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Judgment
24.02.2026 Heard Ld. Counsel for Appellant and Ld. Counsel appearing for the Respondent.
This Appeal has been filed against the order passed by the Adjudicating Authority dated 11/09/2025, by which section 7 Application filed by the Appellant has been rejected.
The brief fact necessary to be noticed for deciding the Appeal are, the Appellant claim to have given unsecured loan to the Corporate Debtor, the Applicant were shareholders in the CD. Recall notice was given on 21/08/2024 by the Appellant to the CD requesting the CD to discharge a debt of Rs. 2,24,97,222/-. Reply was sent by e-mail dated 05/09/2021, where in Para 6, following was stated :
“6.However, the company would be able to return your unsecured loan after repayment of the entire loan facility availed by Organic World from the Bank, which is possible only by selling the assets of the company for which endeavors are being made by the Company”.
The Appellant thereafter filed a Section 7 Application, in which notices were issued. Parties filed their replies and by impugned order, the Adjudicating Authority has rejected Section 7 Application and also imposed cost of Rs. 2,00,000. The Adjudicating Authority, in Para 45 of the order has noticed the reply and made following observations :
“45.The Corporate Debtor in its reply to notice of 21.08.2023 (vide email of 05.09.2023 (paragraph 22 of this order) had admitted the liability of the repayment of unsecured loan after repayment of the entire loan facility availed from the Bank. The CD has replied that the repayment of the unsecured loan is subject to settlement of the dues of the Bank. On the other hand, the Applicant has claimed the understanding between the CD and the Petitioner was only that the unsecured loan shall be due and payable by the CD as per the demand. However, this assertion of the Applicant is unsupported by any evidence.”
The Adjudicating Authority when noticed the admission of liability of the repayment of unsecured loan after repayment of the entire loan facility availed from the bank, the same was relevant factor and indicated the admission of unsecured debt.
Appellant, in this Appeal has brought on record the letter issued by the State Bank of India dated 06/06/2025 that entire loan facilities given to the CD has been closed on 14/02/2025. The letter dated 06/06/2025 is as follows.
TO WHOMSOEVER IT MAY CONCERN
This is to certify that M/S Organic World Private Limited had availed a Working capital and Term Loan limit with other Facilities like CEL Limit, EPC Limit, GECL and Warehouse Receivable Discounting had also been availed and closed. This exposure has been properly discharged on 14.02.2025 & no dues remain on the customer in respect for above mentioned account. We have also cancelled our applicable Hypothecation charge on current assets like stocks & receivables & charge on Factory building & land for same.
Although Adjudicating Authority, in the impugned order has also made various other observations for rejecting the Section 7 Application, we are of the view that in view of the observations made in Para 45 as noted above and the reply given in Para 6, and the facts that the loan of the State Bank of India has been closed, the amount of SBI having been paid, Para 45 of the order of the Adjudicating Authority clearly contains an admission of liability of unsecured loan. There were also on the record TDS certificates, which has been mentioned in Paragraph 40 of the Impugned orders.
We thus are of the view that, in facts of the present case ends of justice be served in setting aside by the impugned order and reviving the Section 7 Application before the Adjudicating Authority for fresh consideration. We make it clear that it shall be open for both the Parties to raise all their submissions and fresh order need to be passed by the Adjudicating Authority considering all facts and submissions.
The Adjudicating Authority shall endeavour to dispose of the matter expeditiously.
With the above observations, the Appeal is disposed.