The National Company Law Tribunal (NCLT), Chandigarh Bench has held that mere removal or satisfaction of a charge over the assets of a corporate debtor does not amount to discharge of the underlying financial debt and cannot by itself invalidate insolvency proceedings initiated under Section 7 of the Insolvencyand Bankruptcy Code, 2016 (IBC).
The applicant contended that the financial creditor had suppressed material facts regarding the removal of charge created over the assets of the corporate debtor. It was argued that since the charge had been satisfied and removed from the records of the Ministry of Corporate Affairs pursuant to proceedings before the Himachal Pradesh High Court, the underlying debt itself stood…