Assignment deed registration and proof of filing authority cured procedural defects in the Section 7 insolvency application.

Subsequent registration made an assignment deed enforceable for a Section 7 insolvency application, as the Kerala Stamp Act provision concerning property transfers for debt did not govern assignment of debt without property transfer. Under the Registration Act, registration allowed the deed to be received in evidence and gave it effect from its execution date. Production of the Trust Deed before the appellate forum also cured the earlier deficiency in proving authority to commence proceedings. The Section 7 application therefore required fresh determination on merits, without non-registration of the assignment deed or prior non-production of the Trust Deed being treated as impediments.

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Issues: (i) Whether the assignment deed was enforceable and could support an application under Section 7 of the Insolvency and Bankruptcy Code, 2016; (ii) whether the applicant had established authority to institute the insolvency proceedings.

Issue (i): Enforceability of the assignment deed and its use in the Section 7 proceedings.

Analysis: The rejection of the application was based on the view that the assignment deed was insufficiently stamped and unregistered. The appellate record showed that the deed had subsequently been registered pursuant to the High Court's directions. The Tribunal held that Section 25 of the Kerala Stamp Act, 1959 concerns transfer of property in consideration of a debt and does not govern an assignment of debt where no property is transferred. Upon registration, the deed became capable of being read in evidence. Under Section 47 of the Registration Act, the registered deed operated from the date on which it would have operated had registration not been required, namely the date of execution.

Conclusion: The assignment deed dated 17 March 2017 was enforceable for purposes of considering the Section 7 application and could not be treated as an embargo to its maintainability.

Issue (ii): Whether the applicant had proved authority to institute the Section 7 proceedings.

Analysis: The original Tribunal had rejected the application because the Trust Deed establishing the applicant's authority had not been produced. The Trust Deed was subsequently placed on record before the Appellate Tribunal and was permitted to be considered at the final hearing. The defect concerning proof of authority was therefore cured.

Conclusion: The applicant had established the authority required to institute the Section 7 proceedings.

Final Conclusion: The procedural grounds on which the application had been rejected no longer survived. The matter was required to be adjudicated afresh on the merits without treating non-registration of the assignment deed or non-production of the Trust Deed as impediments.

Ratio Decidendi: Subsequent registration of an assignment deed and production of the instrument establishing the applicant's authority cure the procedural defects relied upon to reject an insolvency application, and a registered document operates from the date on which it would have operated if registration had not been required.

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