Unregistered sale agreement can still prove a collateral transaction and support admission of a financial debt claim.

An unregistered sale agreement and claim acknowledgement letter signed by the company's managing director and director, and bearing the corporate seal, were held admissible to prove the underlying transaction and a collateral arrangement, even though the documents could not operate as a conveyance of immovable property. The tribunal found the agreement sufficiently stamped, supported by surrounding correspondence and recitals, and not displaced by the absence of accounting entries or an unsupported allegation of misuse of blank papers. It also held that the resolution professional lacked adjudicatory power to reject a substantiated claim on those grounds. The claim was therefore treated as financial debt and admitted.

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Issues: Whether the claim based on an unregistered sale agreement and claim acknowledgement letter was admissible in evidence despite absence of entry in the corporate debtor's books of account, and whether the applicants were entitled to have the claim admitted as financial debt.

Analysis: The sale agreement and the claim acknowledgement letter bore the signatures of the then managing director and director with the corporate seal. The document concerning immovable property was unregistered, but such a document is not wholly excluded from evidence; under the Registration Act, it cannot affect immovable property as a conveyance, yet it may be received to prove a contract or a collateral transaction. The agreement was also found to be sufficiently stamped, and the surrounding correspondence and recitals supported the existence of the transaction and the payment of Rs. 15 crores. The absence of proper accounting entries and the plea that blank papers were misused did not displace the documentary record, particularly when no contrary evidence was produced. The tribunal also noted that the directors who executed the documents were the directing mind of the company and that the resolution professional had no adjudicatory power to reject a substantiated claim on such grounds.

Conclusion: The claim was admissible and was rightly treated as financial debt; the rejection orders were set aside and the claim for Rs. 15 crores was admitted.

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