NCLT Cuttack: CIRP Can Be Admitted Even When Corporate Debtor Makes Part Payments

The National Company Law Tribunal, Cuttack Bench, in IN2IT Systems & Services Pvt. Ltd Vs IN2IT Technologies Private Ltd. examined whether part repayment of loan and ongoing settlement discussions could prevent admission of a Section 7 application under the Insolvency and Bankruptcy Code, 2016. The Tribunal ultimately admitted the Corporate Insolvency Resolution Process (CIRP), clarifying the limited scope of enquiry at the admission stage and the effect of acknowledgements and part payments on limitation.

Below is a structured summary of the key facts, rival contentions, legal reasoning and the operative directions issued by the Tribunal.

Background and Loan Structure

The proceeding arose from an application filed on 13.01.2026 by In2IT Systems & Services Private Limited (formerly Alpha Codes IT Solutions Private Limited), acting as Financial Creditor, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the “Code”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

The application sought initiation of CIRP against In2IT Technologies Private Limited (Corporate Debtor) based on a Loan Agreement dated 30.09.2020. The Financial Creditor alleged default in repayment of:

  • Principal outstanding: Rs.11,04,07,794/-
  • Contractual interest @ 18% p.a. up to 12.01.2026: Rs.5,49,33,570/-
  • Total claimed default: Rs.16,53,41,365/-
  • Date of default (for the purpose of the petition): 18.11.2025

Parties and Authority

  • The Financial Creditor is a company incorporated under the Companies Act and claims to fall within Section 5(7) of the Code.
  • The Corporate Debtor is an IT services company based at Bhubaneswar, Odisha.
  • The Board of Directors of the Financial Creditor, by resolution dated 02.01.2026, authorized a specific individual (Mr. Roshan Kumar Dubey) to prosecute the Section 7 application.

Loan Agreement and Disbursement Mechanics

Under the Loan Agreement dated 30.09.2020:

  • An overall sanctioned loan facility of Rs.15 crore was granted.
  • The primary purpose was to support the Corporate Debtor’s liquidity and operational obligations, including vendor payments.
  • Disbursement modality:
    • Funds could be transferred directly into the Corporate Debtor’s bank account; or
    • Paid directly to third-party vendors on the Corporate Debtor’s behalf, strictly against written Payment Request Letters.
  • The agreement expressly categorized such disbursements as “financial debt” for the “time value of money” within the meaning of Section 5(8) of the Code, attracting interest at 18% per annum.

Clause 3 of the Loan Agreement mandated that all disbursements made during a financial year had to be repaid within three months from the close of that year, i.e., on or before 30 June of the following financial year.

Financial Creditor’s Case

Evidence of Financial Debt

The Financial Creditor relied primarily on:

  • The Loan Agreement dated 30.09.2020;
  • Multiple Payment Request Letters raised periodically by the Corporate Debtor;
  • Bank statements and ledger accounts;
  • Financial statements showing the movement and utilization of funds.

These Payment Request Letters carried detailed particulars of:

  • Vendor names,
  • Bank account numbers,
  • IFSC codes, and
  • Exact amounts requested to be paid.

Funds were disbursed accordingly. The Financial Creditor asserted that these sums were used to discharge debts owed by the Corporate Debtor to vendors such as Trustone Wegmans Developers, Microsoft Corporation India, Artha Infratech Pvt. Ltd., Achal Kumar (through Axis Bank), among others. Thus, in substance, there was a clear disbursement of money for the benefit of the Corporate Debtor and a corresponding obligation to repay, satisfying the definition of “financial debt” under Section 5(8).

Persistent Defaults and Recall Notices

The Financial Creditor alleged:

  • Persistent irregularity in adherence to repayment timelines.
  • Despite not being a related party and notwithstanding earlier defaults, it continued to honor fresh Payment Request Letters to maintain business relations.
  • Multiple recalls and reminder notices were issued, including letters dated 08.06.2024, 03.04.2025 and 18.06.2025.
  • Instead of clearing the dues, the Corporate Debtor repeatedly sought extensions.

On 02.07.2025, the Corporate Debtor issued a letter giving an unequivocal undertaking to clear all outstanding amounts within two months. However, according to the Financial Creditor, only Rs.1,20,00,000/- was paid thereafter against an admitted outstanding of Rs.12,24,07,794/-, leaving a principal balance of Rs.11,04,07,794/-.

A Final Demand Notice dated 13.11.2025 was then issued through registered post, email and hand delivery, calling upon the Corporate Debtor to pay within five days. The notice was stated to have been duly served but remained uncomplied with, prompting the present Section 7 application.

Clarification on Date of Default and Year-wise Breakup

Pursuant to a direction by the Tribunal dated 12.02.2026, the Financial Creditor filed an affidavit giving:

  • Year-wise breakup of:
    • disbursements made,
    • repayments received by 30 June of each succeeding year, and
    • resulting outstanding principal;
  • Separate computation of interest outstanding as on 31 March of every financial year starting from 2020-21.

On this basis, the Financial Creditor submitted that:

  • Cumulative principal outstanding as of financial year 2025-26 stood at Rs.11,04,07,795/-;
  • Accrued interest as of the same date was Rs.5,49,33,570/-;
  • Aggregate claim as of 12.01.2026 was Rs.16,53,41,365/-;
  • For the purposes of the present proceedings, 18.11.2025 was treated as the date of default, being five days after the demand notice dated 13.11.2025.

Arguments on Limitation