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2024 (5) TMI 138 - AT - Insolvency and BankruptcyAdmission of Section 7 application - Assignment Agreement - Proper stamping of the agreement - Existence of Debt and Default - Corporate Guarantee - Whether registered Assignment Deed could have been looked into by the Adjudicating Authority while admitting Section 7 application? - Failure to comply with the conditions of settlement agreement - HELD THAT - Present is a case where the Assignment Agreement which is challenged by the Appellant is a registered document duly stamped for Rs.1,01,500 and it is submitted by the Respondent that the said stamp was paid as per the Maharashtra Stamp Act, 1958. Thus, present is not a case where document which is sought to be challenged is unstamped document. According to the own case of the Appellant, his complaint regarding insufficiency of stamp is pending adjudication before the Stamp Authority. Thus, as on date, there is no determination by any competent authority that the registered Assignment Deed is insufficiently stamped, therefore, the submission of the Appellant that the registered Assignment Deed could not have been looked into by the Adjudicating Authority while admitting Section 7 application, cannot be accepted. No error has been committed by the Adjudicating Authority in relying on the Assignment Deed dated 07.08.2020 on basis of which the Respondent No.1 has filed Section 7 application. The present is a case where the Corporate Debtor has given a guarantee. The Corporate Debtor having given Corporate Guarantee, both the Cooperative Bank (the original lender) and Respondent No.1 (the Assignee) were fully entitled to file Section 7 application against the Corporate Debtor. The judgment of Hon ble Supreme Court in ANUJ JAIN VERSUS AXIS BANK LIMITED AND ORS. 2020 (2) TMI 1700 - SUPREME COURT was on its own facts and there are distinguishing features in the present case with those of the Anuj Jain s Case. There are no reason to enter into issues raised by the Intervener in Company Petition filed under Section 241-244 of the Companies Act, 2013 nor at the instance of Intervener, the impugned order passed by the Adjudicating Authority admitting Section 7 application can be interfered with. More so, Appellant who is Suspended Director of the Corporate Debtor filed the appeal and raised all possible grounds to challenge the admission order. There are no ground to interfere with the order passed by the Adjudicating Authority admitting Section 7 application against the Corporate Debtor - appeal dismissed.
Issues Involved:
1. Validity of Assignment Deed 2. Admissibility of insufficiently stamped documents 3. Existence of debt and default 4. Competence of Respondent No.1 to file Section 7 application Summary: 1. Validity of Assignment Deed: The Appellant challenged the validity of the Assignment Deed dated 07.08.2020, claiming it was insufficiently stamped under the Maharashtra Stamp Act, 1958. The Respondent argued that the document was duly stamped and registered, and the stamp duty was paid as per the notification dated 06.05.2002, which capped the duty at Rs.1 lakh. The Tribunal held that the Assignment Deed was valid and that, under Section 5(2) of SARFAESI Act, the Respondent No.1, as an Asset Reconstruction Company, was deemed to be the lender and entitled to file the Section 7 application. 2. Admissibility of Insufficiently Stamped Documents: The Appellant argued that the Assignment Deed could not be relied upon as it was insufficiently stamped. The Tribunal referred to the judgment in "In Re: Interplay, 2023 SCC Online SC 1666" which stated that insufficiently stamped documents are inadmissible in evidence but not void or unenforceable. The Tribunal noted that the complaint regarding insufficient stamping was pending adjudication, and as such, the registered Assignment Deed could be considered by the Adjudicating Authority. 3. Existence of Debt and Default: The Adjudicating Authority found that there was an existence of debt and default by the Corporate Debtor, which was more than the threshold of Rs.1 crore. The Appellant had repeatedly acknowledged the outstanding dues and offered to settle the amount of Rs.24.10 Crores but failed to comply with the commitments. The Tribunal concluded that the Corporate Debtor required insolvency resolution due to its failure to clear its outstanding dues. 4. Competence of Respondent No.1 to File Section 7 Application: The Tribunal held that Respondent No.1 was competent to file the Section 7 application as it had acquired the financial assets from the Cooperative Bank and was deemed to be the lender under Section 5(2) of SARFAESI Act. The Corporate Debtor had mortgaged its immovable property and executed Deeds of Guarantee to secure the loan facilities, making the Respondent No.1 eligible to initiate CIRP under Section 7 of the Code. Conclusion: The Tribunal dismissed the appeal, upholding the Adjudicating Authority's order admitting the Section 7 application against the Corporate Debtor. The interim order was discharged.
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