Tribute Trading and Finance Limited Vs Florin Realtors Private Limited (NCLT Kolkata)
Summary: NCLT Kolkata admitted the Section 7 IBC petition filed by Tribute Trading and Finance Limited against Florin Realtors Private Limited after finding the existence of financial debt and default. The Financial Creditor, an NBFC registered with the Reserve Bank of India, had advanced an Inter-Corporate Deposit (ICD) aggregating to Rs.1,45,00,000 in four tranches in December 2013, carrying interest at 9% per annum and repayable on demand. The Corporate Debtor initially paid interest aggregating to Rs.15,18,030 for FYs 2013-14 and 2014-15 but thereafter ceased payments. After giving credit for the interest paid, Rs.2,23,30,000 was claimed as due as on 31.03.2021, comprising principal of Rs.1,45,00,000 and accrued interest of Rs.78,30,000. A demand notice dated 13.05.2021 was followed by a reply dated 18.05.2021, but no payment was made, resulting in the Section 7 petition being filed on 25.06.2021 with 21.05.2021 stated as the date of default.
During the pendency of the petition, the parties entered into a Settlement Agreement dated 02.09.2021 under which the Corporate Debtor admitted liability of Rs.1,45,00,000, payable on or before 31.03.2022. The original petition was consequently withdrawn on 10.11.2021 with liberty to seek revival if the settlement failed. The Corporate Debtor, however, paid only Rs.25,00,000 under the settlement, following which the petition was restored on 09.09.2025. Examining the requirements of Section 7 of the Insolvency and Bankruptcy Code, 2016, the Tribunal held that its enquiry was confined to whether a financial debt existed and whether default had occurred. The ICD, having been advanced against interest at 9% per annum, possessed the essential features of disbursement against consideration for the time value of money and therefore constituted a financial debt within Section 5(8) of the IBC. Bank statements, forwarding letters, TDS reflected in Form 26AS, confirmation of accounts, the Corporate Debtor’s financial statements, part-payment of interest and the subsequent settlement agreement cumulatively established and acknowledged the debt and default. Referring to Mahabir Cold Storage v. CIT, 1991 Supp (1) SCC 402 : (1991) 188 ITR 91, NCLT also noted the principle that entries in books of account can amount to acknowledgment of liability for purposes of Section 18 of the Limitation Act, 1963.
