NCLT Kolkata: Registration Of Assignment Of Debt Is Not Mandatory For CIRP U/S 7 Of IBC

The National Company Law Tribunal (‘NCLT’) Kolkata Bench comprising Smt. Bidisha Banerjee (Judicial Member) and Shri Arvind Devanathan (Technical Member) held that the registration of the assignment of debt is not mandatory for the Corporate Insolvency Resolution Process (‘CIRP’) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’). Further, the Corporate Debtor cannot go into the question of the legality of the assignment of debt since the assignment of debt was never disputed to date. Facts: Manavta Tradelink Pvt. Ltd. (Financial Creditor), a Private Non-Government Company filed a CIRP application against Manikaran Vincom Pvt. Ltd. (Corporate Debtor), a Private Non-Government Company. The Corporate Debtor has defaulted on the payment of the total amount of Rs. 2.72 Crores as of 25.12.2022 with a 12% per annum interest rate till the date of repayment. The date of default is claimed as of 31.03.2021. Contentions of the Parties: The Financial Creditor argued that an unsecured loan of Rs. 1.40 crores was assigned by SSA Hire Purchase Pvt. Ltd. (Assigner). The Loan Agreement was duly accepted and agreed upon by the Corporate Debtor. The loan was disbursed and duly confirmed by the Corporate Debtor with the issuance of receipt and promissory notes. The Corporate Debtor was also intimated by the Assigner of the assigning of debt in favor of the Financial Creditor. A letter dated 31.05.2022 was sent to the Corporate Debtor intimating that the loan should be paid along with the interest from the beginning and was duly received by the Corporate Debtor. The Corporate Debtor via letter dated 15.07.2022 also acknowledged the debt and sought for extension of time in repayment of the loan. The Corporate Debtor contended that since the assignment of debt is registered, the Financial Creditor has no locus standi to file a CIRP application. It argued that once the assignment has been held invalid, the debt becomes time-barred and no CIRP application would lie. NCLT Verdict: The NCLT Kolkata observed that the total amount of debt along with the interest was never disputed by the Corporate Debtor and the only contention is as to the legality of the assignment of debt in the absence of the registration of the assignment of debt. The Tribunal held that the registration of the assignment of debt is not mandatory since the Corporate Debtor never disputed the assignment of debt to date. Further, the Corporate Debtor was in correspondence with the Financial Creditor seeking time to repay the loan with interest which is evidenced from the letter dated 15.07.2022. Therefore, the legality of the assignment of debt cannot be questioned by the Corporate Debtor. In conclusion, the NCLT allowed the CIRP application filed under Section 7 of the IBC against the Corporate Debtor since there is a default of financial debt, the debt is also above the prescribed threshold limit and is not time-barred. Case Title: Manavta Tradelink Pvt. Ltd. vs. Manikaran Vincom Pvt. Ltd. Case No.: Company Petition (IB) No. 80/KB/2023 Counsel for Appellants: Ms. Urmila Chakrabarty and Ms. Ranjana Seal, Advocates. Counsel for Respondent: Mr. Rahul Auddy and Mr. Aditya Gooptu, Advocates. Click Here To Read/Download Order

NCLT Kolkata: Registration Of Assignment Of Debt Is Not Mandatory For CIRP U/S 7 Of IBC

Sachika Vij

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