# In the matter of Prayag Polytech Pvt. Ltd. Vs. Good Marketing and Sales Pvt. Ltd. CA(AT)(Ins)No. 1307 of 2019

> NCLAT judgment dated 2019-11-25. Citation: TCN-2019-NCLAT-00082. Prayag Polytech Pvt. Ltd. filed an application under Section 7 of the Insolvency and…

- **Court:** NCLAT
- **Order date:** 25 Nov 2019
- **Citation:** TCN-2019-NCLAT-00082
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/prayag-polytech-pvt-ltd-vs-good-marketing-and-sales-pvt-ltd-ca-7133cb2c

## Summary

### Background

Prayag Polytech Pvt. Ltd. filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of corporate insolvency resolution process against Good Marketing and Sales Pvt. Ltd. (Corporate Debtor). The Adjudicating Authority (National Company Law Tribunal), Bench-III, New Delhi, rejected the application on the ground that the Appellant failed to demonstrate the existence of a 'financial debt'. The Appellant claimed that Rs.3,45,00,000/- remained as the balance amount as of March 14, 2016, apart from interest. The Corporate Debtor opposed the application, stating that the Appellant was obligated to undertake equity investment in the respondent company as per a memorandum of understanding (MoU). The Corporate Debtor also claimed an

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## Facts

Prayag Polytech Pvt. Ltd. (Appellant) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate corporate insolvency resolution process against Good Marketing and Sales Pvt. Ltd. (Corporate Debtor). The Adjudicating Authority (National Company Law Tribunal) rejected the application because the Appellant failed to demonstrate the existence of a 'financial debt'. The Appellant claimed Rs.3,45,00,000/- was outstanding as of March 14, 2016, excluding interest. The Appellant submitted evidence, including an audit report, to support the disbursal of funds and partial payments by the Corporate Debtor. The Corporate Debtor opposed the application, asserting that the Appellant was obligated to make an equity investment under a memorandum of

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## Issues and analysis

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

**Ratio:** The Adjudicating Authority must be satisfied that a 'financial debt' exists and that the

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**Reasoning:** The Adjudicating Authority found that the Appellant failed to provide sufficient

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**Interpretation:** Section 7 of the IBC requires the Adjudicating Authority to determine the

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**Application:** In this case, the Appellant failed to provide sufficient evidence to convince

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## Parties

- **Judges:** S.J. Mukhop…; Bansi Lal…; +1 more
- **Appellants:** Prayag Polytech…
- **Respondents:** Good Marketing…; Good Marketing…

## Timeline

- **2019-09-20 — Impugned Ord…**: Date of the impugned order passed by the Adjudicating Authority (National Company Law…
- **2019-11-25 — Appellant's Su…**: Learned counsel for the Appellant submits that the certified copy of the impugned order…

## 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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