# In the matter of Averx Drugs Pvt. Ltd.

> NCLT judgment dated 2025-04-03. Citation: TCN-2025-NCLT-00276. The Financial Creditor filed a petition against the Corporate Debtor to execute an award passed…

- **Court:** NCLT
- **Order date:** 3 Apr 2025
- **Citation:** TCN-2025-NCLT-00276
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/averx-drugs-pvt-ltd-14ad5bc3

## Summary

### Background

The Financial Creditor filed a petition against the Corporate Debtor to execute an award passed by the Lok Adalat. The Counsel for the Financial Creditor failed to file necessary documents, such as the Board Resolution of the Company for borrowing money from the Corporate Debtor, and failed to show the entries of Bank statements. The Petitioner also failed to file the Demand Notice along with the proof of serving the same on the Corporate Debtor.

## Facts

The Financial Creditor, Mr. Chappidi Swaminadha Rao, filed a petition against the Corporate Debtor, M/s. Averx Drugs Pvt. Ltd., seeking to execute an award passed by the Lok Adalat in O.S. No. 45 of 2021 dated 2021-08-16. The Financial Creditor failed to provide necessary documents, including the Board Resolution for borrowing money and bank statements. The Financial Creditor also failed to file a Demand Notice with proof of service on the Corporate Debtor. The petition was filed in the NCLT, even though the Lok Adalat Rules specify that parties should approach the same court to conduct proceedings further after the failure of the Lok Adalat settlement. The Corporate Debtor filed an application under Section 65(1) of the IBC, 2016, seeking a penalty for fraudulent

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## Issues and analysis

### Issue 1: Whether the petition filed by the Financial Creditor under Section 7 of the IBC, 2016 is …

**Ratio:** A petition under Section 7 of the IBC, 2016 requires proof of debt and default. The

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**Reasoning:** The court found that the Financial Creditor failed to establish proof of debt and

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**Interpretation:** Section 7 of the IBC, 2016 requires the Financial Creditor to demonstrate the

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**Application:** In this case, the Financial Creditor failed to provide the necessary documents

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## Parties

- **Judges:** UMESH KUMAR…; KISHORE VEMULAPALL…
- **Appellants:** Chappidi Swaminadh…
- **Respondents:** M/s.Averx Drugs…
- **Advocates:** Mirza Moinullha…; Dr.S.V.Rama…

## Timeline

- **2021-08-16 — Lok Adalat…**: Lok Adalat passed an award…
- **2024-01-01 — Filing o…**: Financial Creditor filed a Company Petition…

## 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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