Issuance Of Post Dated Cheques Is Not An Unqualified Admission Of Debt, NCLT Allahabad Dismisses Section 7 Application

[15 June 2022] The National Company Law Tribunal (“NCLT”), Allahabad Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Virendra Kumar Gupta (Technical Member), while adjudicating an application filed in N.C. Goel & Maya Goel v Piyush Infrastructure India Pvt. Ltd., has held that issuance of post dated cheques cannot be taken to be unqualified admission of debt, because the presumptions drawn under Section 118 and Section 139 of the Negotiable Instruments Act, 1881, are rebuttable presumptions. The order was passed on 13.06.2022.
The Bench observed that the loan were given between 2011 to 2016 by the Applicants. However, in absence of any documentation, no date of default could be established. The date of default can only be calculated when the tenure of the loan is established, or when there is a demand for repayment. It was observed that receipt of interest was only evidenced through two letters of the Respondent, thus the claim regarding receipt of interest remain unsubstantiated.
Further, copies of the post-dated cheques issued by the Respondent cannot be taken to be unqualified admission of debt because the presumptions drawn under Section 118 and Section 139 of the Negotiable Instruments Act, 1881, are rebuttable presumptions.
“In summary jurisdiction, without adequate documentation, it is difficult to establish the purpose for which the money was lent and accepted. It is also not possible to establish whether there was any interest required to be paid. The time value of money is an important factor to be considered in order to establish whether this is a financial debt. Ex facie, this appears to be a petition which has been filed for recovery of money and not for resolution of the corporate debtor. The Insolvency & Bankruptcy Code, 2016, should not be allowed to be used as an easy way of recovery of money.”