# In the matter of Biomylz Private Limited

> NCLT judgment dated 2024-09-26. Citation: TCN-2024-NCLT-00538. Rahul Narayana Reddy filed a petition under Section 7 of the Insolvency and Bankruptcy Code…

- **Court:** NCLT
- **Order date:** 26 Sept 2024
- **Citation:** TCN-2024-NCLT-00538
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/biomylz-private-limited-2a1cec13

## Summary

### Background

Rahul Narayana Reddy filed a petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Biomylz Private Limited, citing a total outstanding default amount of Rs. 8,46,69,785/-. The financial creditor, Rahul Narayana Reddy, had lent money to the corporate debtor, Biomylz Private Limited, between 2017 and 2018, totaling Rs. 5,57,20,000/-. A demand notice was served on 05.05.2022, but the corporate debtor failed to repay the amount. The respondent opposed the application, contending that the amount in question was not a 'Financial Debt' and there was no 'Default' as defined under Section 5(8) of the Code.

## Facts

Rahul Narayana Reddy, the financial creditor, filed a petition to initiate CIRP against Biomylz Private Limited, the corporate debtor, due to a default of Rs. 8,46,69,785/-. The financial creditor had lent Rs. 5,57,20,000/- to the corporate debtor between 2017 and 2018. The corporate debtor repaid Rs. 20,00,000/- on 17.06.2020 but failed to pay anything thereafter. A demand notice was served on 05.05.2022. The corporate debtor argued that the amount was not a 'Financial Debt' as there was no formal authorization, loan agreement, or consideration for the time value of money. The corporate debtor also claimed that the petitioner and his mother were operating the bank accounts and signing cheques on behalf of the corporate debtor. The petitioner contended that the balance

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## Issues and analysis

### Issue 1: Whether the amount lent by the Petitioner to the Corporate Debtor qualifies as a 'financial debt' …

**Ratio:** A 'financial debt' is defined under Section 5(8) of the IBC as a debt which is disbursed

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**Reasoning:** The court reasoned that the balance sheets and email communications between the parties

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**Interpretation:** The court interpreted Section 5(8) of the IBC to mean that a debt qualifies as

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**Application:** The court applied the ratio and reasoning to the facts of the case and

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## Parties

- **Judges:** K. Bi…; Manoj Kumar…
- **Appellants:** Rahul Narayana…
- **Respondents:** Biomylz Private…

## Timeline

- **2017-01-01 — Loan Disbur…**: The Petitioner started funding the…
- **2018-01-01 — Loan Disbur…**: The Petitioner continued funding 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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