurisdiction while examining the nature of transaction in q tion? 15. We would like to refer the Judgment of Hon'ble Supreme rt in the case of Phoenix Arc Pvt. Ltd. Vs. Spade Financial Ltd.&Ors. Civil Appeal No. 2842 of 2020 decided on ls February, 2021 which reads as under: ,r4 The IBC has made provisions for identifuing, annulling or 'ing "avoidable transactions" which distressed co ies may ltave undertaken to hamper recovery of c 'itors in the event of the initiation of CIRP. Such avoidable t ctions include: (i) preferential transactions under lon 43 of the IBC; (ii) undervalued transactions under 45(2) ofthe IBC; (iii) transactions defrauding creditors un, 'er Section 49 of the IBC; and (iv) extortionate transactions un, 'r Section 50 of the IBC. The IBC recognizes that fur the s of an insolvency regime, the real nature of the ions has to be unearthed in order to prevent any person fr, taking undue benefit of its provisions to the detriment of th rights of legitimate creditors."

18 The Hon'ble Supreme Court in the above-mentioned case he that even f the Applicationfiled under Section 7 meets all th requirements, then also the Adjudicating Authority has 'ised discretion carefully to prevent and protect the C, 'rate Debtor from being dragged into the Corporate I y Resolution Process malafide. 19 Thus, it is clear that the Adjudicating Authority is obliged to vestigate the nature of the transaction and should be very c 'ious in admitting the Application in order to prevent taking u e benefit of provisions of IBC to detriment of the rights of t, timate creditors as well as to protect the Corporate Debtor

CP (IB) No.45/7/JPR/2023 IN THE NATIONAL COMPANY LA TRIBIINAL JAIPUR BENCH )L-being dragged into CIRP with malaJide. Section 65 's that f any person initiates the Insolvency Resolution or or liquidation proceedings fraudulently with ous intend for any purpose other than for resolution of y or Liquidation, the Adjudicating Authority may e upon such person a penalty." 52. The dent has also relied on the judgment of the Hon'ble NCLAT in Acute Mediu Pvt. Ltd. & Ors. ys. Rockman Advertising und Marketin Qndiu) Ltd, & Ors, (Company Appeal (AT) (Insolvency) No. 1480 of2 ) wherein it was observed as under: While there is no quarrel over thefoct that Section 7 yests on the financial creditors to initiate CIRP proceedings a. inst the defaulting Corporate Debtor, however, debt and de It cannot always be seen in isolation. We cannot be u ndful of the fact that the Adjudicating Aathority is also ired to take care that the provisions of Section 7 of IBC are misused or abused in any manner either by the financial 'itor or the promoters of the Corporate Debtor to take u advantage at the cost of insolvency resolution...." 53. Reliance further been placed on the judgment of Hon'ble NCLAT in M/s Santoshi Private Limited vs. State Bank of India (Company Appeal ( (Insolvency) No. 974 of 2023), The relevant observations are rep

As noted above by us that rejection of attempted CIRP due s of its fraudulent and malicious initiation, we need go into the issue of the existence of financial debt and It, yet for sake of completeness we are delving into it to out the real nature of the transactions in this case. On the of the existence of debt, we find that the Appellant a sum of Rs 92,00,000/- (Page 147 of the Appeal)

CP (IB) No.45/7/JPR/2023 IN THE NAIIONALCOMPANY TRIBLINAL j,t JAIPURBENCH -

'he CD, as per the account stdtement of the Appellant. The nature of the purported 'Loan Agreement' has been noted by previous in paragraphs. ..........Therefore, in the facts an the circumstances of the case we find that all the amounts sh, wn qs amount paid by the Appellant, were paid to acquire stc in CD and appoint the Directors, We cannot but conclude tht the amount of Rs 92,00,000/- in question was not a loan instead iffised by the Appellant as an investment in equity ire control and Directorship in the CD, and not as a or financial debt. And the said investment was not in the of a disbursement against time value of money, which is a ndamental criterion for a financial debt.

Based on thefacts and circumstances, we conclude that the tion 7 petition was filed with malicious intent. .. . " 54. There be no dispute with the legal proposition emerging from the aforesaid that a litigant is under an obligation to disclose all material and that Section 7 proceedings cannot be permitted to be used for any other than insolvency resolution. Further, where surrounding indicate fraud, collusion, or artificial creation of a debt, the Adjudi Authority is empowered to examine the real nature of the tran However, such examinations must rest on objective material placed on rd and not merely on allegations. 55. The jud relied upon by the Respondent are distinguishable on facts. In Ki, rire (supra), the issue pertained to deliberate suppression and conceal of material facts having a direct bearing on adjudication. In Acute Media (supra), contemporaneous material disclosed collusive

CP (IB) No.45/7/JPR/2023 INTHENATIONALCOMPANY TRIBUNAL JAIPURBENCH J,L artan ts and artificial creation of debt, leading to a finding of fraudulent initiation CIRP. Similarly, in Santoshi Finlease (supra), apart from the f existence common directorship, the contemporaneous material itself demon that the amounts advanced were in substance the investments made for isition of stake, control and management of the Corporate Debtor than genuine financial debt. It was in such peculiar circums that the Hon'ble Courts proceeded to examine the real character the transaction and concluded that the proceedings were initiated with mal ious intent. However, in the present case, although certain surroundi circumstances and prior associations between the parties have been poi out, no material has been placed on record demonstrating that the trans ion in question was intended for acquisition of control, artificial creation o debt, or initiation of CIRP with malicious intent. It has also not been on record as to how previous association of the parties concerned prejudiced the corporate debtor in any manner particularly when is a clear disbursal of the loan amount duly admitted by the corporate tor as reflected in its balance sheets, as also in its reply and further in backdrop of the fact that the interest was being paid by the corporate on such loan amount from time to time. 56. Further, t allegation of concealment of material facts against the Petitioner also requi examination in light of the pleadings as a whole. It is also

CP (IB) No.45/7/JPR/2023 INTHENATIONALCOMPANY TRIBLTNAL JAIPURBENCH 3L-'- relevant note that the Petitioner has not remained silent on the aforesaid allegati raised by the Corporate Debtor. Rather, in the rejoinder, the Petitioner has specifically denied the allegations regarding the alleged of electricity dues and sought to explain the surrounding alleged and relied upon by the Corporate Debtor. r 57. The has also disputed the Corporate Debtor's contention that disputes existed between the parties since the year 2012 and has conte that the email dated 24.07.2012 relied upon by the Corporate Debtor i lf stood subsequently withdrawn. Had there been any deliberate intention suppress material facts from this Tribunal, the Petitioner would not have ifically dealt with and contested the said allegations upon these being so 58. The r has also taken a specific stand in the rejoinder that for the purposes adjudication under Section 7 of the Code, the enquiry is confined to ion of debt and default and has placed reliance on Innoventive Industyi, (supra) and ,8.S. Krishnamurthy (supra) in support thereof. Hence, mere fact that all surrounding factual assertions subsequently raised by .Corporate Debtor were not elaborately narrated in the petition itself automatically lead to an inference of deliberate suppression or lack of fides, particularly when such allegations have been specifically dealt with nd denied through subsequent pleadings and supporting material.

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Also, no judice has been shown by the corporate debtor in view of the alleged iation between the parties in the past. Moreover, the contention of the R t Corporate Debtor for alleged concealment of surrounding facts and relating to prior association between the parties and one of director of the Petitioner being on the board of the Respondent Corporate r is of no significance when such surrounding facts are seen and the facts and circumstances of the present case relating to debt and lt. I find that such surrounding facts as allegedly concealed do not have y bearing or impact whatsoever on the merits of the case under Section 7 of the Code, not even remotely, as the debt and default is conclusi y proved as there is an admitted disbursement and consequential t.

59. Similarly, , contention regarding variation in the amount of loan being Rs. 2 crores Rs. 4.55 crores also does not by itself establish fraud or supp of material particulars. The relevant consideration is whether the claim ing the subject matter of the present proceedings has been substanti by the material placed on record. Merely because there may exist fi ial dealings of a larger value between the parties would not automati ly lead to an inference thai the claim made in the present petition is false or t material facts have been concealed.

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60. The issue therefore, does not appear to be one of concealment of material facts, but r revolves around the rival interpretations of the same set of transacti and surrounding circumstances by the respective parties. Accordi y, the judgments relied upon by the Respondent are distingui le on facts and do not advance its case and, therefore, the argument f concealment of material facts cannot be accepted in the peculiar facts and rcumstances of the present case. 61. In view f the foregoing discussion and findings on the issues framed herei and while agreeing with the order of the Hon'ble Member (Techni I conclude that the Financial Creditor has been able to establish the exi of 'ofinancial debt" and occurrence of "default" within the meaning Sections 5(8) and 3(12) of the lBC,2016. I further conclude that the plea pre-existing dispute raised by the Corporate Debtor does not constitute valid ground for rejecting the present proceedings under Section 7 ofthe C and that the allegations regarding concealment of material facts and su g circumstances, in the facts of the present case, do not disclose y fraud, collusion, artificial creation of debt, or malicious 'CIRP initiation so as to warrant rejection of the petition. 62. In view o the above findings, I am of the considered opinion that there is a debt and t which meets the ingredients of Section 7 of the Code, and therefore petition deserves to be admitted. I order accordingly and direct

CP (IB) No.45/7/JPR/2023 INTHENATIONALCOMPANY TRIBI.]NAL JAIPTJRBENCH initiation Corporate Insolvency Resolution Process against the Corporate Debtor with all consequential directions, including declaration of under Section 14 of the Code and appointment of the Interim Resoluti Professional (I.R.P.).

63. The ce (File No. 0611312026-NCLT (JPR)) as per the order of the Hon'ble is answered accordingly. 64. Let the be placed before the concerned/Regular Bench for further proceedi as per law. S4-- Praveen Gupta Member (Judicial) Date: 09.

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