Corporate Debtor Can't Avoid Repayment Obligations On Ground Of Irregularities U/S 186 Of Companies Act In Disbursing Loan: NCLAT

The NCLAT (National Company Law Appellate Tribunal) has ruled that a corporate debtor cannot avoid repayment obligations on the grounds of "irregularities under Section 186 of the Companies Act" in disbursing a loan. Section 186 deals with restrictions on loans and investments by a company. The NCLAT clarified that while violations of Section 186 might lead to penalties for the company and its officers, they do not render the loan transactions void or absolve the corporate debtor from its liability to repay. The primary objective of Section 186 is to protect shareholders, not to provide a shield for debtors to evade legitimate repayment.