# In the matter of MD Development Private Limited CP(IB)-1018(MB)-2021

> NCLT judgment dated 2023-03-24. Citation: TCN-2023-NCLT-04055. The case involves a petition filed by Praful Satra (Financial Creditor) under Section 7 of the…

- **Court:** NCLT
- **Order date:** 24 Mar 2023
- **Citation:** TCN-2023-NCLT-04055
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/md-development-private-limited-cpib-1018mb-2021-eff746f3

## Summary

### Background

The case involves a petition filed by Praful Satra (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), seeking to initiate Corporate Insolvency Resolution Process (CIRP) against MD Development Private Limited (Corporate Debtor). The Financial Creditor claimed that the Corporate Debtor defaulted on a loan repayment of ₹1,84,57,850/-. The Corporate Debtor denied any amount payable.

## Facts

Praful Satra (Financial Creditor) filed a petition under Section 7 of the IBC to initiate CIRP against MD Development Private Limited (Corporate Debtor). The Corporate Debtor was incorporated on 07.05.2007. The Financial Creditor extended an interest-free loan of ₹9,37,52,350 to the Corporate Debtor between 02.05.2018 and 05.03.2019, repayable on demand. The Corporate Debtor repaid ₹7,52,94,500 between 05.03.2019 and 15.06.2021, leaving an outstanding balance of ₹1,84,57,850. A demand notice was issued on 26.08.2021. The Corporate Debtor denied any amount payable in its reply filed on 18.01.2022. The Financial Creditor submitted accounts confirmation from 01.04.2018 to 31.03.2021 and auditor's reports for 2018-2019 and 2019-2020. The Corporate Debtor's financial

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## Issues and analysis

### Issue 1: Whether the interest-free loan qualifies as a …

**Ratio:** The Supreme Court in “M/s. Orator Marketing Pvt. Ltd. Vs. M/s. Samtex Desinz Pvt. Ltd.”

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**Reasoning:** The NCLT relied on the Supreme Court's interpretation of Section 5(8) of the IBC, which

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**Interpretation:** The term 'financial debt' under Section 5(8) of the IBC is interpreted broadly

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**Application:** In this case, the interest-free loan of ₹1,84,57,850/- was considered a

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## Parties

- **Judges:** Prabhat…; KISHORE VEMULAPALL…
- **Appellants:** Praful…
- **Respondents:** MD Development…
- **Advocates:** Rima D…; Krushi N Ba…; +3 more

## Timeline

- **2007-05-07 — Incorporation of…**: MD Development Private…
- **2018-05-02 — Loan Disbursement Start…**: Financial Creditor started disbursing the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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