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TMI Blog2024 (7) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... the Code is not borne out from the facts and the loan agreement itself and cannot be accepted - the evidences presented by the Appellant, including the balance sheet and the 'Record of Default', unequivocally establishes the debt and default. Stamping of Promissory Note - HELD THAT:- It is evident that, the debt and default are clearly established by the material on record in the form of the Loan Agreement, the Audit Report and also Record of Default (Form D) from the Information Utility (NeSL) taken together, as was examined in earlier part of the Appraisal. This Appellate Tribunal finds that the Adjudicating Authority erred in dismissing the application under Section 7 of the IBC. The existence of debt and default has been clearly established, and the procedural requirements have been met by the Appellant. The issue of stamping does not outweigh the substantive evidence of debt and default - impugned order set aside - appeal allowed. - [ Justice Ashok Bhushan ] Chairperson And [ Arun Baroka ] Member ( Technical ) For the Appellant : Mr. Abhishek Naik , Ms. Gulafsha Kureshi , Advocates For the Respondent : Mr. Abhishek Arora , Mr. Abhishek Anand , Advocates for IRP JUDG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent. 9. Despite multiple hearings and submission of additional documents, including the 'Record of Default' authenticated by NeSL, the Adjudicating Authority dismissed the appellant's application on 29.02.2024. 10. The Adjudicating Authority Erred in dismissing the Application under Section 7 of the IBC on following grounds: 10.1. Existence of Debt and Default : The appellant provided substantial evidence demonstrating the existence of a debt and the respondent's default. The loan was reflected in the respondent's balance sheet, and the 'Record of Default' from NeSL was undisputed. Under Section 7 of the IBC, the only requirement for admission of an application is the existence of a debt and default, both of which were clearly established. 10.2. Compliance with Procedural Requirements : The appellant complied with all procedural requirements, including filing the information of default with the information utility, as directed by the Ld. Adjudicating Authority. The authenticated records were submitted and should have been duly considered. 10.3. Misinterpretation of the Indian Stamp Act, 1899 - Sufficient Stamping of Promissory Note : The Adjudicating A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he actual disputed loan amount remains Rs. 70,00,000/-. 17. The loan was intended for general corporate purposes and should be treated as a business loan rather than a financial loan under Section 5(8) of the IBC. This distinction is crucial in determining the applicability of CIRP under the IBC, as the nature of the loan affects the legal rights and obligations of the parties involved. Therefore, the provisions of the IBC are not applicable. 18. The Appellant's inclusion of the interest amount of Rs. 44,62,500/- in the total claim is unwarranted and intended to unjustly increase the amount claimed under the CIRP. The principal loan amount of Rs. 70,00,000/- is acknowledged, but the inflated claim due to the disputed interest lacks basis and should be disregarded by this Appellate Tribunal. The interest of 15% per annum is denied as it does not form part of the present purpose under the application filed under Section 7 of IBC. 19. The Adjudicating Authority correctly observed that the Promissory Note dated 01.10.2018 was insufficiently stamped under Schedule 1 Article 49(b) of the Indian Stamp Act, 1899. This deficiency was highlighted in the clarification sought on 12.10.2023 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has clear mention of the principal amount of Rs 70 Lakhs and also the interest @15%. The relevant clauses are extracted herein : 29. This document also has a clause for a promissory note which is not registered. The relevant clause is as follows : 4 ) Security A Demand Promissory note to be executed by the company for Rs. 7000000/- togather with interest. Cost, charges and expenses and : And the unsecured promissory note is as follows : 30. From the above material on record, it is evident that in October 2018, a Loan Agreement dated 01.10.2018 was executed between the Appellant and the Respondent for disbursal of loan of Rs. 70,00,000/- which was to be repaid by the Respondent within a period of 36 months along with the accumulated interest calculated at 15% per annum. Also, document reveals that an Unsecured Demand Promissory Note dated 01.10.2018 was also executed by the Respondent in favour of the Appellant as a security and the same has been recorded in Clause 4 of the Loan Agreement. 31. The argument of the Respondent-CD that the loan amount of Rs.70,00,000/- was for general Corporate purposes and was in nature of business loan and not a financial loan as explained under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mping does not fall for determination under Sections 8 or 11 of the Arbitration Act. The concerned court must examine whether the arbitration agreement prima facie exists; d. Any objections in relation to the stamping of the agreement fall within the ambit of the arbitral tribunal; and e. The decision in NN Global 2 (supra) and SMS Tea Estates (supra) are overruled. Paragraphs 22 and 29 of Garware Wall Ropes (supra) are overruled to that extent...... 36. It has been clearly brought out in the above judgement of the Apex Court that Agreements which are not stamped or are inadequately stamped are inadmissible in evidence under Section 35 of the Stamp Act and such agreements are not rendered void or void ab initio or unenforceable and further Non-stamping or inadequate stamping is a curable defect and therefore as claimed by the Appellant unstamped confirmation and undertaking doesn t make the whole process illegal if this document is not even relied upon as an evidence. In this backdrop we need not look into the claim of the Appellant that the Promissory Note was sufficiently stamped under Clause 49(iii) of the Indian Stamp Act, 1899. Even if there was an issue with the stamping, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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