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Judgment
12.02.2026 Heard Ld. Counsel for the Appellant as well as Ld. Counsel for the Respondent.
This Appeal has been filed against the order dated 05.08.2025 passed by the Adjudicating Authority by which Section 7 application filed by the Appellant has been rejected. Ld. Counsel for the Appellant has filed an application under Section 7 for the alleged default amount of Rs. 1,13,45,000/- as on 03.05.2025.
Notices were issued by the Adjudicating Authority to which reply was also filed. In the reply, the Corporate Debtor admitted having obtained financial facilities of Rs. 1,05,00,000/-, however, Adjudicating Authority has rejected the application. Observation made by the Adjudicating Authority in Para 23 and 24 are as follows:
“23.A bare reading of the various clauses of the agreement shows that the stamp paper for the execution of the loan agreement was purchased on 12.02.2025, whereas the agreement was executed/signed on 01.03.2025 for the disbursals made from 16.01.2025 to 25.02.2025. This approach of the parties casts a doubt about the bona fides of the Applicant, and such irregularity prima facie suggests a deliberate attempt to retrospectively regularize the transaction.
24.Be that as it may, there is no dispute that the Respondent Company is a solvent company who had a long-standing business relationship with the Applicant. There has been no prior record of financial delinquency or breach of contractual obligations by the Respondent vis-a-vis the Applicant.”
Ld. Counsel for the Appellant challenging the order submits that the fact that stamp paper was purchased on 12.02.2025 and the agreement was executed on 01.03.2025 was not relevant factor for rejecting the agreement. He further submitted that in any view of the matter disbursement through banking channel having not been denied, agreement or no-agreement, the disbursal of the Financial Debt was proved. He further submits that the observation of the Adjudicating Authority that the Respondent Company is solvent Company and there has been no prior record of the financial discrepancy was not a reason to reject the Application. Ld. Counsel for the Appellant has further submitted that there has been order admitting the Corporate Debtor into Insolvency. One of such order has been brought on record as annexure A-16.
Ld. Counsel for the Respondent does not dispute that the amount of Rs. 1,05,00,000/- was extended by the Financial Creditor. It is further submitted that the Corporate Debtor tried to settle the matter but no settlement could take place, however, as on date the Corporate Debtor was not in position to pay the entire amount claimed.
We have heard Ld. Counsel for the parties and perused the record.
From the Material which has been brought on the record, it is clear that disbursement was not disputed. The repayment of certain amount was made by the Corporate Debtor which is reflected in Bank Statement filed along with the Appeal. The observation of the Adjudicating Authority that the stamp paper was purchased on 12.02.2025 and agreement was executed on 01.03.2025 can not be any relevant consideration for rejecting Section 7 application. Observations in Para 23 and 24, as noted above, can not be basis for rejection of the application. We, thus, are of the view that order of the Adjudicating Authority rejecting Section 7 application can not be sustained. Appeal is allowed. The order dated 05.08.2025 is set aside. Application under Section 7 CP(IB) 313/ND/2025 is revived before the Adjudicating Authority for passing order afresh in accordance with law.