The Delhi bench of the National Company Law Tribunal (NCLT) has ruled that merely including a company’s name in loan and sanction documents is not enough to establish that the company itself is the real obligor for the purpose of initiating insolvency proceedings.
“The insolvency jurisdiction under Section 7 cannot be permitted to be invoked merely because the name of a company appears in the sanction letter, absent clear evidence that the company itself is the real obligor in respect of the financial transaction. The provisions of the IBC cannot be employed as a substitute for enforcement of mortgage security or recovery of personal loan liabilities,” the bench of Judicial Member Manni Sankariah Shanmuga Sundaram and Technical Member…