Jaiprakash Agarwal Vs Alka Prakash Agarwal (NCLAT New Delhi)
Summary: In Jaiprakash Agarwal Vs Alka Prakash Agarwal, the National Company Law Appellate Tribunal (NCLAT) in New Delhi affirmed that a written financial contract is not a prerequisite for the existence of a debt under the Insolvency and Bankruptcy Code (IBC). The appeal challenged an Adjudicating Authority (NCLT) order admitting a corporate debtor into CIRP based on an oral loan agreement. The appellant, the corporate debtor’s suspended director, argued that the debt, an unsecured loan of Rs. 70 lakhs, had been fully repaid with interest and that the claim was inflated with compounded interest to cross the Rs. 1 crore threshold for CIRP initiation. They also alleged that the Section 7 application was based on forged documents and that the ex-parte order violated natural justice, citing their absence due to a family demise.
The NCLAT dismissed the appeal, finding no violation of natural justice as the appellant had ample opportunity to appear but failed to do so, even while actively pursuing related criminal applications. The Tribunal affirmed the Adjudicating Authority’s finding of debt and default, noting the corporate debtor’s admission of receiving the “friendly loan” and the interest rates. It emphasized that Form 26AS, reflecting TDS deductions on interest payments, served as evidence of the financial debt and the 24% compound interest rate. The NCLAT reiterated that under IBC, the Adjudicating Authority’s role is to confirm debt and default, not to delve into disputes over the debt’s exact amount or the terms of an oral agreement. The ruling underscores that financial debt can be proven through various relevant documents, not just a written contract, and that a formal demand notice is not necessary when a loan is repayable on demand.
