Tribunal Admits Petition for Corporate Insolvency, Orders Document Impounding for Stamp Duty Payment

The Tribunal admitted the petition, initiated Corporate Insolvency Resolution Process against the Corporate Debtor, and ordered the impounding of the Debenture Trust Deed and Debenture Subscription Agreement for payment of requisite stamp duty. The Petitioners were found entitled to recover outstanding sums amounting to Rs. 65,24,33,104. There was a dissent on whether the documents should be impounded, with one member ordering impounding and the other disagreeing, citing sufficient evidence to adjudicate the petition without impounding. The case was referred to the Hon'ble President for resolving the dissenting issue.

---

---

Issues Involved:
1. Enforceability of Debenture Subscription Agreement and Debenture Trust Deed under Maharashtra Stamp Act.
2. Impounding of documents under Sections 33 and 34 of Maharashtra Stamp Act.
3. Alleged novation of contract.
4. Petitioners' entitlement to recover outstanding sums under the Debenture Subscription Agreement and Debenture Trust Deed.

Detailed Analysis:

A. Enforceability of Debenture Subscription Agreement and Debenture Trust Deed:
The Tribunal examined whether the Debenture Subscription Agreement and Debenture Trust Deed, executed and registered in Delhi, are enforceable in Maharashtra despite being insufficiently stamped as per the Maharashtra Stamp Act. The Tribunal determined that these documents are subject to the payment of the difference in stamp duty when brought into Maharashtra for enforcement. The relevant sections of the Maharashtra Stamp Act, including Section 19, mandate the payment of additional stamp duty for documents executed outside the state but enforced within it.

B. Impounding of Documents:
The Tribunal emphasized the obligation under Section 33 of the Maharashtra Stamp Act to impound documents that are insufficiently stamped. The Tribunal referenced the Supreme Court's decisions in SMS Tea Estate Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. and Garware Wall Ropes Ltd. v. Coastal Marine Construction and Engineering Ltd., which held that documents not duly stamped cannot be acted upon. Consequently, the Tribunal ordered the impounding of the Debenture Trust Deed and Debenture Subscription Agreement for payment of requisite stamp duty.

C. Alleged Novation of Contract:
The Corporate Debtor claimed that a larger settlement agreement, reached in January 2018, novated the original contract, thereby discharging its liability. However, the Tribunal found that the alleged settlement was revoked by the Petitioners and was never acted upon. The Tribunal concluded that there was no novation of contract, and the original liability under the Debenture Trust Deed and Debenture Subscription Agreement remained enforceable.

D. Petitioners' Entitlement to Recover Outstanding Sums:
The Tribunal found that the Corporate Debtor defaulted in redeeming the outstanding debentures as per the Debenture Subscription Agreement and Debenture Trust Deed. The Tribunal noted that the Corporate Debtor admitted its liability and sought extensions for redemption, which demonstrated the existence of debt and default. The Tribunal concluded that the Petitioners are entitled to recover the outstanding sums amounting to Rs. 65,24,33,104/-.

Separate Judgments:
While both members of the Tribunal agreed on admitting the petition and initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, there was a dissent on whether the Debenture Subscription Agreement and Debenture Trust Deed should be impounded. Member (Judicial) ordered the impounding and payment of requisite stamp duty, while Member (Technical) disagreed, stating that the documents were ancillary and sufficient evidence existed to adjudicate the petition without impounding.

Conclusion:
The Tribunal admitted the petition, initiated CIRP against the Corporate Debtor, and ordered the impounding of the Debenture Trust Deed and Debenture Subscription Agreement for payment of requisite stamp duty. The case was referred to the Hon'ble President for constituting an appropriate bench to resolve the dissenting issue on impounding.

---