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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 ..... he 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 Adjudicating Authority admitted the petition filed under Section 7 of the Code. The objections raised by the Appellant/Corporate Debtor are unsustainable. First, the Appellant emphasised the alleged insufficiently stamped Term Loan Agreement. However, in addition to the Term Loan Agreement, the Financial Creditor relies on Demand Promissory Note, Hypothecation letter regarding depositing of title deed, a certified copy of the bank statement, and so many other documents filed along with the Application - Therefore, even if it is considered that the Term Loan Agreement is insufficiently stamped and it cannot be accepted in evidence, then also alleged debt and default are proved beyond doubt. Furthermore, the Application filed under Section 7 is complete. The Appeal is dismissed. - Company Appeal (AT) (CH)(Insolvency) No. 22 of 2021 - - - Dated:- 19-7-2021 - [Justice Venugopal M.] Member (Judicial) And [V. P. Singh] Member (Technical) For the Appellant : Mr R Murari, Sr Advocate For Ms Ramya Subramaniam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Appeal 5. The Appeal is filed on the ground that the Adjudicating Authority has failed to consider that the purported 'Term Loan Agreement' is the Umbrella Agreement concerning not only the subject loan itself but the various security obligations/security documents thereunder. It provides for the hypothecation of immovable property, the mortgage of other pieces of immovable property owned by the Corporate Debtor by deposit of title deed and the creation of a floating charge on the Appellant's asset. 6. The Adjudicating Authority has failed to consider that it is settled law that under Section 17 of the Registration Act 1908, such agreements must be compulsorily registered for being considered legally admissible. Further, all the ancillary security documents executed under the Term Loan Agreement were entered into by the Corporate Debtor are under security obligations reduced in writing, including the creation of charge over the immovable property. 7. The demand promissory note dated the 30th of June 2014 and the Agreement of Guarantee dated the 30th of June 2014, provided by the promoters of M/S Koyenco Auto Private Limited towards the obligation of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tcy Code 2016 is not complete as it is not supported by the documents mandated under the IBC. The Applicant has not complied with Section 7 (3) of the Code because Applicant failed to submit a record of default recorded with the information utility or such document specified. Discussion and findings 13. We have heard the argument of the learned Counsels for the parties and perused the record. The impugned Order is mainly challenged on the ground that the petition filed under Section 7 of the Code is not maintainable. After all, the entire loan transaction is based on the 'Term Loan Agreement', an inadequately stamped document inadmissible in evidence. 14. The following points arise for our consideration: Whether petition filed under Section 7 of the code is not maintainable because the entire loan transaction is based on the 'Term Loan Agreement', which is an inadequately stamped document, therefore, inadmissible in evidence? 15. The Appellant contends that the purported Term Loan Agreement is the Umbrella Agreement with respect to the subject loan itself and the various security obligations/ documents thereunder. It is an Agreement creating a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered instrument is required Under Section 59 thereof as in other classes of mortgage. The essence of mortgage by deposit of title-deeds is handing over by a borrower to the creditor title-deeds of immovable property with the intention that those documents shall constitute security, enabling the creditor to recover the money lent. After the deposit of the title-deeds the creditor and borrower may record the transaction in a memorandum but such a memorandum would not be an instrument of mortgage. A memorandum reducing other terms and conditions with regard to the deposit in the form of a document, however, shall require registration Under Section 17(1)(c) of the Registration Act, but in a case in which such a document does not incorporate any term and condition, it is merely evidential and does not require registration. 18. The Appellant has further placed reliance on the Hon'ble Supreme Court's decision in United Bank of India v Lekharam Sonaram Co, AIR 1965 SC 1591 wherein it is stated that; Parties reducing the contract to writing - Registration, held, necessary. The essence of a mortgage by deposit of title deeds is the actual handing over by a borrower to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed an agreement related to deposit of title deeds and compulsorily registrable is also incorrect and unsustainable, as the said document does not even indicate the deposit of the title deed. 21. The Appellant further contends that the impugned Order of admission was made despite the Corporate Debtor making the oral submission without prejudice willing to pay the outstanding amount to the Respondent within six months, thereby rendering the need for admission of insolvency proceedings superfluous infructuous. In the circumstances, there was no necessity of putting the Corporate Debtor into rigours of the Corporate Insolvency Resolution Process for one purportedly outstanding debt. The Appellant has stated that it is at an advanced stage of entering into a settlement with the Financial Creditor. It has proposed a short six months to settle all disputes between the parties. 22. Further, on the 10th of March 2021, the Appellant sent an email to the Financial Creditor making the settlement offer. Based on the settlement offer Appellant has prayed that the impugned Order of admission should be set aside. 23. It is to be clarified that the impugned Order of admission cannot be ..... 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