Whether transfer of loan account by a Bank/Financial Institution to an Asset Reconstruction Company (ARC) would amount to “conveyance” as defined in Sec. 2(d) of the Kerala Stamp Act, 1959 – Abdul Azeez Vs. The Authorized Officer, Phoenix ARC. Ltd. and Anr. – Kerala High Court
Hon’ble Kerala High Court holds that:
(i) What is transferred by a Bank / financial institution to an Asset Reconstruction Company is only a transfer of economic interest and there is no conveyance of property or proprietary rights. The transfer of legal ownership of the loan is limited to the extent to the economic interest transferred.
(ii) Article 22 of the Kerala Stamp Act, 1959 takes within its ambit only those conveyances as defined in Section 2(d). Even assuming that transfer of loan interest by a financial institution involves transfer of any interest in the secured asset and therefore it amounts to conveyance, even then such conveyance will not fall in any of the categories mentioned in Article 22.
(iii) The NCLT has taken a contrary view in CP(IBC)/08/KOB/2023 wherein the Tribunal has held that the assignment deed in favour of the Asset Reconstruction Company is not a conveyance relating to immovable property.
