# In the matter of Abhishek Agarwal and Ors. Vs. Ms. Manasadevi Bakers Pvt. Ltd.  CA(AT)(Ins)No. 1012 of 2019

> NCLAT judgment dated 2020-06-08. Citation: TCN-2020-NCLAT-00236. The case involves an appeal against an order dated 22.08.2019 passed by the National Company…

- **Court:** NCLAT
- **Order date:** 8 Jun 2020
- **Citation:** TCN-2020-NCLAT-00236
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/abhishek-agarwal-and-ors-vs-ms-manasadevi-bakers-pvt-ltd-ca-6ead95bc

## Summary

### Background

The case involves an appeal against an order dated 22.08.2019 passed by the National Company Law Tribunal, Hyderabad Bench, which rejected an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Appellants, claiming to be Financial Creditors of the Corporate Debtor, M/s. Manasadevi Bakers Pvt. Ltd., filed the application. Vishnu Dutt Gupta, a Director of the Corporate Debtor, opposed the application, claiming that the Appellants were related parties and that the loan was interest-free. The Adjudicating Authority found that the loan was indeed interest-free and that the Appellants were signatories to a Subordination Agreement with Canara Bank, which prevented them from claiming their dues until Canara Bank's dues were settled.

## Facts

Abhishek Agarwal, Ashish Kumar Agarwal, and Neha Agarwal (the Appellants) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) before the National Company Law Tribunal (NCLT), Hyderabad Bench, claiming to be Financial Creditors of M/s. Manasadevi Bakers Pvt. Ltd. (the Corporate Debtor). The Appellants claimed to have disbursed unsecured loans totaling Rs.66,75,000/- to the Corporate Debtor between 2006-2007 and 2015-2016, which with interest amounted to Rs.1,47,881,477/-. Vishnu Dutt Gupta, a Director of the Corporate Debtor, filed a counter, claiming that the loan was interest-free and that the Appellants were related parties. Ajay Kumar Agarwal also filed a counter admitting the dues but stating that the Appellants had executed a

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was correct in rejecting the application under Section 7 of the …

**Ratio:** The Adjudicating Authority has the discretion to reject an application under Section 7 of

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**Reasoning:** The Adjudicating Authority found that the loan was not a financial debt, that the

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**Interpretation:** Section 7 of the IBC allows a financial creditor to initiate the corporate

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**Application:** In this case, the Adjudicating Authority found that the loan was not a

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## Parties

- **Judges:** A.I.S. C…; A.B. S…; +1 more
- **Appellants:** Abhishek A…
- **Respondents:** M/s. Manasadevi…
- **Advocates:** Anil K…; Satendra…; +2 more

## Timeline

- **2019-08-22 — Order by NCLT…**: Order passed by National Company Law Tribunal, Hyderabad Bench, Hyderabad in…
- **2016-06-10 — Demand N…**: Appellants sent Demand…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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