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2019 (9) TMI 1538 - Tri - Insolvency and BankruptcyPayments of claims of other secured creditors - claim of the Applicants is based on an unregistered sale agreement - properly stamped documents or not - acknowledgement letter - admissible as evidence in the absence of entry in the Books of Account of the Corporate Debtor or not? - HELD THAT - An identical issue as framed above has come up for consideration before the Hon ble High Court of Madras in the matter of N. MUTHUKUMAR VERSUS M. KARUPAPIAH P.R. RAJESH KUMAR S. SATHEESHKUMAR 2018 (2) TMI 2034 - MADRAS HIGH COURT wherein a suit was filed only for recovery of money paid under unregistered sale agreement. In the said case the issue under consideration in the revision petition filed before the Madras High Court was that unregistered sale agreement is not sufficiently stamped and is compulsorily required registration therefore the same is inadmissible in evidence. The Hon ble high Court of Madrasa has held that as per Article 5 0) of the Schedule I of the Indian Stamp Act the stamp duty for the sale agreement is 20/- and unregistered sale agreement was written on 20/- stamp paper which was held to be sufficiently stamped. In the case on hand the sale agreement dated 02.08.2016 is written on the non- judicial stamp paper of 100/- which as per Article 5 (j) of Schedule I of the Indian Stamp Act 1899 is held to be sufficiently stamped and even if the same is unregistered it is admissible in evidence for collateral purpose i.e. for proving the payment of 15, 00, 00, 000 (15 Crores) by the Applicant/ Financial Creditor to the Corporate Debtor. This fact is also corroborated by the claim acknowledgement letter dated 02.08.2016. Moreover this authority has also noted that a communication dated 22.07.2016 was sent by the Managing Director to Indian overseas Bank which goes to state that the Managing Director has identified an investor who is willing to pay bank dues and immediately thereafter on 02.08.2016 the sale agreement was executed between the Applicant/finical creditor and the Corporate Debtor represented by the Managing Director and Director. This fact seems to have co-relation with the purpose of execution of the sale agreement. The purpose of sale agreement was the payment of dues of Indian Overseas Bank to the tune of 15, 00, 00, 000/- (15 Crores) which was agreed to be paid by the Applicant as mentioned in the sale agreement. The exercise under taken by the Resolution Professionals to reject the claim of the Applicants / Financial Creditors is without any basis. Moreover the Resolution Professional(s) has no adjudicatory power for deciding the issue pertaining to the claim made - the Applicants are held entitled to their claim to the tune of 15, 00, 00, 000 (15 Crores) as financial debt. This authority takes judicial notice that during the pendency of this Application the Resolution Plan came to be approved by the COC which has been filed before this authority under Section 30(6) read with Section 31(1) of the IBC 2016. In view of this order the Resolution Professional is directed as follows - a). to treat the Applicants at par with other unsecured financial creditors and make the appropriate provision for payment to which they are entitled in consultation with the COC and the Resolution Applicant and file the supplementary affidavit to that effect before this authority or b). to withdraw the Resolution Plan and constitute the COC afresh to get the Resolution Plan(s) approved with suitable modifications as may be required. Application disposed off.
Issues Involved:
1. Admissibility of the unregistered sale agreement dated 02.08.2016 and claim acknowledgment letter dated 02.08.2016 as evidence. 2. Validity of the Resolution Professional's rejection of the Applicant's claim. 3. Authority of the Resolution Professional in adjudicating claims. 4. Compliance with the Companies Act and Registration Act requirements. Issue-Wise Detailed Analysis: 1. Admissibility of the Unregistered Sale Agreement and Claim Acknowledgment Letter: The primary issue was whether the unregistered sale agreement dated 02.08.2016 and the claim acknowledgment letter dated 02.08.2016 could be admitted as evidence despite not being recorded in the Corporate Debtor's books. The Tribunal referred to Section 49 of the Registration Act, 1908, which allows an unregistered document to be received as evidence of a contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by a registered instrument. The Tribunal also cited the judgment of the Madras High Court in N. Muthukumar vs M. Karupapiah, which held that an unregistered sale agreement could be admitted as evidence for collateral purposes. The Tribunal concluded that the sale agreement and claim acknowledgment letter were sufficiently stamped and admissible as evidence for proving the payment of ?15,00,00,000 by the Applicant to the Corporate Debtor. 2. Validity of the Resolution Professional's Rejection of the Applicant's Claim: The Resolution Professional rejected the Applicant's claim on the grounds of lack of documentary evidence, cash payments, absence of a duly signed loan agreement, and no entry in the financial statements. The Tribunal noted that the sale agreement and claim acknowledgment letter, signed by the Managing Director and Director of the Corporate Debtor, acknowledged the payment of ?15,00,00,000. The Tribunal found that the reasons given by the Resolution Professional and the suspended Directors were not substantiated by any documentary evidence. The Tribunal held that the claim of the Applicant for ?15,00,00,000 was admissible based on the sale agreement and claim acknowledgment letter. 3. Authority of the Resolution Professional in Adjudicating Claims: The Tribunal emphasized that the Resolution Professional does not have adjudicatory power to decide the issue pertaining to claims. The role of the Resolution Professional is to vet and verify claims and determine the amount of each claim. This position was supported by the Supreme Court judgment in Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors., which clarified that the Resolution Professional's function is administrative and not judicial. The Tribunal concluded that the Resolution Professional's rejection of the Applicant's claim was beyond his authority and thus null and void. 4. Compliance with the Companies Act and Registration Act Requirements: The Tribunal examined the compliance with the Companies Act, 2013, and the Registration Act, 1908. The Resolution Professional argued that the sale agreement was void under Section 180 of the Companies Act, as it involved the sale of a substantial asset without a special resolution. The Tribunal, however, focused on the admissibility of the unregistered document for proving the financial transaction. The Tribunal also noted that the sale agreement was sufficiently stamped as per the Indian Stamp Act, 1899, and thus admissible for collateral purposes. The Tribunal dismissed the argument that the absence of a Board Resolution and proper audit records could invalidate the Applicant's claim, emphasizing that the Directors' signatures and the Corporate Debtor's seal on the documents indicated their authority. Conclusion: The Tribunal held that the Applicant's claim for ?15,00,00,000 was valid and admissible based on the sale agreement and claim acknowledgment letter. The rejection of the claim by the Resolution Professional was declared null and void. The Tribunal directed the Resolution Professional to treat the Applicants at par with other unsecured financial creditors and make appropriate provisions for payment, or to withdraw the Resolution Plan and reconstitute the Committee of Creditors (COC) afresh. The Application MA/518/2018 was disposed of with no order as to costs.
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