Unstamped instrument objections cannot defeat section 7 insolvency claims when debt and default are otherwise proved by independent records.

An unstamped confirmation and undertaking did not defeat a section 7 insolvency petition where debt and default were independently established by audited financial statements, demand notices, part-payments and the NeSL report. The tribunal also treated the disputed sum as an unsecured loan, not a mere project investment, because the surrounding records and interest payments were consistent with a lending transaction. On that basis, the objection based on stamping failed and the insolvency admission was upheld.

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Issues: (i) Whether the section 7 insolvency petition could be sustained despite reliance on an unstamped "confirmation and undertaking" document. (ii) Whether the amount of Rs. 7 crores constituted a loan or merely an investment in the project.

Issue (i): Whether the section 7 insolvency petition could be sustained despite reliance on an unstamped "confirmation and undertaking" document.

Analysis: The record showed that the Adjudicating Authority did not rest its finding solely on the disputed document. The finding of financial debt and default was supported by the corporate debtor's audited financial statements, the demand notices, part-payments, and the NeSL report reflecting the date of default and outstanding amount. An unstamped instrument, even if objectionable on stamp-duty grounds, did not by itself defeat the insolvency claim where other admissible material independently established debt and default.

Conclusion: The section 7 proceedings were maintainable and the objection based on stamping failed.

Issue (ii): Whether the amount of Rs. 7 crores constituted a loan or merely an investment in the project.

Analysis: The surrounding materials, including the audited financial statements of the corporate debtor and the NeSL record, treated the amount as an unsecured loan. The corporate debtor had also paid interest and made part-payments in terms consistent with a lending transaction. On that basis, the characterization advanced by the appellant as a mere investment was not accepted.

Conclusion: The amount was correctly treated as a loan and not as a mere investment.

Final Conclusion: The insolvency admission was upheld because the record independently established a financial debt and default, and the appeal failed on both substantial grounds.

Ratio Decidendi: In a section 7 proceeding, an objection that the primary instrument is unstamped does not invalidate the petition where debt and default are otherwise proved by independent material; the real nature of the transaction may be inferred from the contemporaneous records, payments, and financial statements.

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