Corporate debtor's challenge to Section 7 application admission fails over stamp duty dispute on assignment deed

NCLAT dismissed appeal challenging admission of Section 7 application. Corporate debtor contested validity of assignment agreement claiming insufficient stamping, but tribunal found the registered deed was properly stamped under Maharashtra Stamp Act for Rs.1,01,500 with no competent authority determining insufficiency. Adjudicating Authority correctly relied on assignment deed dated 07.08.2020 for admission. Corporate debtor provided guarantee enabling both original lender and assignee to file Section 7 application. Distinguishing features existed from Anuj Jain case precedent. Suspended director's appeal raising various grounds against admission order was rejected.

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Issues Involved:
1. Validity of Assignment Deed
2. Admissibility of insufficiently stamped documents
3. Existence of debt and default
4. Competence of Respondent No.1 to file Section 7 application

Summary:

1. Validity of Assignment Deed:
The Appellant challenged the validity of the Assignment Deed dated 07.08.2020, claiming it was insufficiently stamped under the Maharashtra Stamp Act, 1958. The Respondent argued that the document was duly stamped and registered, and the stamp duty was paid as per the notification dated 06.05.2002, which capped the duty at Rs.1 lakh. The Tribunal held that the Assignment Deed was valid and that, under Section 5(2) of SARFAESI Act, the Respondent No.1, as an Asset Reconstruction Company, was deemed to be the lender and entitled to file the Section 7 application.

2. Admissibility of Insufficiently Stamped Documents:
The Appellant argued that the Assignment Deed could not be relied upon as it was insufficiently stamped. The Tribunal referred to the judgment in "In Re: Interplay, 2023 SCC Online SC 1666" which stated that insufficiently stamped documents are inadmissible in evidence but not void or unenforceable. The Tribunal noted that the complaint regarding insufficient stamping was pending adjudication, and as such, the registered Assignment Deed could be considered by the Adjudicating Authority.

3. Existence of Debt and Default:
The Adjudicating Authority found that there was an existence of debt and default by the Corporate Debtor, which was more than the threshold of Rs.1 crore. The Appellant had repeatedly acknowledged the outstanding dues and offered to settle the amount of Rs.24.10 Crores but failed to comply with the commitments. The Tribunal concluded that the Corporate Debtor required insolvency resolution due to its failure to clear its outstanding dues.

4. Competence of Respondent No.1 to File Section 7 Application:
The Tribunal held that Respondent No.1 was competent to file the Section 7 application as it had acquired the financial assets from the Cooperative Bank and was deemed to be the lender under Section 5(2) of SARFAESI Act. The Corporate Debtor had mortgaged its immovable property and executed Deeds of Guarantee to secure the loan facilities, making the Respondent No.1 eligible to initiate CIRP under Section 7 of the Code.

Conclusion:
The Tribunal dismissed the appeal, upholding the Adjudicating Authority's order admitting the Section 7 application against the Corporate Debtor. The interim order was discharged.

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