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TMI Blog2021 (7) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Insolvency and Bankruptcy Code 2016 to initiate a Corporate Insolvency Process again the Corporate Debtor 'Platino Classic Motors'. 3. The Appellant is an Ex-director of the Corporate Debtor 'Platino Classic Motors' engaged in the sale of vehicles. Respondent/Financial Creditor purportedly entered into a Term Loan Agreement (here-in-after referred to as 'TML') dated the 30th of June 2014 with the Corporate Debtor. The 'TML' contained various ancillary provisions that in effect sought to create a charge of the Respondent over the assets of the Corporate Debtor as security for the loan of Rs. ten crores, extended under the 'TML'. However, as per the Financial Creditor's statement of account, the total amount of debt is Rs. 6,39,13,042.98 only. 4. The Financial Sector/Federal Bank contends that on the 30th of June 2019, the Corporate Debtor had availed, among other things, a term loan of Rs. ten crores with an agreement to repay the same in 120 monthly instalments together with interest and charges outlined in the loan document. The Corporate Debtor as collateral security for the debt created an equitable mortgage favouring the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Attorney does not grant a general authorisation to present before all Tribunals. Therefore, a power of attorney does not affect to present petition before the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. 9. Application U/S 7 is filed merely based on the bank statement. The Financial Creditor has not produced any valid documents to show that the Corporate Debtor had received the alleged amounts that could be termed as financial debt under Section 5 (8) of the Code. There was no promise to repay within the stipulated time. There has been no default in terms of the Agreement. Therefore, there is no legally recoverable debt against the Company. 10. Further, no consideration has been passed from the Financial Creditor to the Corporate Debtor against the promissory note. Therefore, there is no evidence to show that the amount of Rs. ten crores have been given to the Respondent under the promissory note. 11. There is no Debtor-Creditor Relationship between the Financial Creditor and the Corporate Debtor. There is no undertaking to repay the amount with interest within the specified period, and hence there is no default. Based on the documents which are not en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon parties in the Term Loan Agreement. Thus, by the said Term Loan Agreement, all the Corporate Debtor's security obligations were registered in writing, including the creation of charges and mortgage over immovable property. Therefore, the registration of such a document is compulsory. 17. The Adjudicating Authority further failed to consider the case-law of the Hon'ble Supreme Court, State of Haryana v Navir Singh, 2010 SCC OnLine SC 36, and in the case of United Bank of India versus Lekharam Sonaram and Company, AIR 1965 SC 1591. State of Haryana and Ors. vs Navir Singh and Ors. (07.10.2013 - SC) : MANU/SC/1036/2013 "14. Mortgage inter alia means transfer of interest in the specific immovable property for the purpose of securing the money advanced by way of loan. Section 17(1)(c) of the Registration Act provides that a non-testamentary instrument which acknowledges the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extension of any such right, title or interest, requires compulsory registration. Mortgage by deposit of title-deeds in terms of Section 58(f) of the Transfer of Property Act surely acknowle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1908, as a non-testamentary instrument creating an interest in immovable property, where the value of such property is one hundred rupees and upwards. If a document of this character is not registered it cannot be used in the evidence at all and the transaction itself cannot be proved by oral evidence either. In the present case the letter does not mention what was the principal amount borrowed or to be borrowed. Neither does it refer to rate of interest for the loan. The letter does not mention details of title deeds which are to be deposited with the plaintiff-bank. The document was not intended to be an integral part of the transaction and did not, by itself, operate to create an interest in the immovable property. It follows, therefore, that the document did not require registration under S. 17 of the Indian Registration Act. " 19. In reply to the above, the learned Counsel for the Respondent/Financial Creditor had taken a stand before the Adjudicating Authority that the contention of the Corporate Debtor that 'Term Loan Agreement" is an insufficiently stamped document, hence inadmissible in evidence, was an incorrect one. The Term Loan Agreement is a document that purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the 01st of July 2014; certificate of registration of charge with the ROC, dated the 30th of June 2014; Sale Deed No's 3992, 3993 and 3994, dated the 24th of November 2010 of M/S Platino Classic Motors; a statement of accounts; certificate under the Bankers Book of Evidence Act; CIBIL report etc. 25. Based on the documents filed by the Financial Creditor, it is clear that the Financial Creditor has proved that the Corporate Debtor has defaulted in making the payment is 6,39,13,042 due on the Corporate Debtor. Therefore, if it is considered that the Term Loan Agreement is insufficiently stamped for argument sake, then it is inadmissible in evidence. Furthermore, the claim of the Financial Creditor is fully corroborated by other evidence filed. 26. The Corporate Debtor committed default in repayment of the loan amount to the Financial Creditor. Hence its loan account was declared as NPA. In light of facts and circumstances, debt and default are reasonably established by the Financial Creditor. 27. The Application filed by the Financial Creditor under Sub-section (4) of Section 7 of the Insolvency and Bankruptcy Code 2016 was complete in all respects. Therefore, the Adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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