# In the matter of Brick & Mortar Realty Pvt. Ltd.

> NCLT judgment dated 2023-11-21. Citation: TCN-2023-NCLT-00674. Desana Impex Limited, the Financial Creditor, filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 21 Nov 2023
- **Citation:** TCN-2023-NCLT-00674
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/brick-mortar-realty-pvt-ltd-fef3ef68

## Summary

### Background

Desana Impex Limited, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Brick and Mortar Reality Private Limited, the Corporate Debtor. The Financial Creditor claimed to have disbursed Rs. 1.50 Crores in five tranches to the Corporate Debtor with a 12% per annum interest rate. The Corporate Debtor allegedly defaulted, leading to an outstanding amount of Rs. 2,31,44,999 as of March 12, 2022, including principal and interest. A legal notice was issued on May 26, 2022, demanding payment, but no reply was received. The Corporate Debtor showed the loan under 'Other Liabilities' in its balance sheet.

## Facts

Desana Impex Limited (Financial Creditor) claimed to have disbursed Rs. 1.50 Crores to Brick and Mortar Reality Private Limited (Corporate Debtor) in five tranches with 12% annual interest. The disbursement dates were 24/05/2013 (Rs. 10,00,000), 24/05/2013 (Rs. 10,00,000), 28/06/2014 (Rs. 95,00,000), 29/07/2015 (Rs. 10,00,000), and 05/09/2015 (Rs. 25,00,000). The Financial Creditor alleged a default, leading to an outstanding amount of Rs. 2,31,44,999 as of 12/03/2022, including principal and interest. A legal notice was issued on 26/05/2022, but no reply was received. The Corporate Debtor reflected the loan under 'Other Liabilities' in its balance sheet as of 31/03/2021. The Financial Creditor is an NBFC. No written loan agreement was produced. The Corporate Debtor

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor merits admission under Section 7 of the …

**Ratio:** An application under Section 7 of the IBC requires demonstration of a 'financial debt'

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**Reasoning:** The Adjudicating Authority found that the Financial Creditor failed to demonstrate the

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**Interpretation:** Section 7 of the IBC requires strict adherence to the definition of 'financial

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**Application:** The Financial Creditor's application was dismissed because it failed to provide

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## Parties

- **Judges:** BIDISHA BA…; ARVIND DEVA…
- **Appellants:** Desana Impex…
- **Respondents:** Brick and Mortar…; Brick and Mortar…

## Timeline

- **2013-05-24 — Disbursement…**: Rs. 10,00,000 disbursed by…
- **2013-05-24 — Disbursement…**: Rs. 10,00,000 disbursed by…

## 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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