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TMI Blog2024 (5) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (viii) On 21.03.2020, several loan accounts including the Borrowers loan accounts were assigned by KAIJS Bank in favour of Encore Asset Reconstruction Company Pvt. Ltd. (Respondent No.1 herein) (ix) On 16.06.2020 and 18.06.2020, KAIJS Bank intimated the Corporate Debtor, Borrower-1 and Borrower-2 that both loans have been declared NPA and has been assigned to Respondent No.1. (x) On 10.07.2020, Respondent No.1 gave a notice of assignment to the Corporate Debtor and Borrowers. (xi) Corporate Debtor, on 16.10.2020, wrote to Respondent No.1 that they were unaware of Borrowers default of their respective loans. (xii) Respondent No.1 on 04.05.2021 sent notices under Section 13(2) of SARFAESI Act 2002 to the Borrowers and Corporate Debtor demanding repayment of outstanding amount under the loan accounts. (xiii) On 20.05.2021, Respondent No.1 issued demand notices to Corporate Debtor for payment as per Deeds of Guarantee, failing which Respondent No.1 would initiate CIRP under Section 7 of the Code. (xiv) Corporate Debtor replied notices under Section 13(2) as well as demand notices dated 20.05.2021. Corporate Debtor requested for copy of the Assignment Agreement dated 21.03.2020 with d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the Respondent submits that the Respondent is also present. Counsel for the Respondent submits that the Respondent are ready to accept the principal amount of Rs. 24.10 Crores and close the matter with no liberty to proceed against the Personal Guarantor. Let the Learned Counsel for the Appellant take instructions from the Appellant. List this matter on 7th June, 2023. Interim Order to continue, till the next date of hearing. 4. Again on 07.06.2023, the Appellant prayed for time to file affidavit indicating time line and manner in which Appellant will pay Rs.24.10 Crores. On 07.06.2023, 10 days time was allowed to the Appellant and interim order was continued. 5. On 05.07.2023, when case was taken, learned counsel for the Appellant submitted that Appellant is ready to pay Rs.24.10 Crore provided they are given six months time. On 05.07.2023 following order was passed by this Tribunal: ORDER 05.07.2023: Learned Counsel for the appellant referring to the affidavit submits that appellant is still ready to pay the amount of Rs. 24.10 crores, however, they require six months time. It is further submitted that the appellant has also given an offer to the Bank to sell the mortgage p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25% up front. It is further submitted that Respondent Bank shall also permit the appellant to sell the mortgage property subject to the condition that the proceeds of sales shall be utilized only for the purpose of the payment of above amount. Learned Counsel for the Appellant seeks time to obtain instructions. List this appeal on 10th July, 2023. Interim order to continue. 28.07.2023: Learned counsel for the Appellant and the Respondent submits that the parties have finally settled the issue. It is submitted that in the settlement 10% amount shall be paid upfront, 10% shall be paid in 30 days of signing the agreement of amount already settled. Learned counsel submit that the Settlement Agreement shall be filed by 31.07.2023. List this Appeal on 01.08.2023. Interim order to continue. 2. We have also noticed in the earlier order that the Respondent was agreeable that the Appellant may sell the mortgaged property provided that sale proceed shall be deposited with the Respondent. 3. In view of the aforesaid, we grant three months' time to the Appellant to deposit the entire amount in the FDR in the name of the Registrar, NCLAT within three months. We further permit the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that appellant obtained interim order in this appeal on statement that Appellant is ready to pay amount of Rs.24.10 Crores to the Respondent to settle all issues between the parties. Repeated opportunities were obtained by the Appellant to deposit the amount. Respondent also accepted the offer made by the Appellant to settle the entire outstanding against the Appellant, however, the Appellant failed to comply its own undertaking inspite of repeated opportunities. The above sequence of events clearly indicates the acceptance of Appellant of outstanding dues and its repeated offer to make the payment. The fact that Appellant has filed to make the payment as offered by it itself indicate that the Corporate Debtor requires insolvency resolution, it having failed to clear its outstanding dues as admitted by it. 12. The above sequence of events is sufficient to close the appeal, however, learned counsel for the Appellant has raised several grounds to challenge the impugned order, we proceed to examine the submission of the parties on merits also. 13. We have heard Shri Krishnendu Datta, learned senior counsel for the Appellant, Shri Sudhir Makkar, learned senior counsel appearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the Appellant submits that the Assignment Deed dated 07.08.2020 is a registered document and duly stamped. It is submitted that the fact the Assignment Deed is registered presupposes that sufficient stamps have been paid for registration of the document. It is submitted that in the Assignment Deed stamp duty has been paid as per notification dated 06.05.2002 issued by Government of Maharashtra which mandated a cap of Rs.1 lakh on an Assignment Agreement. It is submitted that stamp duty paid in the Assignment Agreement is of Rs.1,01,500 which is adequate stamp duty paid for assignment. It is submitted that two Deeds of Mortgage by which Corporate Debtor has mortgaged it immovable assets in favour of the Financial Creditor have been adequately stamped and duly registered. It is submitted that on the Mortgage Deed with regard to loan of Rs.10 Crore stamp duty of Rs.5 Lakhs has been paid and for Mortgage Deed for loan of Rs.15 Crore stamp duty of Rs.7.5 Lakhs has been paid on the Deeds of Mortgage @0.5% duty as mandated by Article 40 of Schedule-I of Maharashtra Stamp Act. It is submitted that two Deeds of Guarantee were also adequately stamped. Stamping of Rs.100 ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Borrower-1 and Borrower-2 by KAIJS Bank on 28.03.2019 for Rs.10 Crore and Rs.15 Crores in relation to which mortgage was created by the Corporate Debtor on its immovable property in favour of KAIJS Bank in lieu of two term loans. Mortgage Deeds are registered mortgages with appropriate stamp duty. Copy of the registered Mortgage Deeds dated 28.03.2019 executed between Shri Tradco Deesan Pvt. Ltd., Bairagra Builder Pvt. Ltd. and Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd. has been brought on the record, under which the Corporate Debtor who is mortgagor has mortgaged its immovable assets. Clause 8 and 9 of the Mortgage Deed provides as follows: 8. NOW THIS DEED WITNESSETH that in pursuance of the above representations and to the said agreement and in consideration of THE BANK having granted or agreed to grant loan, credit facilities from time to time to the sum viz Rs.10,00,00,000/- (RUPEES TEN CRORES ONLY) as Mortgage Term Loan to the mortgagors/borrowers on of terms and conditions as may be stipulated by THE BANK from time to time, the mortgagor as beneficial owner of the property describes in schedule '1', hereby transfers /discharged/released to THE BANK b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stamp duty of Rs.5 Lakhs with registration fee of Rs.30,000 with regard to loan of Rs.10 Crore in favour of Borrower-1, where the Corporate Debtor stood as mortgagor. 21. Learned counsel for the Respondent has referred to Article 54 of the Maharashtra Stamp Act, 1958, according to which for Security Bond and Mortgage Deed stamp duty of 0.5% for the amount secured is payable. Learned counsel for the Respondent has also submitted that with regard to two Deeds of Guarantee stamp duty of Rs.100 was paid which was as per Article 40. Article 54 proviso of Maharashtra Stamp Act has been referred which proviso provides that where on an instrument executed by a person for whom a person stands surety and executes security bond or a mortgage deed, duty has been paid under article 40, then the duty payable shall be one hundred rupees. Thus, as per Article 54 of the Maharashtra Stamp Act, when stamp duty has already been paid on the Mortgage Deed of 0.5%, the Guarantee Deed has to be executed with stamp duty of Rs.100. From the above it is clear that the Corporate Debtor mortgaged its immovable assets for securing loans in favour of the Financial Creditor and also executed Guarantee Deeds. 22. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression Notwithstanding anything contained in any agreement or any other law for the time being in force . Thus, overriding effect has been given to the provision of Section 5(1) by virtue of which an Asset Reconstruction Company may acquire financial assets of any bank or financial institution. Sub-section (1A) granting exemption from stamp duty was inserted w.e.f. 01.09.2016. We may also look into Sub-section (2) of Section 5 which contains a deeming clause by which on acquisition by an Asset Reconstruction Company, the Asset Reconstruction Company shall be deemed to be a lender. 26. Section 5(2) came for consideration before this Tribunal in Naresh Kumar Aggarwal vs. CFM Asset Reconstruction Pvt. Ltd. Ors., Company Appeal (AT) (Ins.) No.470 of 2023 where this Tribunal considered Sub-section (2) of Section 5 of SARFAESI Act, 2002. It was held that when acquisition of assets by Asset Reconstruction Company is made under Section 5(1), deeming provision shall come into play and Asset Reconstruction Company shall be deemed as Lender for all purposes. In Para 7 to 9 following was held: 7. Section 5 Sub-section (1) begins with non-obstante clause with the words Notwithstanding anythi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... *** *** 94. Although a deeming provision is to deem what is not there in reality, thereby requiring the subject matter to be treated as if it were real, yet several authorities and judgments show that a deeming fiction can also be used to put beyond doubt a particular construction that might otherwise be uncertain. Thus, Stroud's Judicial Dictionary of Words and Phrases (7th Edition, 2008), defines deemed as follows: Deemed as used in statutory definitions to extend the denotation of the defined term to things it would not in ordinary parlance denote , is often a convenient device for reducing the verbiage or an enactment, but that does not mean that wherever it is used it has that effect; to deem means simply to judge or reach a conclusion about something, and the words deem and deemed when used in a statute thus simply state the effect or meaning which some matter or things has-the way in which it is to be adjudged; this need not import artificiality or fiction; it may simply be the statement of an indisputable conclusion. 22.2.2. In Pioneer Urban, this Court further extracted extensively from the decision in Hindustan Cooperative Housing Building Society Limited v. Registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary function as to bring in something which would otherwise be excluded.' (Per Viscount Simonds in Barclays Bank Ltd. MANU/WB/0296/1959: 1961 AC 509 at AC p. 523.) V. IRC: Deems means is of opinion or considers or decides and there is no implication of steps to be taken before the opinion is formed or the decision is taken. [See R. v. Brixton Prison (Governor), ex p Soblen: (1963) 2 QB 243 at QB p. 315.] 22.3. On a conspectus of the principles so enunciated, it is clear that although the word 'deemed' is employed for different purposes in different contexts but one of its principal purpose, in essence, is to deem what may or may not be in reality, thereby requiring the subject-matter to be treated as if real. Applying the principles to the provision at hand i.e., Section 43 of the Code, it could reasonably be concluded that any transaction that answers to the descriptions contained in sub-sections (4) and (2) is presumed to be a preferential transaction at a relevant time, even though it may not be so in reality. In other words, since sub-sections (4) and (2) are deeming provisions, upon existence of the ingredients stated therein, the legal fiction would come into play ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able under clause (a) article 25 of Schedule I to the said Act, to fifty paise for every five hundred rupees or part thereof, of the loan securitised or debt assigned with underlying securities, subject to maximum of rupees one lakh, and in case of instrument of Assignment of Receivables in respect of use of credit cards to two rupees and fifty paise for every five hundred rupees or part thereof. By order and in the name of the Governor of Maharashtra, 29. It appears that stamp duty of Rs.1 Lakh was paid on the Assignment Agreement in view of the above notification issued by State of Maharashtra. It is further relevant to notice that the Assignment Agreement is a registered document. When a document is registered, the registration itself gives a presumption that the document is duly stamped. 30. Learned counsel for the Appellant submits that he has filed complaint before the Collector, Stamps on 07.08.2023 with regard to insufficient stamps on the Assignment Deed and Guarantee Bonds. It is submitted that notices have been issued to the Cooperative Bank demanding deficit stamp duty in Guarantee Bonds and directed the Joint Registrar to take action against the Assignment Deed. Letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, which is as follows: 1. This Court has been called upon to resolve an issue which arose in the context of three statutes the Arbitration and Conciliation Act 1996, the Indian Stamp Act 1899, and the Indian Contract Act 1872. The Stamp Act imposes duty on instruments . An instrument which is unstamped or insufficiently stamped is inadmissible in evidence and cannot be acted upon in terms of its provisions. Arbitration agreements are often embedded in underlying instruments or substantive contracts. When an application is made for the appointment of an arbitrator, an objection is raised on the ground that the arbitration agreement is inadmissible because it is in an instrument which is unstamped or inadequately stamped. The primary issue that arises is whether such arbitration agreements would be non-existent, unenforceable, or invalid if the underlying contract is not stamped. A brief description of the context in which this question arises follows. 33. On the said issue, the majority judgment in Para 224 recorded its conclusions, which is as follows: 224. The conclusions reached in this judgment are summarised below: a. Agreements which are not stamped or are inadequately st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such person or by any public officer, unless it is duly stamped. The words acted upon are with reference to the acts or the proceedings before such officer or public officer, as the case may be. 8. Section 35 permits admission of an unstamped or under-stamped instrument after the same instrument is duly stamped. Proviso (a) requires payment of the chargeable duty and penalty, before an insufficiently stamped instrument is admitted in evidence, or is acted upon, registered or authenticated. 9. Section 40(1)(b) of the Stamp Act provides for payment of proper duty if the instrument impounded is not duly stamped. Section 42(1) provides for certifying that proper duty has been paid on the impounded instrument. Sub-section (2) of Section 42 provides that after certification the instrument shall be admissible in evidence, and may be registered, acted upon and authenticated as if it has been duly stamped. 10. Sections 33 and 35 do not apply when an instrument is produced or is acted upon by the parties themselves, or by a person who does not have authority by law or by consent of the parties to receive evidence, or a person who is not a public officer. Sections 33 does not authorise a pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant, 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, we are unable to accept 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. 39. It is relevant to notice that the Appellant in his appeal at no place pleaded that there is no debt or default by the Corporate Debtor in making payment or there is no debt and default of the financial debt. Whole attack of the Appellant is regarding Assignment Agreement dated 07.08.2020 for the reasons as has been mentioned above. We are of the view that 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. 40. We may also notice judgment of Hon ble Supreme Court relied by learned counsel for the Appellant i.e. judgment of Anuj Jain vs. Axis Bank Limited, (2020) 8 SCC 401 . The above judgment has been cited by learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or incurring liability by the modes prescribed in clauses (a) to (f) of Section 5(8); it may also include any derivative transaction or counter-indemnity obligation as per clauses (g) and (h) of Section 5(8); and it may also be the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in clauses (a) to (h). The requirement of existence of a debt, which is disbursed against the consideration for the time value of money, in our view, remains an essential part even in respect of any of the transactions/dealings stated in clauses (a) to (i) of Section 5(8), even if it is not necessarily stated therein. In any case, the definition, by its very frame, cannot be read so expansive, rather infinitely wide, that the root requirements of disbursement against the consideration for the time value of money could be forsaken in the manner that any transaction could stand alone to become a financial debt. In other words, any of the transactions stated in the said clauses (a) to (i) of Section 5(8) would be falling within the ambit of financial debt only if it carries the essential elements stated in the principal clause or at least has the feature ..... X X X X Extracts X X X X X X X X Extracts X X X X
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