# In the matter of Proactive Plast Pvt. Ltd. (IB)-365-(ND)-2017

> NCLT judgment dated 2017-10-23. Citation: TCN-2017-NCLT-00267. Vivek Gupta, the Financial Creditor/Petitioner, filed a petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 23 Oct 2017
- **Citation:** TCN-2017-NCLT-00267
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/proactive-plast-pvt-ltd-ib-365-nd-2017-9ec398ee

## Summary

### Background

Vivek Gupta, the Financial Creditor/Petitioner, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against M/s Proactive Plast Pvt. Ltd., the Corporate Debtor/Respondent, seeking to initiate Corporate Insolvency Resolution Process (CIRP) based on non-payment of debt. The Financial Creditor claimed that a sum of Rs. 1,81,00,000/- was given as a loan to the Corporate Debtor, repayable on demand with 18% interest per annum. The Corporate Debtor argued that the amount was not a loan but an unsecured, interest-free contribution towards margin money for securing a loan from Canara Bank, and that the Financial Creditor was also a shareholder and director of the company.

## Facts

Vivek Gupta (Financial Creditor) claimed to have given Rs. 1,81,00,000/- as a loan to M/s Proactive Plast Pvt. Ltd. (Corporate Debtor), repayable on demand with 18% interest. The Financial Creditor was also a director in the Respondent company until 2015 and a shareholder holding .07% equity. The Corporate Debtor argued that the amount was not a loan but an unsecured, interest-free contribution towards margin money required by Canara Bank for a term loan of Rs. 14.2 crores. All six promoters, including the Financial Creditor, provided interest-free unsecured loans. The Financial Creditor also provided a personal guarantee as collateral security for the bank loan. The Corporate Debtor stated that the Financial Creditor was aware that he was not entitled to claim any

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## Issues and analysis

### Issue 1: Whether the claim of Rs. 1,81,00,000/- by Vivek Gupta constitutes a 'financial debt' under Section …

**Ratio:** A 'financial debt' is defined as a debt along with interest, if any, which is disbursed

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**Reasoning:** The NCLT found that there was no Demand Promissory Note executed, nor was there any

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**Interpretation:** The court interpreted the definition of 'financial debt' under the IBC to

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**Application:** In this case, the absence of any agreement for interest payment, coupled with

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## Parties

- **Judges:** Ina Mal…; SH. S.K MOH…
- **Appellants:** Vivek G…
- **Respondents:** M/s Proactive…

## Timeline

- **2012-12-19 — Appointment as…**: Vivek Gupta was appointed as a…
- **2016-01-01 — Winding up P…**: A winding up petition was filed before the Hon'ble High Court of Delhi being Company…

## 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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