The National Company Law Tribunal (NCLT) at Chennai has held that a loan directly disbursed into the personal bank account of a company’s director cannot be treated as a financial debt of the company without supporting evidence.
The creditor must establish that the borrowing was undertaken by the company and that the funds were received or utilised by it for its business.
A coram of Judicial Member Jyoti Kumar Tripathi and Technical Member Ravichandran Ramasamy observed,
“A financial disbursement made directly to an individual director’s bank account cannot, by stretch of imagination, be treated as a financial debt extended to the corporate entity, in the absence of direct corporate borrowing resolutions and direct receipt of funds by…