# In the matter of Pawan Kumar Vs. Utsav Securities Pvt. Ltd. & Ors.  Company Appeal (AT) (Ins) No. 251 of 2020

> NCLAT judgment dated 2021-08-03. Citation: TCN-2021-NCLAT-00155. The appeal was filed by Pawan Kumar, ex-director of Vogue Clothiers Pvt. Ltd., against the…

- **Court:** NCLAT
- **Order date:** 3 Aug 2021
- **Citation:** TCN-2021-NCLAT-00155
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/pawan-kumar-vs-utsav-securities-pvt-ltd-ors-company-appeal-61585911

## Summary

### Background

The appeal was filed by Pawan Kumar, ex-director of Vogue Clothiers Pvt. Ltd., against the order dated 30.01.2020 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench) in CP (IB) No. 1593/(ND)/2019, which admitted the Financial Creditor's application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) and initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Financial Creditor, Utsav Securities Pvt. Ltd., claimed to have provided financial assistance to the Corporate Debtor, but the Corporate Debtor disputed the existence of a financial debt due to the lack of a formal agreement.

## Facts

Pawan Kumar, the ex-director of Vogue Clothiers Pvt. Ltd., filed an appeal against the order of the Adjudicating Authority (NCLT, New Delhi Bench) which admitted the application of Utsav Securities Pvt. Ltd. (Financial Creditor) under Section 7 of the IBC and initiated CIRP against Vogue Clothiers Pvt. Ltd. The Financial Creditor claimed to have granted financial assistance of Rs. 6.10 Cr to the Corporate Debtor between 16.02.2017 and 22.02.2017. The Corporate Debtor paid interest of Rs. 6,05,718 on 14.02.2018 after TDS deduction but later failed to pay interest. The Financial Creditor recalled the loan on 27.04.2019. The Corporate Debtor resisted the application, arguing the lack of a contractual agreement, an undefined loan period, and the absence of an agreement for

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## Issues and analysis

### Issue 1: Whether the transaction in …

**Ratio:** A financial debt requires a written agreement, especially for NBFCs, outlining the terms

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**Reasoning:** The Tribunal relied on a coordinate bench decision in Prayag Polytech Pvt. Ltd. Vs. Gem

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**Interpretation:** The definition of 'Financial Debt' under the IBC requires clear terms and

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**Application:** In this case, the absence of a written loan agreement between the Financial

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## Parties

- **Judges:** Jarat Kuma…; Ashok Kumar…
- **Appellants:** Pawan K…
- **Respondents:** Vogue Clothiers…; Utsav Securities…

## Timeline

- **2020-01-30 — Order by Adjudicating…**: The Adjudicating Authority (National Company Law Tribunal, New Delhi Bench) passed an…
- **2021-08-03 — NCLAT Or…**: The National Company Law Appellate Tribunal (NCLAT) allowed the appeal, set aside the…

## 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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