Rajendra Narayan Panda S/O Late Shri ... vs Shri Mangesh Vittal Kekre Insolvency ...

IN THE MATTER OF: Rajendra Narayan Panda S/o Late Shri Bhagwan Panda R/o 84, Sector A, Shahpura, Bhopal (M.P.)- 462 016 ...Appellant

Versus

1. Shri Mangesh Vittal Kekre Insolvency Resolution Professional Panda Technologies India Pvt. Ltd. 607, Chetak Center, RNT Marg, Near Hotel Shreemaya, Indore (MP)-452001 ...Respondent No.1

2. Omkara Assets Reconstruction Private Limited No.9, M.P. Nagar First Street, Kongu Nagar Extension Tirupur, Coimbatore (T.N.)-641 607 ...Respondent No.2

Present: For Appellant : Mr. Vijayesh Atre and Ms. Aarya Chhangani, Advocates.

For Respondent : Mr. Kushal Bansal, Anish Ahluwalia, Adv. for R-1. Mr. Kunal Godhwani, Kinjal Chadha, Adv. for R-2.

JUDGMENT

(Hybrid Mode)

[Per: Arun Baroka, Member (Technical)]

This is an Appeal preferred by the Appellant under Section 61 of the

Insolvency and Bankruptcy Code, 2016 against the impugned Order and

Judgment dated 21.01.2025 passed by the Hon'ble Adjudicating Authority, National Company Law Tribunal, Indore Bench in CP(IB) No.40 (MP) 2022

through which the Hon'ble Adjudicating Authority has admitted the

application under Section 7 of the Code.

Submissions of Appellant:

2. Appellant who is the Suspended Director of the Corporate Debtor M/s.

Panda Technologies India Private Limited - namely Rajendra Narayan Panda.

had approached L&T Finance Limited to avail short term loan financing

facility on a revolving basis for purchase of industrial products from L&T

Valves Limited.

3. Section 7 was admitted on 21.01.2025 against the Corporate Debtor

on its initiation by the Financial Creditor - Omkara Assets Reconstruction

Private Limited the assignee of L&T Finance Limited.

4. The main ground for the Appeal is that the principal amount as in Form

1 Application under Section 7 of the Code was only Rs. 64,33,286/- and the

interest was claimed to be Rs. 76,07,249/- aggregating to Rs.1,40,40,535/-

which is alleged to be incorrect and defective.

5. Appellant claims that as per the audited balance sheet of the Appellant

company as on 31.03.2017 the balance outstanding was Rs.48,01,648/-. As

per the Audited Balance Sheet of Appellant Company at 31st March, 2017,

the balance outstanding was Rs.48,01,648.43; as at 31 March, 2018, the

balance outstanding was Rs.40,06,309.79; as at 31 March, 2019, the balance

Company Appeal (AT) (Insolvency) No. 372 of 2025 2 of 36 outstanding was Rs.40,06,309.79; and as at 31 March, 2020, the balance

outstanding was Rs.40,06,309.79 only.

6. A bare perusal of the sanction letter dated 17th July, 2013, the

sanctioned limit was Rs.150 lacs, with tenure of 90 days from disbursement,

on which accrued interest was payable at the end of every month in the first

week of next month and delayed payment charges for 91-120 days was @

16% and 121 days onwards @ 22% p.a. for the period of delay. The sanction

letter does not provide for payment of interest beyond 90 days and instead

provides for payment of delayed payment charges and the sanction letter

nowhere provides for compounding of interest as wrongly alleged in the

application under Section-7.

7. Furthermore, Clause 1.5.7 of the Facility Agreement provides that

interest shall be calculated on a 365-day year basis, there is no mention

about monthly compounding of alleged interest. The Summary Schedule as

per clause 1.5.2 of the Facility Agreement, provides for interest @ 13.75% p.a.

for 90 days, and interest accrued at the end of every month was payable on

or before 10th day of next month. The summary schedule does not provide

for payment of interest beyond 90 days period and only provides for payment

of Delayed Payment Charges for 91-120 days @ 16% p.a. and 120 days

onwards @ 22% p.a. on the defaulting amount for the period of default. The

legal notice dated 19th April, 2017 also mentions "Delayed Payment Charges"

and not the word Interest and therefore, no payment of interest was envisaged

in the contractual terms. Therefore, the summary schedule, which is part of

Company Appeal (AT) (Insolvency) No. 372 of 2025 3 of 36 the facility agreement does not provide for compounding of interest, much

less monthly compounding of interest beyond 90 days. Further, the term

"Accrued" and "Compounding" are different phrases in the commercial

parlance and cannot be equated or interchanged.

8. The assignment agreement dated 24th September, 2019, which is in

favour of the Respondent No.2, has a table under item No.21 of which the

amount assigned to the Respondent No.2 on 24th September, 2019 as

"Unsecured" (emphasis supplied) was Rs.63,04,190/-, (including interest)

which demonstrates that as on 24th September, 2019 the amount

outstanding (including interest) was only Rs.63,04,190/-. Therefore, the

table attached to the application under Section-7 showing the outstanding

amount of Rs.1,40,40,535/-(including principal of Rs.64,33,286/- and

interest of Rs.76,07,249/-) suffers the following defects:

o The table is based on "Compound Interest Calculation"

which was never intended and contractually agreed between the parties and therefore the amount arrived at is incorrect;

o The table shows "monthly compounding of interest" which is also not as per the contractual terms;

o The table starts calculation for arriving at amount of alleged interest instead of Delayed Payment Charges with effect from 28th April, 2018 while the assignment had taken place on 24th September, 2019 and therefore the first 18 entries in the table are of a period prior to Deed of Assignment for which an alleged interest amount of Rs.43,43,043.24 has been wrongly charged for arriving at

Company Appeal (AT) (Insolvency) No. 372 of 2025 4 of 36 the total amount of alleged interest of Rs.76,07,428.85, and therefore the very basis of calculation of total alleged interest of Rs.76,07,248.85, is wrong, being not as per the contractual terms;

o The residual amount of the alleged interest of Rs.32,64,205/-also suffers from several defects because it is calculated on monthly compounding basis, which is not as per the contractual terms; since as per the contractual terms mentioned in the summary schedule at Page-126 of appeal, delayed payment charges @ 22% p.a. was payable and therefore the total amount of Delayed Payment Charges (Not the Interest) on the assigned principal amount of Rs.40,06,310/- till the date of filing of application i.e. 4th April, 2022 comes out to Rs.22,03,470/- only which has been worked out as under:

Sr. Period INR No. 1. 24.09.2019 to 3 1.12.2019 2,20,347 2. 01.01.2020 to 31.12.2020 8,81,388 3. 01.01.2021 to 31.12.2021 8,81,388 4. 0 1.0 1.2022 to 3 2,20,347 1.03.2022 Total 22,03,470

o As per the contractual terms, the aforesaid amount of delayed payment charges, starting from the date of Assignment (24th September, 2019) till the date of filing of the application (4th April, 2022) under Section 7 comes out to Rs.22,03,470/-only, which if added with the outstanding principal of Rs.40,06,310/-, comes out to Rs.62,09,780/- only, which is less than the threshold.

9. Furthermore, the account of the appellant was classified as NPA on

11th June, 2016 and thereafter the Demand Notice dated 19th April, 2017

Company Appeal (AT) (Insolvency) No. 372 of 2025 5 of 36 was issued and the application under section 7 was filed on 4th April, 2022

and therefore, the application is barred by limitation.

Submissions of Respondent No. 2- Omkara Assets Reconstruction Private Limited - Financial Creditor

10. In 2013, the Corporate Debtor approached L&T Finance Limited

(earlier known as L&T Fincorp Limited) seeking a short-term financing facility

on a revolving basis for the purchase of industrial products for L&T Valves

Limited. In pursuance of the same, on 17.07.2013 L&T Finance Limited

issued a sanction letter to the Corporate Debtor. As per the terms of the

Sanction Letter dated 17.07.2013 the maximum sanction limit provided to

the 1,50,00,000/- (Rs. One Crore Fifty Lakhs).

11. In furtherance of the Sanction letter, L&T Finance Limited entered into

a Facility Agreement dated 17.07.2013 with the Corporate Debtor). As per the

terms of the Facility Agreement, the Corporate Debtor authorized L&T

Finance Limited to disburse the amount directly to the manufacturer i.e.,

L&T Valves Limited towards the purchases of industrial products. The

Corporate Debtor also issued a demand promissory in favour of L&T Finance

Limited.

12. The Corporate Debtor was irregular in repaying the amount in terms

of the Facility Agreement. Accordingly, L&T Finance Limited issued a

Demand Notice dated 19.04.2017 seeking repayment of Rs. 67,19,390/-

(Sixty-Seven Lakhs Nineteen Thousand Three Hundred Ninety) along with

further interest till the date of realisation.

Company Appeal (AT) (Insolvency) No. 372 of 2025 6 of 36

13. On 24.09.2019, L&T Finance Limited executed an Assignment

Agreement in favour of the present Answering Respondent i.e., Omkara

Assets Reconstruction Private Limited and assigned its debt and all rights,

title and interest in the Corporate Debtor to the Answering Respondent in its

capacity as Trustee of PS 10/ 2019-20 Trust.

14. Post assignment, Respondent (Financial Creditor) being trustee of PS

10/2019-20 Trust, on 18.12.2021 issued a loan recall notice to the

Appellant/Corporate Debtor seeking discharge of all liabilities by the

Corporate Debtor. In view of the default committed by the Corporate Debtor,

the Answering Respondent / Financial Creditor had preferred the petition

under Section 7 of the Code seeking initiation of CIRP against the Corporate

Debtor which was eventually allowed by the Ld. Adjudicating Authority by

way of the Impugned Order.

15. The Ld. Adjudicating authority is not required to ascertain the exact

quantum of debt. It is the case of the Appellant that the quantum of the debt

calculated by the Answering Respondent is incorrect, and as such the

Impugned Order must be set aside. However, the Appellant has failed to

consider that once the threshold of Rs. 1,00,00,000/- (Rs. One Crore) in

terms of Section 4 of the Code has been crossed, the Ld. Adjudicating

Authority is required to admit the petition seeking initiation of the Corporate

Insolvency Resolution Process. At this juncture, it is necessary to place

reliance on the Judgment in the matter of Rajesh Kedia v. Phoenix ARC

Private Limited in Company Appeal (AT) (Ins) No. 916/2021 wherein it

Company Appeal (AT) (Insolvency) No. 372 of 2025 7 of 36 was held that once the threshold is crossed, it is not for the Ld. Adjudicating

Authority to decide the exact 'Quantum of Debt', but what has to be examined

is whether there is a 'Debt' and 'Default'.

16. It is also relevant to the refer to the judgement in the matter of Mr.

Vineet Khosla Vs. M/s Edelweiss Asset Reconstruction Company Ltd. &

Ors., Company Appeal (AT) (Ins) No.441 of 2019 wherein this Hon'ble

Tribunal made it clear that dispute over the quantum of debt cannot be a

ground for rejection of insolvency petition. Similar observations were also

made by this Hon'ble Appellate Tribunal in the case of Mr. Gouri Prasad

Goenka Ex-Chairman of NRC Limited v. Punjab National Bank and Anr.

Company Appeal (AT) (Insolvency) No. 28 of 2019 wherein it was held that

the Adjudicating Authority is not concerned with the quantum of the payable

debt at the stage of admission of the petition under Section 7 of the Code.

17. In the matter in hand, it is not disputed that the Corporate Debtor had

entered into a financing facility with the Answering Respondent/Financial

Creditor. The Appellant in the present case has not denied the existence of

the facility agreement, the sanction letter and the fact that an amount of Rs.

1,50,00,000/- (Rs. One Crore Fifty Lakhs) was disbursed to the Corporate

Debtor. The Section 7 Petition was filed by the Financial Creditor on

15.06.2022. Interestingly, the Appellant neither before the NCLT nor before

this Hon'ble Appellate Tribunal has filed any ledger account to establish the

amount in default as on 15.06.2022.

Company Appeal (AT) (Insolvency) No. 372 of 2025 8 of 36

18. It is an admitted fact that as on 31.03.2016 the principal outstanding

towards the loan was Rs. 85,59,134/- (Balance sheet of the Corporate Debtor

annexed at Page 210 of the Appeal). The amount of Rs. 85,59,134/-

outstanding as on 31.03.2016 is only towards principal as the Appellant in

its reply before the NCLT has admitted that the interest amount has never

been acknowledged by the Corporate Debtor. Thus, it is clear that the

principal outstanding as on 31.03.2016 was Rs. 85,59,134/-.

19. It is matter of fact that the Corporate Debtor was in default as on

31.03.2016 as the Appellant has admitted that the account of Corporate

Debtor was declared as NPA on 11.06.2016 (admitted by the Appellant in its

written submissions filed before the NCLT, refer page 336 of the Appeal). It is

RBI guideline to classify the account as NPA when the Principal or Interest

remain overdue for 90 days or more. Thus, the Corporate Debtor started

defaulting in the loan account from 11.03.2016 onwards and the Corporate

Debtor has itself acknowledged in its balance sheet that the principal

outstanding as on 31.03.2016 was Rs. 85,59,134/-.

20. Calculation of interest based on Corporate Debtor's balance sheet is as

follows:

S. Acknowledgment Amount Period Interest No. Amount*

1. As on 31.03.2016 85,59,134/- 01.04.2016 to 18,83,009/- (Pg. 210 of Appeal) 31.03.2017 2. As on 31.03.2017 40,06,310/- 01.04.2017 to 10,56,363/- (Pg. 228 of Appeal) 31.03.2018

Company Appeal (AT) (Insolvency) No. 372 of 2025 9 of 36 3. As on 31.03.2018 40,06,310/- 01.04.2018 to 35,25,552/- (Pg. 248 of Appeal) 31.03.2022) = 4 years Total Interest Amount 64,64,942/- Principal amount acknowledged by Borrower = 40,06,310/-

Interest amount = 64,64,942/-

Total outstanding = 1,04,71,252/-

*Interest amount includes the delayed payment charges in terms of the

sanction letter.

21. The balance sheet for the financial year 2016-17 has been signed on

29.11.2017 and also uploaded/filed with the Ministry of Corporate Affairs on

29.11.2017. In terms of Section 18(1) of the Limitation Act, 1963 which is

also reproduced below, the fresh period of limitation has to be computed from

the date of the signing of acknowledgment, the fact that the Balance Sheet

for the Financial Year 2016-17 has been signed on 29.11.2017, the fresh

period of limitation for the period of 3 years shall begin from 29.11.2017 and

accordingly, the limitation period is extended till 28.11.2020. Section 18 of

the Limitation Act, 1963 is reproduced below:

"18. Effect of acknowledgment in writing. (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed."

22. The Petition under Section 7 of the Insolvency and Bankruptcy Code,

2016 was filed by the Financial Creditor on 06.04.2022. It is submitted that

the time period from 15.03.2020 to 28.02.2022 is required to be excluded for

Company Appeal (AT) (Insolvency) No. 372 of 2025 10 of 36 the purpose of computation of the limitation period in terms of the Suo-Moto

order dated 10.01.2022 passed by the Hon'ble Supreme Court in Suo-Moto

Writ Petition (C) No. 3 of 2020. Further, in the cases in which the limitation

period would have expired during the period between 15.03.2020 to

28.02.2022, notwithstanding the actual balance period of limitation

remaining, all persons shall have a limitation period of 90 days from

01.03.2022. Thus, the present petition is within the limitation period i.e. 3

years from the date of default.

23. Adjudicating Authority at the time of admission of a Section 7 petition

is only required to ascertain the existence of a debt and default. It is a settled

law that debt and default are sine qua non and only condition for admitting

an application under Section 7 of the Code. The Hon'ble Supreme Court in

the matter of Innoventive Industries Ltd. v. ICICI Bank observed that for

the initiation of the Corporate Resolution process by financial creditor under

sub-section (4) of Section 7 of the Code, 2016, the Adjudicating Authority on

receipt of Application under sub-section (2) is required to ascertain existence

of default from the records of Information Utility or on the basis of other

evidence furnished by the Financial Creditor under sub-section (3).

24. Under Section 7, the Adjudicating Authority is required to satisfy (a)

Whether a default has occurred, (b) Whether an application is complete and

(c) Whether any disciplinary proceedings against the proposed Insolvency

Resolution Professional. Once satisfied, it is required to admit the petition. In

the instant case, the record establishes that there is a 'debt' and a 'default'

Company Appeal (AT) (Insolvency) No. 372 of 2025 11 of 36 and the Application is complete and the Adjudicating Authority has rightly

admitted the Application under Section 7 of the Code.

25. Further, it is the case of the Appellant that the acknowledgement in

the balance sheet cannot be construed as acknowledgment for the purpose

of extending the period of limitation. It is settled position of law that there

need not be a specific or direct acknowledgment of a particular liability which

is sought to be enforced. Reliance is placed upon the judgment passed by

Hon'ble Bombay High Court in the matter of Teumal Bishamal Sindhi V.

Amar Mohandas Sindhi, AIR 1973 Bom 84. Further, it is also a settled

position of law that a liberal construction should be placed upon documents

purporting to be acknowledgments. Further, reliance is also placed on the

judgement passed by the Hon'ble Supreme Court in the matter of Vidyasagar

Prasad v. UCO Bank and Anr. Civil Appeal No. 1031 of 2022 wherein the

argument on behalf of the Corporate Debtor that the there is no unequivocal,

unambiguous and specific acknowledgment of debt owed to the Financial

Creditor in the balance-sheet entries of the Corporate Debtor and in the

absence of the same, the said entries cannot be relied upon for the purpose

of extending limitation was rejected and it was held that such entries even if

not specified shall amount to unequivocal admission of liability.

26. It is sufficient if the statement on which a plea of acknowledgment is

based relates to a present subsisting liability though the exact nature or the

specific character of the said liability is not indicated in words. All that is

necessary is that the words used in an acknowledgment must indicate the

Company Appeal (AT) (Insolvency) No. 372 of 2025 12 of 36 existence of jural relationship between the parties such as that of debtor and

creditor, and it must appear that the statement is made with the intention to

admit such jural relationship. It is an admitted position that the Corporate

Debtor owes a Financial Debt and is also in default, thus, the

acknowledgment in balance sheets clearly indicate existence of jural

relationship and liability, thus, the argument of the Appellant that the

acknowledgment should be of the exact liability is baseless.

Submissions of the Resolution Professional.

27. Hon'ble National Company Law Tribunal ("NCLT"), Indore bench vide

its order dated 21.01.2025 in Company Petition [CP(IB)/40 (MP) 2022] filed

by Omkara Assets Reconstruction Private Limited, ordered commencement

of Corporate Insolvency Resolution Process (CIRP) under the provisions of the

Insolvency and Bankruptcy Code, 2016 ("IBC") of Panda Technologies Private

Limited ("Corporate Debtor").

28. The Interim Resolution Professional (IRP) Mr. Mangesh Vitthal Kekre

made Public Announcement in Form A on 24.01.2025 in English newspaper

- Free Press Journal (Bhopal Edition) and Hindi newspaper Dainik Agniban

(Bhopal Edition) inviting claims from all the stakeholders in accordance with

Section 13 of the Insolvency and Bankruptcy Code, 2016 and Regulation 6 of

the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process

for Corporate Persons) Regulations, 2016. The last date for submission of

claim as per Public Announcement was 04.02.2025.

Company Appeal (AT) (Insolvency) No. 372 of 2025 13 of 36

29. The Resolution Professional (RP) initially received a claim from only one

financial creditor i.e. Omkara Assets Reconstruction Pvt. Ltd., within the

prescribed due date for submission of claims and prior to the constitution of

the Committee of Creditors (CoC). Pursuant to receipt of claims, the said

claims were verified by IRP and accordingly, a Committee of Creditors (CoC)

was constituted on 11.02.2025, in accordance with provisions of Section 21

of the IBC, 2016. A list of creditors along with a report certifying the

constitution of the Committee of Creditors was filed with Hon'ble NCLT on

13.02.2025 in accordance with regulation 13(2)(d) and 17(1) of IBBI (CIRP)

Regulations, 2016 respectively. The said report was taken on record by

Hon'ble NCLT. COC confirmed the appointment of Mr. Mangesh Vitthal Kekre,

Interim Resolution Professional as Resolution Professional in accordance with

the provision of section 22 (3) (a) of the Code. Subsequently, after the

constitution of CoC, a claim was received from another secured financial

creditor, HDFC Bank Limited, on 18.02.2025. (NPA Date 28.09.17). This claim

was verified and accepted for collation in accordance with Regulation 13 of

the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations,

2016. As a result, the CoC was reconstituted on 02.04.2025. Thereafter,

HDFC Bank Limited submitted a revised claim on 03.04.2025, which was also

duly verified and accepted for collation. It is pertinent to mention that HDFC

Bank Ltd had sanctioned and disbursed various credit facilities to the

Corporate Debtor. The account of corporate debtor was classified as Non-

Performing assets on 28 September 2017. Later, the debt in respect of the

said credit facilities along with all the underlying security interest, rights, title

Company Appeal (AT) (Insolvency) No. 372 of 2025 14 of 36 & interest therein has been assigned by HDFC Bank Ltd in favor of Pegasus

Assets Reconstruction Pvt. Ltd. (Pegasus ARC) vide assignment agreement

dated June 30, 2025 under the aegis of Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest Act, 2002. The details

of creditors in the COC is as below:

S. Financial Category Clam Admitted Voting No. Creditor Share 1. Omkara Assets Financial 3,89,89,710.00 10.05% Reconstruction Creditor - Pvt. Ltd. Unsecured 2. Pegasus Assets Financial 34,90,22,088.76 89.95% Reconstruction Creditor - Pvt. Ltd. Secured (Pegasus ARC) Assignee of debt from HDFC Bank Limited

30. The undersigned in his capacity as IRP and RP, made numerous efforts

to establish contact with the suspended management and sought information

in relation to assets of the Corporate Debtor as well as other information

relevant in the process. However, they have not responded to any of the

intimations/request letters/emails. As also their contact details were initially

not available with RP, RP made a preliminary enquiry with respect to the

Corporate Debtor's present affairs, offices locations, Location of assets

including factory location, directors/promoters, change in addresses, change

in directorships, audited financial, ROC filings, bank borrowings, bank

accounts etc. based on available information on MCA portal, local enquiries,

telephonic discussions with the last statutory auditor, bankers etc. After

collecting information and locations of the offices of the CD, he visited all

such office addresses. At all such addresses, premises were found to be

Company Appeal (AT) (Insolvency) No. 372 of 2025 15 of 36 locked, and various notices of the Bank were found affixed outside those

office addresses. In this process, RP had also sent letters along with a copy

of CIRP order to the personal email as well as addresses of the directors which

could be found in the records. However, despite successful delivery, they

chose not to respond to the emails and also refused to receive letters posted

to their address. RP also attempted calling them on the contact number

which was made available by the Bank, on multiple occasions, but it was not

responded as well. RP shared a copy of letters posted to their address over

their WhatsApp number, which was delivered to Mr. Rajendra Panda

(Suspended Director). However, he neither responded to this nor to all other

notices sent by RP. It could be seen from all such efforts that the suspended

directors are deliberately avoiding contact with RP. Finally, RP made a

personal visit to the available addresses of directors, two of the premises were

found locked and it could be seen from the condition out there, that it has

been locked for years now. On one other address, when RP rang the bell,

neither the door was opened nor anyone came out of the house. One of the

Financial creditors HDFC filed its claim to the RP from where it came to the

knowledge that one commercial property belonging to the CD is mortgaged to

the bank. RP took over the possession of said property on 16.05.2025.

31. The suspended management filed an appeal before Hon'ble NCLAT

[Company Appeal (AT) (Insolvency) No. 372 of 2025) challenging the order of

Hon'ble NCLT for initiation of the CIRP. Hon'ble NCLAT vide its order dated

28/02/2025 gave interim directions as "while let the CoC may proceed with

its functions, no Form G shall be issued". Accordingly, the said direction is Company Appeal (AT) (Insolvency) No. 372 of 2025 16 of 36 being duly complied with. Thereafter, matter has been listed before Hon'ble

Appellate Tribunal on various occasions. The matter is still pending final

adjudication.

32. That Despite numerous efforts, no contact could be established with

the Suspended Directors. RP has even reached out to the statutory auditor,

bankers, and the legal representative of the suspended directors in the

NCLAT proceedings. However, no relevant information could be obtained from

any of these parties. RP preferred filing an application before the Hon'ble

National Company Law Tribunal (NCLT) under Section 19(2) of the Insolvency

and Bankruptcy Code, 2016, for seeking necessary directions in such a

peculiar case against the respondent (suspended Directors). The said

application [IA(I.B.C.) 380/2025] filed was listed on 12.08.2025, whereby

counsel for RP presented before the Hon'ble Bench, issues faced in conduct

of process. The counsel for the respondents appeared and sought time to file

a reply and the same was allowed. The matter was last listed on 17.11.2025,

wherein the Respondent expressed its inability to file the reply due to certain

difficulties. The Hon'ble Tribunal granted a final opportunity to file the same

and directed that the matter be listed for further consideration on

16.12.2025.

33. As per Regulation 27 of IBBI (Insolvency Resolution Process of

Corporate Persons) Regulations, 2016, RP has appointed 2 registered valuers

each for asset class being Land & Building on 08.03.2025 to determine fair

value and liquidation value of Land & Building of CD in accordance with

Company Appeal (AT) (Insolvency) No. 372 of 2025 17 of 36 regulation 35. Valuers for other asset classes, namely plant and machinery

as well as securities and financial assets, have not been appointed due to the

non-availability of necessary documents and information and ongoing non-

cooperation from the suspended management.

34. In accordance with the provisions of Regulation 36 of the CIRP

Regulations, the Information Memorandum (IM) is required to be issued to

each member of the Committee of Creditors. The IM was issued to all CoC

members on 10.10.2025, containing the details of the corporate debtor as

prescribed.

35. As directed in the CIRP commencement order passed by Hon'ble NCLT,

Indore bench, intimation to various statutory authorities like Income Tax,

VAT department, GST department, Industrial Development Center etc, have

been sent apprising them of the commencement of Corporate Insolvency

Resolution Process (CIRP) of the CD. Similarly, intimations have also been

sent to the banks and financial Institutions that have charges registered over

CD with ROC requesting them to submit their claims as well as to other

financial institutions, enquiring if CD is maintaining an account with them

and if so, sharing details and account statements. Further, as mandated in

regulation 6A of IBBI (Insolvency Resolution Process for Corporate Persons)

Regulations, 2016, IRP/RP is required to send mails along with a copy of

public announcement to the creditors of the CD based on the last available

books of accounts of the CD through post or electronic means wherever the

information for communication is available. However, List of Creditors of CD

Company Appeal (AT) (Insolvency) No. 372 of 2025 18 of 36 is not available in the last audited Balance Sheet downloaded from the

website of MCA. Hence, RP approached the statutory auditor of CD to provide

a complete set of financial statements including list of creditors as well as

last audited data available in his records, in order to comply with the

requirements of said regulation. It was informed by the auditor that he is not

in possession of any such information.

36. Till date, 4 CoC meetings have been conducted. During these meetings

the members were apprised of the progress of the CIRP and the CIRP

expenses incurred. Details of incurred CIPR Expenses- As on 31.10.2025, the

total CIRP cost incurred amounts to Rs. 13,81,440/-, which includes the fees

of the Resolution Professional. RP has written to all CoC members requesting

them to contribute their proportionate share of the CIRP expenses.

37. The initial CIRP period of 180 days, commencing from 21.01.2025, was

scheduled to expire on 20.07.2025. Accordingly, an application

ΙΑ/343(MP)/2025 was filed before this Hon'ble Tribunal under Section 12(3)

of the Insolvency and Bankruptcy Code, seeking extension of the CIRP period.

The application was listed on 30.07.2025, and this Hon'ble Tribunal was

pleased to grant an extension of 90 days, thereby extending the CIRP until

18.10.2025. As the extended period was due to expire on 18.10.2025, another

application, IA/525(MP)/2025, was filed before the Hon'ble NCLT on

17.10.2025, seeking exclusion of 210 days-i.e., from 28.02.2025 (the date of

the Hon'ble NCLAT's direction restraining issuance of Form G) to 26.09.2025

(the date of the last effective order continuing the interim relief already

Company Appeal (AT) (Insolvency) No. 372 of 2025 19 of 36 granted). Vide order dated 14.11.2025, Hon'ble Tribunal was pleased to allow

the application and exclude the period of 210 days (28.02.2025 to

26.09.2025) from the computation of the CIRP timeline of the Corporate

Debtor. Consequently, the CIRP timeline stands extended by 210 days. And

now the CIRP closure date is 16.05.2026.

Appraisal

38. We have heard the counsels of both sides and also perused the material

placed on record. The issue which emerges is whether the claim filed under

Section 7 of the code is below threshold or not and whether the application is

barred by limitation or not.

Issue of Threshold

39. With respect to threshold the Appellant claims that the principal

amount as in Form 1 Application under Section 7 of the Code was only Rs.

64,33,286/- and the interest was claimed to be Rs. 76,07,249/- aggregating

to Rs.1,40,40,535/-, which is incorrect and defective. Appellant contends

that since the quantum of the debt calculated by the Answering Respondent

is incorrect and is less than threshold and therefore, the Impugned Order

must be set aside. We delve into this issue to find out whether the impugned

order can be sustained on this ground and some other grounds raised by the

Appellant.

40. The defence taken by Appellant with respect to threshold as per his

reply before the adjudicating authority in his reply is noted as below [from

page 329 of APB]:

Company Appeal (AT) (Insolvency) No. 372 of 2025 20 of 36 "7. It is also humbly and respectfully submitted that the application has been filed for repayment of debt of Rs.67,17,390/- as of 24™ April, 2017 which is wrongly calculated and no such amount has been acknowledged in the balance sheets on the respondent company. Appellant claims that as per the audited balance sheet of the Appellant company.

8. As regards calculation of interest is concerned, it is most humbly submitted that as per the application itself, the default has occurred on 24™ April, 2017 and therefore, no interest could have been charged, furthermore, the amount of interest has not been acknowledged in the balance sheets of the respondent company and therefore, charging of the entire amount of interest is denied and disputed by the respondent company.

9. It is also most humbly and respectfully submitted that the amount of claim being less than the threshhold limit of Rs.1,00,00,000/-, the present application is not maintainable pursuant to provision of section 4 of the Code."

41. We observe that it was a cryptic reply without any supportive ledgers

and calculations, which didn't justify his arguments. However, at the

appellate stage the Appellant has submitted detailed calculations to justify

that the threshold is not met by the financial creditor while filing Section 7

application. His justification is noted as below:

"3. As per the Audited Balance Sheet of Appellant Company at 31st March, 2017, (Page No.210 of Appeal) the balance outstanding was Rs.48,01,648.43; as at 31 March, 2018, (Page No.228 of Appeal) the balance outstanding was Rs.40,06,309.79; as at 31 March, 2019, (Page No.248 of Appeal) the balance outstanding was Rs.40,06,309.79; and as at 31 March, 2020, (Page No.269 of Appeal) the balance outstanding was Rs.40,06,309.79 only.

4. A bare perusal of the sanction letter dated 17th July, 2013, (Page 108 of the Appeal) the sanctioned limit was Rs.150 lacs, with tenure of 90 days from disbursement, on which accrued interest was payable at the end of every month in the first week of next month and delayed payment charges (emphasis supplied)

Company Appeal (AT) (Insolvency) No. 372 of 2025 21 of 36 for 91-120 days was @ 16% and 121 days onwards @ 22% p.a. for the period of delay. The sanction letter does not provide for payment of interest beyond 90 days and instead provides for payment of delayed payment charges and the sanction letter nowhere provides for compounding of interest as wrongly alleged in the application under Section-7.

5. Furthermore clause 1.5.7 of the Facility Agreement Page 112-116 of Appeal) provides that interest shall be calculated on a 365 day year basis, there is no mention about monthly compounding of alleged interest.

6. The Summary Schedule as per clause 1.5.2 of the Facility Agreement, (Page 126 of the Appeal) provides for interest @ 13.75% p.a. for 90 days, and interest accrued at the end of every month was payable on or before 10th day of next month. The summary schedule does not provide for payment of interest beyond 90 days period and only provides for payment of Delayed Payment Charges for 91-120 days @ 16% p.a. and 120 days onwards @ 22% p.a. on the defaulting amount for the period of default. The legal notice dated 19th April, 2017 at Page No.131 of the appeal also mentions "Delayed Payment Charges" and not the word Interest and therefore, no payment of interest was envisaged in the contractual terms.

7. Therefore, the summary schedule, which is part of the facility agreement does not provide for compounding of interest, much less monthly compounding of interest beyond 90 days. Further, respectfully submitted that the term "Accrued" and "Compounding" are different phrases in the commercial parlance and cannot be equated or interchanged.

8. The assignment agreement dated 24th September, 2019 (at Page 143 of the Appeal), which is in favour of the Respondent No.2, (at Page 157 of the Appeal) has a table under item No.21 of which the amount assigned to the Respondent No.2 on 24th September, 2019 as "Unsecured" (emphasis supplied) was Rs.63,04,190/-, (including interest) which demonstrates that as on 24th September, 2019 the amount outstanding (including interest) was only Rs.63,04,190/-.

Company Appeal (AT) (Insolvency) No. 372 of 2025 22 of 36

9. Therefore, the table attached to the application under Section-7 (Page 193 of the appeal) showing the outstanding amount of Rs.1,40,40,535/-(including principal of Rs.64,33,286/- and interest of Rs.76,07,249/-) suffers the following defects:

9.1 The table is based on "Compound Interest Calculation" which was never intended and contractually agreed between the parties and therefore the amount arrived at is incorrect;

9.2 The table shows "monthly compounding of interest" which is also not as per the contractual terms;

9.3 The table starts calculation for arriving at amount of alleged interest instead of Delayed Payment Charges with effect from 28th April, 2018 while the assignment had taken place on 24th September, 2019 and therefore the first 18 entries in the table are of a period prior to Deed of Assignment for which an alleged interest amount of Rs.43,43,043.24 has been wrongly charged for arriving at the total amount of alleged interest of Rs.76,07,428.85, and therefore the very basis of calculation of total alleged interest of Rs.76,07,248.85, is wrong, being not as per the contractual terms;

9.4 The residual amount of the alleged interest of Rs.32,64,205/-also suffers from several defects because it is calculated on monthly compounding basis, which is not as per the contractual terms; since as per the contractual terms mentioned in the summary schedule at Page-126 of appeal, delayed payment charges @ 22% p.a. was payable and therefore the total amount of Delayed Payment Charges (Not the Interest) on the assigned principal amount of Rs.40,06,310/- till the date of filing of application i.e. 4' April, 2022 comes out to Rs.22,03,470/- only which has been worked out as under:

Sr. Period INR No. 1. 24.09.20 19 to 3 1.12.20 19 2,20,347 2. 01.01.2020 to 31.12.2020 8,81,388 3. 01.01.2021 to 31.12.2021 8,81,388 4. 0 1.0 1.2022 to 3 1.03.2022 2,20,347 Total 22,03,470

Company Appeal (AT) (Insolvency) No. 372 of 2025 23 of 36 9.5 As per the contractual terms, the aforesaid amount of delayed payment

charges, starting from the date of Assignment (24th September, 2019) till the date of filing of the application (4th April, 2022) under Section 7 comes out to Rs.22,03,470/-only, which if added with the outstanding principal of Rs.40,06,310/-, comes out to Rs.62,09,780/- only, which is less than the threshold."

42. Furthermore, we observe that the Appellant has not been of cooperating

in the proceedings, which has been noted by the Adjudicating Authority as

follows:

"3. Moreover, the respondent neither replied nor has appeared in any of the hearings before this Adjudicating Authority even after serving the notice and newspaper publication. Therefore, the respondent was set ex-parte vide order dated 23.02.2023 of this Adjudicating Authority. Subsequently, the matter was heard and was reserved for order, however, on an application (IA 381 of 2024) filed by the respondent the matter was released for giving an opportunity to the respondent to file its reply.

XXX

8. Furthermore, the present application CP(IB) 40 of 2022 was once heard and reserved for order on 28.08.2024, however, before the pronouncement of the order in the matter, the respondent filed IA 381 of 2024 under. Rule 11 of NCLT Rules, 2016 seeking direction from this Adjudicating Authority to recall the ex-parte order dated 23.05.2023 passed against the respondent and also to recall the order dated 28.08.2024 i.e. when the present application was heard and was reserved for order.

Thereafter, vide order dated 16.10.2024 in IA 381 of 2024, the respondent was given an opportunity to file their reply. Thus, the respondent has through its reply contended that the limitation period begins from the date when the account of the respondent was declared NPA ie. 11.06.2016 and the present application being filed in the year 2022 is barred by limitation. Moreover, the respondent contended that since the respondent was declared NPA no interest thereon can be added to the outstanding amount."

Company Appeal (AT) (Insolvency) No. 372 of 2025 24 of 36

43. The above conduct shows that the Appellant has been evading to appear

before the Adjudicating Authority and thus wasting the precious time and

resources of everyone.

44. We also observe that both sides have provided differing calculations at

different stages of the case to put forth their claims and counter claims. Since

their is a keen contest for determination of the threshold, we have gone

through the calculations provided by both sides and it is evident from the

calculations provided by FC that the Financial Debt owed to the Financial

Creditor exceeds the threshold limit of Rs. 1,00,00,000/- (Rs. One Crore) as

envisaged under Section 4 of the Code. Hence, the contention of the Appellant

that the Corporate Debtor has acknowledged a lesser amount in its balance

sheets is devoid of any merit. The FC's calculations, as provided at the stage

of arguments, are noted as follows:

Repayment Interest Total as per Balance Period

Acknowledgment applied on Interest FY outstanding Corporate outstanding (Date) Lowest Charges (22%)

-Rs Debtor -Rs Amount -Rs

-Rs 85,59,134 [31.03.2016] 96,15,479 58,57,993 (amount acknowledged by 37,57,486 01.04.2016

31.03.2017 31.03.2016

31.03.2017

CD @210 of APB) [85,59,134 (as on to

48,01,648 10,56,363 (Principal) + 31.03.2017) to

48,01,648 [31.03.2017] (85,59,134

- 48,01,648) (amount acknowledged by 10,56,363 (96,15,479 -

CD without interest in BS) (Interest)] 37,57,486)

58,57,993 [31.03.2017] 59,44,118 67,39,456 (as on 7,95,338 31.03.2018) 01.04.2017

31.03.2018 31.03.2018 31.03.2017

40,06,310 [31.03.2018] [(58,57,993 to

40,06,648 8,81,463 (Principal) to

(48,01,648 - [58,57,993 (amount acknowledged by 40,06,310) (Principal) + CD without interest in BS) + 8,81,463 86,125 (Interest)] (Interest)]

Company Appeal (AT) (Insolvency) No. 372 of 2025 25 of 36 31.03.2018 to 58,57,993 (31.03.2018) 1,10,99,150

[For 4 years] 31.03.2022

01.04.2018

31.03.2022 51,55,032 (as on 31.03.2022)

to 58,57,993 [12,88,758 *4] (59,44,118 + 51,55,032)

45. In the above table we note the following:

o The interest has been applied on the lowest amount found

in the FY

o Repayments by the CD have been accounted for

o The interest has been charged as per the facility letter

which prescribed interest at the rate of 22%. The facility

agreement dated 17.07.2013 [@108 of APB] needs to be

noted herein which has been relied heavily by the

Appellant, which reads as follows:

Facility Short Term Revolving Facility Borrower Panda Technologies India Private Limited Lender L&T FinCorp Limited (LTFCL) Scheme FINCORP VALFIN

Sanctioned Limit Rs.150 lacs (Revolving Limit for one year) Tenure 90 days from date of disbursement Interest Rate % Subject to change at sole discretion of L&T FinCorp Limited.

Presently 13.75% p.a. for 90 days payable monthly.

Principal Direct Payment by the Dealer to L&T Repayment Mode FinCorp Limited on due date Interest Payment Interest accrued as at the end of every Mode month shall be payable in the first week of next month Delayed Payment 91-120 days @ 16% p.a. and 121 days Charges onwards @ 22% p.a. for the period of delay to be borne by the borrower.

46. The Appellant has objected to it in his Additional WS and contends that:

"The financial creditor has to stick to the contents of the Original Application; and calculations defying the claims in the Original Application to arrive at the threshold by giving different-different figures and calculations of the outstanding amount

Company Appeal (AT) (Insolvency) No. 372 of 2025 26 of 36 [(1) in the application, (2) reply to appeal; and (3) fresh table at the time arguments] particularly the fresh calculation at the verge of final arguments that too without affidavit and without any prior notice to the appellant as this practice is not only against the Principles of Natural Justice, but is also contrary to the provisions of the Code qua the Section 7 application, where the details of the default are required to be made out from the particulars given under Part-IV."

47. Further, countering the calculations of the FC, the Appellant brings to

our notice the Ledger Account of the financial creditor as maintained by the

Corporate Debtor for the period from 1st April, 2016 to 31st March, 2018, which

completely matches with the balances in the Balance Sheets of the Appellant

which is as follows as placed by the Appellant:

Date Particulars Paid Credit Balance 01.04.2016 Opening Balance - - 85,59,134 06.04.2016 SBI Cash Credit 3,00,000 - 82,59,134 SBINR52016040 19.05.2016 SBI Cash Credit 5,00,000 - 77,59,134 SBINR52016070 05.07.2016 SBI Cash Credit 30,00,000 - 47,59,134 SBINR52016070 17.10.2016 Interest - 42,514 48,01,648 Balance as on 31.03.17 48,01,648 05.12.2017 HDFC 5,00,000 - 43,01,648 52017120559550068 05.12.2017 HDFC 3,00,000 - 40,01,648 52017120559595665 07.12.2017 Legal Charges 4,662 40,06,310 Principal Balance 40,06,310 31.03.2018 Onwards

48. We observe that the above ledger has been relied upon by the Appellant

and claims that the outstanding amount as per the Balance Sheets of the

Appellant as on 31st March, 2017 till the end, other charges @ 22% have to

be calculated as under:

Company Appeal (AT) (Insolvency) No. 372 of 2025 27 of 36 Period Amount No. of Days Other Charges 01.04.2016 to 05.04.2016 85,59,134 5 25,794 06.04.2016 to 19.05.2016 82,59,134 41 2,02,102 20.05.2016 to 05.07.2016 77,59,134 47 2,19,806 06.07.2016 to 17.10.2016 47,59,134 104 2,69,640 18.10.2016 to 31.03.2017 48,01,648 168 4,74,639 A Total for 16-17 11,66,187 01.04.2017 to 05.12.2017 48,01,648 249 7,20,641 06.12.2017 to 31.03.2018 40,06,310 116 2,80,112 B Total for 17-18 10,00,753 01.04.2018 to 31.03.2019 40,06,310 365 8,81,388 01.04.2019 to 31.03.2020 40,06,310 365 8,81,388 01.04.2020 to 31.03.2021 40,06,310 365 8,81,388 01.04.2021 to 31.03.2022 40,06,310 365 8,81,388 C Total for 4 Years 35,25,552 A+B+C Grand Total 56,92,492

49. Basis above the Appellant contends that:

"8. The aforesaid two tables demonstrate that as per the Assignment Agreement, the last principal amount outstanding is Rs.40,06,310/- and the total outstanding "Other Charges" arrived at on the diminishing balance method are Rs.56,92,492/- aggregating to Rs.96,98,802/-, which is less than the threshold and therefore the present appeal, even as per the R-2 financial creditor, deserves to be allowed and the order impugned liable to be set aside.

9. The fresh table of calculation submitted by the R-2 financial creditor suffers from deformity, because it calculates interest on the principal amount of Rs.58,57,993/- as on 31th March, 2018 which comes out to Rs.12,88,758/- for four years, which is grossly incorrect, because after 7th December, 2017 the balance principal outstanding was Rs.40,06,310/- only on which Other Charges @ 22% p.a. comes to Rs.8,81,388/- and NOT Rs.12,88,758/- per annum (for four years) as wrongly calculated; and for the reasons given herein above the present appeal, deserves to be allowed and the order impugned is liable to be set aside on this short ground."

50. The above arguments of the Appellant are basis the assumption that

no compounding of interest could have been done. Appellant claims that

Clause 1.5.7 of the Facility Agreement provides that interest shall be Company Appeal (AT) (Insolvency) No. 372 of 2025 28 of 36 calculated on a 365-day year basis and there is no mention about monthly

compounding of alleged interest. Appellant also claims that the Summary

Schedule as per clause 1.5.2 of the Facility Agreement, provides for interest

@ 13.75% p.a. for 90 days, and interest accrued at the end of every month

was payable on or before 10th day of next month and also it does not provide

for payment of interest beyond 90 days period and only provides for payment

of Delayed Payment Charges for 91-120 days @ 16% p.a. and 120 days

onwards @ 22% p.a. on the defaulting amount for the period of default.

Therefore, the summary schedule, which is part of the facility agreement does

not provide for compounding of interest, much less monthly compounding of

interest beyond 90 days. Further, the term "Accrued" and "Compounding" are

different phrases in the commercial parlance and cannot be equated or

interchanged. But we observe that the sanction letter [facility agreement

dated 17.07.2013] executed by the corporate debtor clearly provides for the

delayed payment charges at the rate of 16% if the delay is beyond 90 days

and if the delay is beyond 121 days at the rate of 22% per annum on such

defaulted amount from the date of default till the date of payment.

51. Appellant has on his own interpretation basis "total outstanding "Other

Charges" arrived at on the diminishing balance method" principle claims that

no interest could have been added into the outstanding after the expiry of the

90 days. We find that this is not as per the facility agreement. We also observe

that such contentions cannot be accepted. Even the Adjudicating Authority

in the impugned order has noted as below:

Company Appeal (AT) (Insolvency) No. 372 of 2025 29 of 36 "We have heard the learned counsel for the applicant as well as for the respondent. After perusing the material available on record, it is noted that L&T FinCorp Limited sanctioned the financing facility of Rs.1,50,00,000/- to the respondent on 17.07.2013 for which a facility agreement on the same date was also executed. As per the said agreement the respondent was to repay the loan within 90 days from the date of disbursement with interest @ 13.75 % p.a. It was also agreed that if in case there is delay in repayment of the loan by the respondent or 91-120 days or beyond 121 days then the delayed payment charges at 16% p.a. and 22% p.a. respectively would be payable by the respondent to the applicant. It is also noted that L&T FinCorp Limited and L&T Finance Limited was merged in the year 2016. Pursuant to the said merger, L&T Finance Limited (L&T) vide assignment agreement dated 24.04.2019 assigned its debt, all rights, title and interest against the respondent to the applicant i.e. Omkara Assets Reconstruction Private Limited."

52. We do not find any infirmity in the methodology which has been noted

by the adjudicating authority which is bases the facility agreement dated

17.07.2013, and which was executed by the original financial creditor and the

CD and which has been adopted by FC in calculating the outstanding balance

and which was presented during the hearing. We also observe that

considering that a year consists of 365 days, the interpretation adopted by

the Appellant is completely contrary to the terms of the sanction letter, which

itself provides that the interest is payable in the first week of every month.

Consequently, we cannot accept the revised calculations presented by the

Appellant, which don't account for adding of delayed payment charges on to

the outstanding and we thus go along with the calculations of the FC-R2.

Basis these calculations, we find that the FC had met the threshold even

though the amount above Rs one crore is different from the original claim and

in also as was in the reply.

Company Appeal (AT) (Insolvency) No. 372 of 2025 30 of 36

53. R2-FC also places its reliance on:

o Rajesh Kedia v. Phoenix ARC Private Limited in Company Appeal (AT) (Ins) No. 916/2021 wherein it was held that once the threshold is crossed, it is not for the Ld. Adjudicating Authority to decide the exact 'Quantum of Debt', but what has to be examined is whether there is a 'Debt' and 'Default'.

o Mr. Vineet Khosla Vs. M/s Edelweiss Asset Reconstruction Company Ltd. & Ors., Company Appeal (AT) (Ins) No.441 of 2019 wherein this Appellate Tribunal made it clear that dispute over the quantum of debt cannot be a ground for rejection of insolvency petition.

o Mr. Gouri Prasad Goenka Ex- Chairman of NRC Limited v. Punjab National Bank and Anr. Company Appeal (AT) (Insolvency) No. 28 of 2019 wherein it was held that the Adjudicating Authority is not concerned with the quantum of the payable debt at the stage of admission of the petition under Section 7 of the Code.

All above judgements support the case of the financial creditor.

54. We also observe that at the time of admission of a Section 7 petition

Adjudicating Authority is only required to ascertain the existence of a debt

and default. Debt and default are sine qua non and only condition for

admitting an application under Section 7 of the Code. The Hon'ble Supreme

Court in the matter of Innoventive Industries Ltd. v. ICICI Bank

observed that for the initiation of the Corporate Resolution process by

Financial Creditor under sub-section (4) of Section 7 of the Code, 2016, the

Adjudicating Authority on receipt of Application under sub-section (2) is

required to ascertain existence of default from the records of Information

Utility or on the basis of other evidence furnished by the financial creditor

under sub-section (3). Under Section 7, the Adjudicating Authority is required

Company Appeal (AT) (Insolvency) No. 372 of 2025 31 of 36 to satisfy (a) Whether a default has occurred, (b) Whether an application is

complete and (c) Whether any disciplinary proceedings against the proposed

insolvency Resolution Professional. Once satisfied, it is required to admit the

petition. In the instant case, the record establishes that there is a 'debt' and

a 'default' and the Application is complete and thus the Adjudicating

Authority has rightly admitted the Application under Section 7 of the Code.

55. We also note that this position was also reaffirmed by the Hon'ble

Supreme Court in the matter of M Suresh Kumar Reddy vs Canara Bank

Civil Appeal No. 7121 of 2022 that once the Adjudicating Authority is

satisfied that a default has occurred, there is little discretion left for the

Adjudicating Authority to refuse admission of the Application under Section

7 of the Code. Hence, the Adjudicating authority was bound to admit the

petition on account of the default of the Corporate Debtor and as such there

is no infirmity in the Impugned Order.

56. Therefore, in the facts and circumstances of the case we observe that

once the threshold was crossed, it was not for the Adjudicating Authority to

decide the exact 'Quantum of Debt', but what had to be examined was whether

there was a 'Debt' and 'Default'. Therefore, the Appeal deserves to be rejected

on this count that the petition doesn't meet the threshold of one crore.

Furthermore, we note the Appellant had neither before the NCLT nor before

this Appellate Tribunal filed any ledger account to establish the amount in

default as on 15.06.2022.

Application barred by Limitation?

Company Appeal (AT) (Insolvency) No. 372 of 2025 32 of 36

57. Now we delve into the claim of the Appellant that the Application is

barred by Limitation as the account of the appellant was classified as NPA on

11th June, 2016 and thereafter the Demand Notice dated 19th April, 2017

was issued and the application under section 7 was filed on 4th April, 2022

and therefore, the application is barred by limitation.

58. We observe that the loan facility was sanctioned by L&T Finance

Limited to the Corporate Debtor on 17.07.2013. The date of default of the

Corporate Debtor is 24.04.2017. Accordingly, the period of limitation will run

from the date of default i.e., 24.04.2017. It was the case of the Appellant that

the repayment under the facility agreement was to be completed within a

period of 90 days from the date of disbursement. The period of 90 days from

the last disbursement on 09.09.2015 expired on 08.12.2015 and as such the

Appellant claims that the correct date of default ought to be 08.12.2015 and

limitation would expire on 07.12.2015.

59. However, we note that the Corporate Debtor itself in its Financial

Statements of the year 2016-2017, 2017-2018, 2018-2019 and 2019-2020

had acknowledged the debt between the Corporate Debtor and the Financial

Creditor. Therefore, in terms of Section 18 of the Limitation Act, the

acknowledgment of liability in respect of the present loan will extend the

limitation period and a fresh period of limitation shall begin from the date of

acknowledgement. Section 18 of the Limitation Act, 1961 is reproduced below:

"Section 18. Effect of acknowledgment in writing:

(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing

Company Appeal (AT) (Insolvency) No. 372 of 2025 33 of 36 signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed."

60. The FC has also placed its reliance on the judgement of the Hon'ble

Supreme Court in the matter of Asset Reconstruction Company (India)

Limited v. Bishal Jaiswal (2021) 6 SCC 366 wherein it was categorically

held that the entries in balance sheets of the Corporate Debtor shall be

considered as a valid acknowledgment of debt. Therefore, in this case basis

acknowledgment in the Balance Sheets, it is evident that the present petition

has been filed within the period of limitation. Hence, the contention of the

Appellant that the petition by the FC was not filed within the limitation period

is devoid of any merit and is rejected on this count.

61. We also note that the Hon'ble Supreme Court in March 2020 took

suo moto cognizance of the difficulties faced during the COVID-19 pandemic

and directed in Suo Motto WP(C) 3 of 2020 that the period from 15.03.2020

till 28.02.2022 shall stand excluded in computing the limitation period.

Accordingly, limitation period will start running from 01.03.2022. Therefore,

the we find that the petition under Section 7 of the Code was within the

period of Limitation.

Negligent conduct of the Appellant

62. We also need to note the conduct of the Appellant which has impacted

the CIRP process in this case, basis materials placed on record. The petition

under Section 7 of the Code was filed before the Adjudicating Authority in

April, 2022. Thereafter, notice was issued against the Corporate Debtor vide Company Appeal (AT) (Insolvency) No. 372 of 2025 34 of 36 order dated 24.06.2022. However, the Appellant failed to enter appearance

before the Adjudicating Authority to plead its case. Subsequently, the

Adjudicating Authority directed the Financial Creditor to also serve the

Corporate Debtor by way of substituted service. Accordingly, the Financial

Creditor issued publication in two newspapers namely Raj Express Bhopal

(Hindi) and Central Chronicle Bhopal (English) on 20.08.2022. Thereafter, the

Corporate Debtor again failed to appear before the Adjudicating Authority and

also failed to file a reply despite multiple opportunities being granted before

the Adjudicating Authority. Subsequently, the Adjudicating Authority vide

order dated 23.02.2023 set the Corporate Debtor ex-parte. The FC filed the

balance sheets of the Corporate Debtor as well as the Record of Default filed

with the Information Utility. Adjudicating Authority again sought some

clarifications from the FC pursuant which were clarified on dated 18.11.2023.

63. Subsequently, the company petition was heard at length by the

Adjudicating Authority and the matter was reserved for orders vide order

dated 28.08.2024. After a delay of more than two years, an application bearing

I.A. No. 381 of 2024 was filed by the Corporate Debtor seeking recall of the

order dated 28.08.2024 as well as the order dated 23.02.2023 passed by the

Adjudicating Authority, whereby the Corporate Debtor was set ex-parte.

Subsequently, vide order dated 16.10.2024, the Adjudicating Authority

allowed I.A. No. 381 of 2024 filed by the Corporate Debtor and allowed the

Corporate Debtor to file a reply to the company petition with a delay of over

two years in the interest of justice.

Company Appeal (AT) (Insolvency) No. 372 of 2025 35 of 36

64. Similar submissions have also been made by the Resolution

Professional that the Appellant who is the suspended director of the corporate

debtor has not been cooperating in the CIRP process, which has been noted

by us herein earlier. RP brings to our notice that he made several efforts to

establish contact with the suspended management and sought information in

relation to assets of the Corporate Debtor as well as other information relevant

in the process, but the Appellant did not respond to any of the

intimations/request letters/emails.

65. We find that the Corporate Debtor had been continuously delaying the

proceedings by not appearing before the Adjudicating Authority. Thus, we

observe that the conduct of the Appellant has been nothing short of negligent

at all stages.

Orders

66. Basis above analysis we conclude that the appeal is devoid of any merit

and is accordingly dismissed. All related IA's are also disposed of. No orders

as to costs. CIRP process stands revived.

[Justice N. Seshasayee] Member (Judicial)

[Arun Baroka] Member (Technical) New Delhi.

February 13, 2026.

Pawan

Company Appeal (AT) (Insolvency) No. 372 of 2025 36 of 36