# In the matter of J. Mohan Babu vs. Ramya Outsourcing Solutions Pvt. Ltd.

> NCLAT judgment dated 2023-07-27. Citation: TCN-2023-NCLAT-00342. The appeal was filed against the order dated 21.07.2022 passed by the Adjudicating Authority…

- **Court:** NCLAT
- **Order date:** 27 Jul 2023
- **Citation:** TCN-2023-NCLAT-00342
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/j-mohan-babu-vs-ramya-outsourcing-solutions-pvt-ltd-5ebe622e

## Summary

### Background

The appeal was filed against the order dated 21.07.2022 passed by the Adjudicating Authority (National Company Law Tribunal, Chennai Bench), which dismissed a petition (CP (IB) 197/CHE/2021) filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016. The application was dismissed with a cost of Rs. 3,00,000/- directed to be deposited in the Prime Minister National Relief Fund. The Adjudicating Authority observed that the name of the Financial Creditor (J. Mohan Babu) was not reflected in the balance sheet statements of the Corporate Debtor and concluded that the Financial Creditor was in collusion with the Corporate Debtor.

## Facts

J. Mohan Babu, the Appellant, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against Ramya Outsourcing Solutions Pvt. Ltd., the Corporate Debtor. The application was dismissed by the Adjudicating Authority (National Company Law Tribunal, Chennai Bench) on 21.07.2022. The Appellant claimed to have disbursed Rs. 50,00,000 initially and entered into an MOU on 22.03.2021, acknowledging old dues and agreeing to disburse a further loan. The Appellant alleged that the Corporate Debtor acknowledged receiving Rs. 1,02,30,000 but failed to make any payment. The Adjudicating Authority dismissed the application because the amount advanced by the Appellant was not reflected in the balance sheet of the Respondent. The Respondent, in its reply,

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## Issues and analysis

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

**Ratio:** The reflection of the debt in the balance sheet of the corporate debtor is a significant

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**Reasoning:** The tribunal reasoned that once the Respondent showed the amount in question in its

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**Interpretation:** This implies that the Adjudicating Authority's initial decision was primarily

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**Application:** Since the Respondent rectified the financial statements and admitted the

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## Parties

- **Judges:** Rakesh Kuma…; Shreesha…; +1 more
- **Appellants:** J Mohan…
- **Respondents:** Ramya Outsourcing…

## Timeline

- **2021-08-14 — Application…**: CP (IB) 197/CHE/2021 filed by the Financial Creditor under Section 7 of the Insolvency…
- **2022-03-31 — Financial Yea…**: Financial year ending where the error in the financial statements was rectified by…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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