NCLT admits Rs 1.71 crore insolvency plea against Megma RFID without written loan agreement

The National Company Law Tribunal (NCLT) accepted a Corporate Insolvency Resolution Process (CIRP) admission petition involving a claim of Rs 1.71 crore against Megma RFID. During the proceedings, the tribunal held that the absence of a written loan agreement does not bar the initiation of insolvency. Instead, the bench established that alternative documentary evidence, specifically bank records, financial statements, and interest acknowledgments, is sufficient to substantiate the existence of a financial debt. In insolvency proceedings, financial creditors must prove the existence of a debt and a default by the corporate debtor to trigger the statutory resolution mechanism.

Traditionally, creditors rely heavily on executed loan agreements, but commercial realities often involve informal documentation or reliance on banking trails and accounting disclosures. The tribunal's stance clarifies that statutory threshold requirements can be satisfied through corroborative financial documentation when formal agreements are missing, balancing strict legal evidentiary standards with verifiable accounting records. Insolvency professionals and financial creditors should review their documentation practices, ensuring that bank transaction histories, financial statements, and written interest acknowledgments are systematically archived for all credit facilities.

Legal advisors handling IBC matters must prepare comprehensive financial trails when formal loan documents are absent to support CIRP applications effectively. Bottom line: Robust bank records and financial statements are vital to substantiate corporate debt claims when a written loan agreement is unavailable.