(2024) ibclaw.in 281 NCLAT
IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Principal Bench, New Delhi
Pawan Kumar Manguturam Bairagra
v.
Encore Asset Reconstruction Company Ltd. and Anr.
Company Appeal (AT) (Insolvency) No. 701 of 2023
Decided on 30-Apr-24
Coram: Mr. Justice Ashok Bhushan (Chairperson) and Mr. Arun Baroka (Technical Member)
Add. Info:
Impugned Order: Order dated 16.05.2023 passed by NCLT, Mumbai Bench-IV in CP (IB) No.1225/MB-IV/2021
Corporate Debtor: Bairagra Builder Pvt. Ltd.
For Appellant(s): Mr. Krishnendu Datta, Sr. Advocate with Mr. Avi Tandon and Rahul, Advocates
For Respondent(s): Mr. Sudhir Makkar, Sr. Advocate, Mr. Tushar John, Ms. Saumya Gupta, Mr. Arjun Maheshwari, Advocates for R-1, Mr. P. Nagesh, Sr. Advocate with Mr. Gaurav Mitra, Mr. Anupam Kishore Sinha, Mr. Apoorv Jha, Advocates in IA No. 5362/2023.
Author’s Note: For case of Debt Assignment Agreement is registered without raising any objection regarding inadequacy of the stamp, refer Emta Coal Ltd. v. L&T Finance Ltd. and Anr. (2024) ibclaw.in 345 NCLAT.
Judgment/Order:
J U D G M E N T
ASHOK BHUSHAN, J.
This Appeal by a Suspended Director of the Corporate Debtor has been filed challenging the order dated 16.05.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench-IV admitting Section 7 application filed by the Financial Creditor. Appellant aggrieved by the admission of Section 7 application has come up in this appeal. Brief facts of the case giving rise to this appeal are:
(i) Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd. (KAIJS Bank), a cooperative bank sanctioned a term loan of Rs.10 Crore to Shri Tradco Deesan Pvt. Ltd. (Borrower No.1) and Rs.15 Crore term loan was sanctioned to Shri Tradco India Pvt. Ltd. (Borrower No.2) on 27.03.2019.
(ii) On 28.03.2019, Bairagra Builder Pvt. Ltd. (Corporate Debtor) executed two registered simple mortgage deeds in favour of KAIJS Bank for securing the above mentioned two loans.
(iii) On 29.03.2019, two loan agreements for Rs.10 Crore and Rs.15 Crore each were executed by KAIJS Bank with both the Borrowers.
(iv) On 29.03.2019, two guarantee bonds were executed by the Corporate Debtor guaranteeing the repayment of both the loans.
(v) On 29.04.2019, Deeds of Mortgage was registered by Corporate Debtor with the ROC.
(vi) On 27.04.2019 and 03.05.2019, Deeds of Guarantee were registered by the Corporate Debtor with ROC.
(vii) On 27.01.2020, Borrower-1 and Borrower-2 loan accounts were declared non-performing assets.
(viii) On 21.03.2020, several loan accounts including the Borrowers loan accounts were assigned by KAIJS Bank in favour of Encore Asset Reconstruction Company Pvt. Ltd. (Respondent No.1 herein)
(ix) On 16.06.2020 and 18.06.2020, KAIJS Bank intimated the Corporate Debtor, Borrower-1 and Borrower-2 that both loans have been declared NPA and has been assigned to Respondent No.1.
(x) On 10.07.2020, Respondent No.1 gave a notice of assignment to the Corporate Debtor and Borrowers.
(xi) Corporate Debtor, on 16.10.2020, wrote to Respondent No.1 that they were unaware of Borrowers default of their respective loans.
(xii) Respondent No.1 on 04.05.2021 sent notices under Section 13(2) of SARFAESI Act 2002 to the Borrowers and Corporate Debtor demanding repayment of outstanding amount under the loan accounts.
(xiii) On 20.05.2021, Respondent No.1 issued demand notices to Corporate Debtor for payment as per Deeds of Guarantee, failing which Respondent No.1 would initiate CIRP under Section 7 of the Code.
(xiv) Corporate Debtor replied notices under Section 13(2) as well as demand notices dated 20.05.2021. Corporate Debtor requested for copy of the Assignment Agreement dated 21.03.2020 with details of the accounts.
(xv) Respondent No.1 sent reply dated 01.06.2021 to the Corporate Debtor that assignment has been done pursuant to a registered deed dated 07.08.2020 under Section 5 of the SARFAESI Act.
(xvi) On 08.09.2021, Respondent No.1 filed Section 7 application claiming an outstanding amount of Rs.31,47,14,883 as on 31.07.2021 along with further interest at contractual rates from 01.8.2021 till the date of realization of same with respect to Term Loan No. LM-01 as well as Term Loan No.LM-17 granted to the Borrowers and guaranteed by the Corporate Debtor.
(xvii) Section 7 application was served to the Corporate Debtor. Corporate Debtor filed reply to Section 7 application.
(xviii) On 13.03.2023, a suit was filed by the Corporate Debtor in High Court of Bombay seeking declaration that the Assignment Agreement is void.
(xix) Rejoinder Affidavit were also filed before the Adjudicating Authority.
(xx) Adjudicating Authority vide order dated 16.05.2023 admitted Section 7 application. The Adjudicating Authority in the impugned order held that Corporate Guarantee having been invoked by notice dated 20.05.2021, there is existence of debt and default which is more than the threshold of Rs.1 crore. The Adjudicating Authority after returning finding of debt and default has admitted Section 7 application and issued consequential orders.
2. This appeal was immediately filed by the Appellant after passing of the impugned order. When appeal came for consideration before this Tribunal on 26.05.2023, a statement was made by the Appellant that Appellant has approached the Financial Creditor and given a proposal for settlement and the Appellant is still ready and willing to enhance the offer. This Tribunal passed following order on 26.05.2023:
“ORDER
26.05.2023: Learned Counsel for the Appellant submits that after the impugned order was passed, the Appellant approached the Financial Creditor and given a proposal for settlement. It is submitted that Appellant is still ready and willing to enhance the offer which offer shall be made within 48 hours.
Let this Appeal be taken on 31st May, 2023. In the event CoC has not been constituted, the same shall not be constituted till 31.05.2023.”
3. On 02.06.2023, following statement was recorded on behalf of the Respondent:
“ORDER
02.06.2023: Learned Counsel for the Appellant submits that the Appellant is present.
Learned Counsel for the Respondent submits that the Respondent is also present. Counsel for the Respondent submits that the Respondent are ready to accept the principal amount of Rs. 24.10 Crores and close the matter with no liberty to proceed against the Personal Guarantor.
Let the Learned Counsel for the Appellant take instructions from the Appellant. List this matter on 7th June, 2023.
Interim Order to continue, till the next date of hearing.”
4. Again on 07.06.2023, the Appellant prayed for time to file affidavit indicating time line and manner in which Appellant will pay Rs.24.10 Crores. On 07.06.2023, 10 days’ time was allowed to the Appellant and interim order was continued.
5. On 05.07.2023, when case was taken, learned counsel for the Appellant submitted that Appellant is ready to pay Rs.24.10 Crore provided they are given six months’ time. On 05.07.2023 following order was passed by this Tribunal:
“ORDER
05.07.2023: Learned Counsel for the appellant referring to the affidavit submits that appellant is still ready to pay the amount of Rs. 24.10 crores, however, they require six months time. It is further submitted that the appellant has also given an offer to the Bank to sell the mortgage property for which reserve price of the failed notice is Rs. 23 crores.
Learned Counsel for the Respondent submits that the six months time is a too long period and in event the appellant is ready to pay within three months, the Respondent shall accept the offer with 25% up front. It is further submitted that Respondent Bank shall also permit the appellant to sell the mortgage property subject to the condition that the proceeds of sales shall be utilized only for the purpose of the payment of above amount.
Learned Counsel for the Appellant seeks time to obtain instructions.
List this appeal on 10th July, 2023.
Interim order to continue.”
6. Appeal was taken on several dates on which interim order was continued. Parties even stated that they have settled the issue. On 28.07.2023, following order was:
“ORDER
28.07.2023: Learned counsel for the Appellant and the Respondent submits that the parties have finally settled the issue. It is submitted that in the settlement 10% amount shall be paid upfront, 10% shall be paid in 30 days of signing the agreement of amount already settled. Learned counsel submit that the Settlement Agreement shall be filed by 31.07.2023.
List this Appeal on 01.08.2023.
Interim order to continue.”
7. Appellant again reiterated that they are ready to pay Rs.24.10 Crore and Court noticing that issue between the parties is time of payment, by order dated 16.08.2023, allowed three months’ further time. Order dated 16.08.2023 is as follows:
“ORDER
16.08.2023: Learned Counsel for the Appellant submits that it is already recorded in the order of the Court that the Appellant is ready to pay the amount of Rs. 24.10 crores as also agreed by the Respondent. The issue between the parties was regarding the time of payment. In the order of this Tribunal dated 05.07.2023 and 28.07.2023 the following was noticed:-
“05.07.2023: Learned Counsel for the appellant referring to the affidavit submits that appellant is still ready to pay the amount of Rs. 24.10 crores, however, they require six months time. It is further submitted that the appellant has also given an offer to the Bank to sell the mortgage property for which reserve price of the failed notice is Rs. 23 crores.
Learned Counsel for the Respondent submits that the six months time is a too long period and in event the appellant is ready to pay within three months, the Respondent shall accept the offer with 25% up front. It is further submitted that Respondent Bank shall also permit the appellant to sell the mortgage property subject to the condition that the proceeds of sales shall be utilized only for the purpose of the payment of above amount.
Learned Counsel for the Appellant seeks time to obtain instructions.
List this appeal on 10th July, 2023.
Interim order to continue.”
“28.07.2023: Learned counsel for the Appellant and the Respondent submits that the parties have finally settled the issue. It is submitted that in the settlement 10% amount shall be paid upfront, 10% shall be paid in 30 days of signing the agreement of amount already settled. Learned counsel submit that the Settlement Agreement shall be filed by 31.07.2023. List this Appeal on 01.08.2023.
Interim order to continue.”
2. We have also noticed in the earlier order that the Respondent was agreeable that the Appellant may sell the mortgaged property provided that sale proceed shall be deposited with the Respondent.
3. In view of the aforesaid, we grant three months’ time to the Appellant to deposit the entire amount in the FDR in the name of the Registrar, NCLAT within three months. We further permit the Appellant to sell the mortgaged property subject to the condition that the entire amount be deposited with the Respondent and the balance amount reduced from Rs. 24.10 crores be deposited. Let the Appellant comply the aforesaid directions within three months’ period as allowed.
4. In the meantime, in pursuance of the Impugned Order, the CoC shall not be constituted.
List this Appeal after three months i.e. on 20.11.2023.
RP shall not take further steps in the CIRP.
5. Learned Counsel for the parties submit that the Respondent shall not have recourse against the guarantors and the guarantors shall not have the recourse against the Respondent.”
8. Appellant again asked for last opportunity on 20.11.2023, when following order was passed:
“ORDER
(HYBRID MODE)
20.11.2023: Learned Counsel for the Appellant submits that after the order dated 16.08.2023, the property which was to be sold could not be sold and now the Appellant has approached the new investor who has already filed an Intervention Application in this Appeal and is ready to deposit the entire amount.
2. Learned Counsel for the Financial Creditor has opposed the submission made by Learned Counsel for the Appellant and submits that several opportunities have been granted to the Appellant but the Appellant has not yet deposited the amount and no further opportunity be granted and the matter be heard.
3. Considering the submission of the Appellant that a last opportunity be granted to deposit the amount as per the order dated 16.08.2023, we permit the Appellant or proposed investors to deposit the amount by 04.12.2023.
4. Let the amount be deposited as directed earlier. We make it clear that in event the amount is not deposited, the matter shall be heard. All Intervention Applications filed be also considered on the next date.
5. Learned Counsel for the interveners seeks liberty to file hardcopy of the applications. He may do so during the course of the day.
6. List the Appeal on 05.12.2023.
Interim order to continue.”
9. Thereafter, the appeal was taken on several dated and interim order was continued from time to time but Appellant failed to comply the commitment as reflected in orders, as extracted above.
10. Learned counsel for the Appellant proceeded to address arguments on merits. After hearing the parties, judgment was reserved on 10.04.2024.
11. From the above proceeding which took place in this appeal, it is clear that appellant obtained interim order in this appeal on statement that Appellant is ready to pay amount of Rs.24.10 Crores to the Respondent to settle all issues between the parties. Repeated opportunities were obtained by the Appellant to deposit the amount. Respondent also accepted the offer made by the Appellant to settle the entire outstanding against the Appellant, however, the Appellant failed to comply its own undertaking inspite of repeated opportunities. The above sequence of events clearly indicates the acceptance of Appellant of outstanding dues and its repeated offer to make the payment. The fact that Appellant has filed to make the payment as offered by it itself indicate that the Corporate Debtor requires insolvency resolution, it having failed to clear its outstanding dues as admitted by it.
12. The above sequence of events is sufficient to close the appeal, however, learned counsel for the Appellant has raised several grounds to challenge the impugned order, we proceed to examine the submission of the parties on merits also.
13. We have heard Shri Krishnendu Datta, learned senior counsel for the Appellant, Shri Sudhir Makkar, learned senior counsel appearing for the Respondent No.1. Shri P. Nagesh with Shri Gaurav Mitra, learned senior counsels appearing for Intervener in I.A. No.5362 of 2023.
14. Shri Krishnendu Datta, learned senior counsel for the Appellant submits that under Section 5 Sub-section (7), Financial Creditor is a person to whom financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. It is submitted that the assignment of debt by the Cooperative Bank in favour of Respondent No.1 dated 07.08.2020 is not a valid assignment, it having not duly stamped as per provisions of Maharashtra Stamp Act, 1958. It is submitted that the Assignment Deed has to be stamped as per Maharashtra Stamp Act. The Assignment Deed shows that it is an assignment of more than 50 unrelated assignments of loan and as per Section 5 of the Maharashtra Stamp Act, aggregate stamp duty in relation to each assignment is required to be paid. It is submitted that Appellant filed a complaint before Collector of stamps, where the Collector has directed for proceedings under Stamps Act with regard to the Assignment Deed which is insufficiently stamped. It is submitted that the Assignment Deed being insufficiently stamped cannot be relied and acted upon which is inadmissible. Learned counsel for the Appellant has relied on judgment of Hon’ble Supreme Court in “In Re: Interplay, 2023 SCC Online SC 1666”. It is submitted that exemption to stamping under Section 5(1A) of SARFAESI Act, is not applicable, in view of the Maharashtra Stamp Act which has repealed the Indian Stamp Act in the State of Maharashtra. It is submitted that the Mortgage Documents cannot create any financial debt as mortgage cannot amount to a financial claim against the Corporate Debtor. Appellant has relied on judgment of Hon’ble Supreme Court in “Anuj Jain vs. Axis Bank Limited, (2020) 8 SCC 401”. There being no valid Assignment Agreement in favour of the Respondent No.1, invocation of guarantee by Respondent No.1vide its notice dated 20.05.2021 is not valid. Shri Dutta submits that the very basis of the claim of Respondent No.1 i.e. the Assignment Deed dated 07.08.2020 being inadmissible, Section 7 application deserve to be rejected and the Adjudicating Authority committed error in admitting Section 7 application.
15. Shri Sudhir Makkar, learned senior counsel appearing for the Respondent refuting the submissions of learned counsel for the Appellant submits that the Assignment Deed dated 07.08.2020 is a registered document and duly stamped. It is submitted that the fact the Assignment Deed is registered presupposes that sufficient stamps have been paid for registration of the document. It is submitted that in the Assignment Deed stamp duty has been paid as per notification dated 06.05.2002 issued by Government of Maharashtra which mandated a cap of Rs.1 lakh on an Assignment Agreement. It is submitted that stamp duty paid in the Assignment Agreement is of Rs.1,01,500 which is adequate stamp duty paid for assignment. It is submitted that two Deeds of Mortgage by which Corporate Debtor has mortgaged it immovable assets in favour of the Financial Creditor have been adequately stamped and duly registered. It is submitted that on the Mortgage Deed with regard to loan of Rs.10 Crore stamp duty of Rs.5 Lakhs has been paid and for Mortgage Deed for loan of Rs.15 Crore stamp duty of Rs.7.5 Lakhs has been paid on the Deeds of Mortgage @0.5% duty as mandated by Article 40 of Schedule-I of Maharashtra Stamp Act. It is submitted that two Deeds of Guarantee were also adequately stamped. Stamping of Rs.100 each has been done as per Article 54 of Schedule-I of Maharashtra Stamp Act. It is submitted that reliance of Appellant on Section 5 of Maharashtra Stamp Act is not applicable. In the present case, principal instrument has been adequately stamped, then other instrument – Deed of Guarantee can be executed at stamp of Rs.100 each. The complaint filed by the Appellant before the Collector, stamps is in the period when Appellant obtained interim order on the statement that Appellant is ready to deposit amount of Rs.24.10 Crores. On the one hand the Appellant was making submissions that he is taking steps to deposit the amount and on the another hand was filing complaint before the Collector, which shows its malafide act. Challenge to the Assignment Agreement by the Corporate Debtor in Suit filed before Bombay High Court does not in any manner inhibit the Adjudicating Authority from taking into consideration the Assignment Agreement. Suit was filed on 03.03.2023, whereas the Corporate Debtor was served with the Assignment Agreement on 20.10.2021 followed by filing of Section 7 application. It is submitted that in proceeding under Section 7 Appellant cannot be allowed to challenge the correctness of a registered Assignment Deed by which debt has been assigned to Respondent No.1 by the Financial Creditor.
16. Learned counsel for the Intervener, who is none other than wife of the Appellant claiming to be holding 49.50% share of the Corporate Debtor, submits that the Intervener was not aware of the mortgage and further inspection of minute book of Corporate Debtor revealed that it has passed two resolutions dated 28.03.2019 giving Corporate Guarantee of Rs.10 Crore and Rs.15 Crore in favor of the Cooperative Bank. Reference has been made to the Company Petition filed by the Intervener under Section 241-244 of the Companies Act before NCLT, Mumbai highlighting the acts of oppression and mismanagement for declaring the two resolutions passed, creation of Corporate Guarantee and Simple Mortgage Deed as null and void. It is submitted that the Company Petition under Section 241-242 has been dismissed on 10.08.2023 against which Company Appeal has already been filed by the Intervener.
17. We have considered the submissions of learned counsel for the parties and perused the record.
18. From the facts and the material on the record, it is undisputed that the loan was sanctioned to Borrower-1 and Borrower-2 by KAIJS Bank on 28.03.2019 for Rs.10 Crore and Rs.15 Crores in relation to which mortgage was created by the Corporate Debtor on its immovable property in favour of KAIJS Bank in lieu of two term loans. Mortgage Deeds are registered mortgages with appropriate stamp duty. Copy of the registered Mortgage Deeds dated 28.03.2019 executed between Shri Tradco Deesan Pvt. Ltd., Bairagra Builder Pvt. Ltd. and Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd. has been brought on the record, under which the Corporate Debtor who is mortgagor has mortgaged its immovable assets. Clause 8 and 9 of the Mortgage Deed provides as follows:
“8. NOW THIS DEED WITNESSETH that in pursuance of the above representations and to the said agreement and in consideration of THE BANK having granted or agreed to grant loan, credit facilities from time to time to the sum viz Rs.10,00,00,000/- (RUPEES TEN CRORES ONLY) as Mortgage Term Loan to the mortgagors/borrowers on of terms and conditions as may be stipulated by THE BANK from time to time, the mortgagor as beneficial owner of the property describes in schedule ‘1’, hereby transfers /discharged/released to THE BANK by way of mortgage, as a security for repayment of the loan amount/credit facilities at rate of 12.00% p.a. under Mortgage Term Loan with all costs, charges and expenses till the repayment of the sum in full or which yearly or as may be prescribed by THE BANK quarterly installment of Rs.35,71,429.00/ + monthly interest respectively under Mortgage Term Loan sum of Rs.10,00,00,000/- (RUPEES TEN CRORES ONLY) to be payable towards the repayment of the loan/credit facility sanctioned by THE BANK, whether actually debited to the account or not, and till the total debts along with Interest/penal interest/cost/charges/expenses are to be repaid in full.
THE BORROWERS also agree to execute necessary. promissory notes, debit balance confirmations and other agreements, accordingly from time to time THE MORTGAGOR/BORROWER further agrees to pay interest tax (if any) whenever becomes applicable and charged by THE BANK.
THE MORTGAGOR ALSO DECLARES that they shall pay the Interest charged by THE BANK, monthly/quarterly / half yearly payments as may be stipulated by THE BANK.
9. THE MORTGAGOR ALSO DECLARES that this mortgage shall be, continuing security for the ultimate sum of money not exceeding Rs.10,00,00,000/- (RUPEES TEN CRORES ONLY) under Mortgage Term Loan at any one time and interest thereon as also the costs, charges and expenses that may become payable by the mortgagors/borrowers to the mortgagee upon any account/s opened or to be opened in or credit facilities the name of the mortgagors/borrowers from time to time for granting credit or other financial facilities to the mortgagors and such account/s is/are to be considered to be closed for the purpose of this security and this security shall be considered to be closed for the purpose of this security and this security shall not be considered as exhausted or discharged or released merely by reason of the said account/s being brought to credit at any time or from time to time.”
19. It is further relevant to notice that the Corporate Debtor has also executed two Deeds of Guarantee dated 29.03.2019 on behalf of the Corporate Debtor which guarantee was for Rs.10 Crores and 15 Crores, respectively.
20. The mortgage Deeds executed by the Corporate Debtor was duly stamped as per the Maharashtra Stamp Act, 1958. Appellant itself has brought on the record the Registered Mortgage Deed dated 28.03.2019 which contains payment of stamp duty of Rs.5 Lakhs with registration fee of Rs.30,000 with regard to loan of Rs.10 Crore in favour of Borrower-1, where the Corporate Debtor stood as mortgagor.
21. Learned counsel for the Respondent has referred to Article 54 of the Maharashtra Stamp Act, 1958, according to which for Security Bond and Mortgage Deed stamp duty of 0.5% for the amount secured is payable. Learned counsel for the Respondent has also submitted that with regard to two Deeds of Guarantee stamp duty of Rs.100 was paid which was as per Article 40. Article 54 proviso of Maharashtra Stamp Act has been referred which proviso provides that where on an instrument executed by a person for whom a person stands surety and executes security bond or a mortgage deed, duty has been paid under article 40, then the duty payable shall be one hundred rupees. Thus, as per Article 54 of the Maharashtra Stamp Act, when stamp duty has already been paid on the Mortgage Deed of 0.5%, the Guarantee Deed has to be executed with stamp duty of Rs.100. From the above it is clear that the Corporate Debtor mortgaged its immovable assets for securing loans in favour of the Financial Creditor and also executed Guarantee Deeds.
22. The thrust of the argument of the Appellant is Assignment Deed dated 07.08.2020. The Appellant has brought on record the Assignment Deed dated 07.08.2020 as Annexure A-7 to the appeal. A perusal of the Assignment Deed brought on the record indicates that stamp duty of Rs.1,01,500 was paid and registration fee of Rs.30,000 has been paid. The document is a registered document. The submission advanced by Shri Krishnendu Datta is that the said Assignment Agreement not duly stamped is neither admissible in evidence nor can be looked for any purpose.
23. Learned counsel for the Appellant has referred to Section 5 of the SARFAESI Act and has claimed that the assignment is referable to Section 5. Section 5 Sub-section (1A) and Sub-section (2) are as follows:
“(1A) Any document executed by any bank or financial institution under sub-section (1) in favour of the asset reconstruction company acquiring financial assets for the purposes of asset reconstruction or securitisation shall be exempted from stamp duty in accordance with the provisions of section 8F of the Indian Stamp Act, 1899 (2 of 1899):
Provided that the provisions of this sub-section shall not apply where the acquisition of the financial assets by the asset reconstruction company is for the purposes other than asset reconstruction or securitisation.]
(2) If the bank or financial institution is a lender in relation to any financial assets acquired under sub-section (1) by the 1[asset reconstruction company], such 1[asset reconstruction company] shall, on such acquisition, be deemed to be the lender and all the rights of such bank or financial institution shall vest in such company in relation to such financial assets.”
24. Learned counsel for the Appellant referring to Section 5 Sub-section (1A) submits that although by virtue of above provision there was exemption from stamp duty in accordance with the provisions of section 8F of the Indian Stamp Act, 1899 but the Indian Stamp Act having been repealed by virtue of Maharashtra Stamp Act, 1958, the exemption of stamp duty is not available with regard to acquisition of rights and interest by Asset Reconstruction Company. Learned counsel for the Appellant has referred to Schedule-II r/w Section 76 of Maharashtra Stamp Act by virtue of which Indian Stamp Act, 1899 has been repealed in the State of Maharashtra.
25. Section 5 of the SARFAESI Act, 2002 begin with expression “Notwithstanding anything contained in any agreement or any other law for the time being in force”. Thus, overriding effect has been given to the provision of Section 5(1) by virtue of which an Asset Reconstruction Company may acquire financial assets of any bank or financial institution. Sub-section (1A) granting exemption from stamp duty was inserted w.e.f. 01.09.2016. We may also look into Sub-section (2) of Section 5 which contains a deeming clause by which on acquisition by an Asset Reconstruction Company, the Asset Reconstruction Company shall be deemed to be a lender.
26. Section 5(2) came for consideration before this Tribunal in “Naresh Kumar Aggarwal vs. CFM Asset Reconstruction Pvt. Ltd. & Ors., Company Appeal (AT) (Ins.) No.470 of 2023” where this Tribunal considered Sub-section (2) of Section 5 of SARFAESI Act, 2002. It was held that when acquisition of assets by Asset Reconstruction Company is made under Section 5(1), deeming provision shall come into play and Asset Reconstruction Company shall be deemed as Lender for all purposes. In Para 7 to 9 following was held:
“7. Section 5 Sub-section (1) begins with non-obstante clause with the words “Notwithstanding anything contained in any agreement or any other law for the time being in force…”. Section 5 is an enabling provision to empower the Asset Reconstruction Company to acquire financial assets in the manner provided in Sub- section (1). The Assignment Agreement dated 18.01.2021 was in accordance with Section 5(1)(b) i.e. by entering agreement with State Bank of India. Sub-section (2) of Section 5 contains a deeming clause. Sub- section (2) provides that Asset Reconstruction Company on such acquisition be deemed to be the lender and all the rights of such bank or financial institution shall vest in such company. When the legislature uses the deeming fiction it is always for purpose and object.
8. Hon’ble Supreme Court had occasion to consider provision of Section 43 of the Indian Contract Act, 1872 which contains the deeming provision and on fulfilling the ingredients as provided in the statute, legal fiction will come into play, irrespective whether the transaction was in fact intended or even anticipated to be so. We may refer to Para 22.2.1, 22.2.2 and 22.3 of the judgment of the Hon’ble Supreme Court in “Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited vs. Axis Bank Ltd. & Ors., MANU/SC/0228/2020: (2020) 8 SCC 401”, which is to the following effect:
“22.2.1. As regards construction of a deeming fiction, this Court pointed out the basic and settled principles in the following:
“88. In every case in which a deeming fiction is to be construed, the observations of Lord Asquith in a concurring judgment in East End Dwellings Co. Ltd. v. Finsbury Borough Council: 1952 AC 109 (HL) are cited. These observations read as follows: (AC pp. 132-133)
“If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it…. The statute says that you must Imagine a certain state of affairs. It does not say that, having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.”
These observations have been followed time out of number by the decisions of this Court. (See, for example, M. Venugopal v. Divisional Manager, LIC: MANU/SC/0310/1994: (1994) 2 SCC 323 at page 329).
*** *** ***
94. Although a deeming provision is to deem what is not there in reality, thereby requiring the subject matter to be treated as if it were real, yet several authorities and judgments show that a deeming fiction can also be used to put beyond doubt a particular construction that might otherwise be uncertain. Thus, Stroud’s Judicial Dictionary of Words and Phrases (7th Edition, 2008), defines “deemed as follows:
“Deemed” as used in statutory definitions “to extend the denotation of the defined term to things it would not in ordinary parlance denote”, is often a convenient device for reducing the verbiage or an enactment, but that does not mean that wherever it is used it has that effect; to deem means simply to judge or reach a conclusion about something, and the words “deem” and “deemed” when used in a statute thus simply state the effect or meaning which some matter or things has-the way in which it is to be adjudged; this need not import artificiality or fiction; it may simply be the statement of an indisputable conclusion.”
22.2.2. In Pioneer Urban, this Court further extracted extensively from the decision in Hindustan Cooperative Housing Building Society Limited v. Registrar, Cooperative Societies and Anr.: MANU/SC/0203/2009: (2009) 14 SCC 302 on various features of the processes of construction of different deeming provisions in different contexts. Some of the relevant parts of such extraction (as occurring in paragraph 95 of Pioneer Urban) read as follows (in SCC at pp. 524):
“ ‘… The word “deemed” is used a great deal in modern legislation. Sometimes it is used to impose for the purposes of a statute an artificial construction of a word or phrase that would not otherwise prevail. Sometimes it is used to put beyond doubt a particular construction that might otherwise be uncertain. Sometimes it is used to give a comprehensive description that includes what is obvious, what is uncertain and what is, in the ordinary sense, impossible.’
(Per Lord Radcliffe in St. Aubyn v. Attorney General:1952 AC 15 (HL), AC p. 53)
14. ‘Deemed’, as used in statutory definitions [is meant]
‘to extend the denotation of the defined term to things it would not in ordinary parlance denote, is often a convenient devise for reducing the verbiage of an enactment, but that does not mean that wherever it is used it has that effect; to deem means simply to judge or reach a conclusion about something, and the words “deem” and “deemed” when used in a statute thus simply state the effect or meaning which some matter or thing has the way in which it is to be adjudged; this need not import artificiality or fiction; it may simply be the statement of an undisputable conclusion.’
(Per Windener, J. in Hunter Douglas Australia Pty. v. Perma Blinds: MANU/AUSH/0055/1970: (1970) 44 Aust LJ R 257)
15. When a thing is to be “deemed” something else, it is to be treated as that something else with the attendant consequences, but it is not that something else (per Cave, J., in R. v. Norfolk County Court: (1891) 60 LJ QB 379).
‘When a statute gives a definition and then adds that certain things shall be “deemed to be covered by the definition, it matters not whether without that addition the definition would have covered them or not.’ (Per Lord President Cooper in Ferguson v. McMillan 1954 SLT 109 (Scot))
16. Whether the word “deemed” when used in a statute established a conclusive or a rebuttable presumption depended upon the context (see St. Leon Village Consolidated School District v. Ronceray: (1960) 23 DLR (2d) 32 (Can)).
‘…. I regard its primary function as to bring in something which would otherwise be excluded.’
(Per Viscount Simonds in Barclays Bank Ltd. MANU/WB/0296/1959: 1961 AC 509 at AC p. 523.) V. IRC:
“Deems” means “is of opinion” or “considers” or “decides” and there is no implication of steps to be taken before the opinion is formed or the decision is taken.”
[See R. v. Brixton Prison (Governor), ex p Soblen: (1963) 2 QB 243 at QB p. 315.]”
22.3. On a conspectus of the principles so enunciated, it is clear that although the word ‘deemed’ is employed for different purposes in different contexts but one of its principal purpose, in essence, is to deem what may or may not be in reality, thereby requiring the subject-matter to be treated as if real. Applying the principles to the provision at hand i.e., Section 43 of the Code, it could reasonably be concluded that any transaction that answers to the descriptions contained in sub-sections (4) and (2) is presumed to be a preferential transaction at a relevant time, even though it may not be so in reality. In other words, since sub-sections (4) and (2) are deeming provisions, upon existence of the ingredients stated therein, the legal fiction would come into play; and such transaction entered into by a corporate debtor would be regarded as preferential transaction with the attendant consequences as per Section 44 of the Code, irrespective whether the transaction was in fact intended or even anticipated to be so.”
9. Following the law laid down by the Hon’ble Supreme Court in the above case, when acquisition of assets by Asset Reconstruction Company is made as per Section 5(1), deeming provision contained in Sub-section (2) of Section 5 shall come into play and the Asset Reconstruction Company shall be deemed to be Lender for all purposes. As a Lender, the Respondent No.1 was fully entitled to exercise its right to initiate proceeding under Section 7.”
27. We, thus, are of the view that on the strength of Sub-section (2) of Section 5 of SARFAESI Act when Respondent No.1 has acquired the assets of the Cooperative Bank, the Respondent No.1 shall be deemed to be lender and shall be entitled to file Section 7 application against the Corporate Debtor who has mortgaged its immovable property as well as executed Deed of Guarantee to secure the loan facility. The above provision is sufficient to hold that Respondent No.1 was fully competent to file Section 7 application as a lender to the facilities extended to Borrower-1 and Borrower-2 of which Corporate Debtor was Guarantor and Mortgagor.
28. Learned counsel for the Respondent has submitted that the stamp duty paid on the Assignment Agreement was in accordance with the Maharashtra Stamp Act, 1958. Learned counsel for the Respondent has referred to a Notification dated 06.05.2002 issued by Revenue and Forests Department, Government of Maharashtra under which stamp duty of maximum one lakh was fixed on instrument of assignment of receivables. Notification dated 06.05.2002 is as follows:
REVENUE AND FORESTS DEPARTMENT
Mantralaya, Mumbai 400 032, dated the 6th May 2002.
Order
BOMBAY STAMP ACT, 1958.
No. Mudrank-2002/875/C.R. 173-M-1. ~ in exercise of the powers conferred by clause (a) of section 9 of the Bombay Stamp Act, 1958 (Bom. LX of 1958), and in supersession of Government notification, Revenue and Forests Department No. STP. 1094/C.R.-369/(c).M-1, dated the 11th May 1994, the Government of Maharashtra hereby reduces with effect from 1st May 2002, the duty with which an instrument of securitisation of loans or of Assignment of Debt with underlying securities is chargeable under clause (a) article 25 of Schedule I to the said Act, to fifty paise for every five hundred rupees or part thereof, of the loan securitised or debt assigned with underlying securities, subject to maximum of rupees one lakh, and in case of instrument of Assignment of Receivables in respect of use of credit cards to two rupees and fifty paise for every five hundred rupees or part thereof.
By order and in the name of
the Governor of Maharashtra,”
29. It appears that stamp duty of Rs.1 Lakh was paid on the Assignment Agreement in view of the above notification issued by State of Maharashtra. It is further relevant to notice that the Assignment Agreement is a registered document. When a document is registered, the registration itself gives a presumption that the document is duly stamped.
30. Learned counsel for the Appellant submits that he has filed complaint before the Collector, Stamps on 07.08.2023 with regard to insufficient stamps on the Assignment Deed and Guarantee Bonds. It is submitted that notices have been issued to the Cooperative Bank demanding deficit stamp duty in Guarantee Bonds and directed the Joint Registrar to take action against the Assignment Deed. Letter dated 04.12.2023 issued by C.Stamp Collector, Registration and Stamp Department, Office of District Registrar Class-1 and Collector of Stamps, Pune (City) has been brought on the record by the Appellant where application submitted by the Appellant dated 07.08.2023 has been forwarded for appropriate action. Subsequent letter dated 12.12.2023 has also been brought on record which is letter written by Joint District Registrar, Class 2 and Stamp Collector, Pune City to the Appellant in reference to Deed of Assignment dated 07.08.2020 informing that proceedings are ongoing and the Appellant shall be intimated as soon as proceedings are completed.
31. The notice dated 04.12.2023, as brought by the Appellant on the record in no manner affect the proceedings of Section 7 which was initiated by the Financial Creditor on 08.09.2021. As noticed above, the Application under Section 7 has already been admitted by the Adjudicating Authority by order dated 16.05.2023. Any complaint filed by the Appellant before the Collector, Stamps with regard to deficiency in the Assignment Agreement or Guarantee Deed shall have no bearing on the proceedings which have already admitted on 16.05.2023.
32. As noted above, it is also relevant to note that in this appeal, Appellant has made a statement that he is ready to pay amount of Rs.24.10 Crores to the Financial Creditor as settlement of his dues and after recording this statement he filed complaints in August, 2023, which indicate that the conduct of the Appellant was not bonafide since very beginning. Before this Tribunal he made statement that he is taking steps to honour its commitment and on the other hand filed complaint with regard to insufficient stamp in the Assignment Deed as well as the Guarantee Deed. In any view of the matter, the complaints filed by the Appellant subsequent to passing of order impugned has no bearing.
33. Learned counsel for the Appellant has also relied on the judgment of Hon’ble Supreme Court in “In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899, 2023 SCC Online SC 1666”. In the said case, the Hon’ble Supreme Court was called upon to decide issue in context of the Arbitration and Conciliation Act 1996, the Indian Stamp Act 1899, and the Indian Contract Act 1872. In Para 1 of the judgment issue was noticed by the Hon’ble Supreme Court, which is as follows:
“1. This Court has been called upon to resolve an issue which arose in the context of three statutes – the Arbitration and Conciliation Act 1996, the Indian Stamp Act 1899, and the Indian Contract Act 1872. The Stamp Act imposes duty on “instruments”. An instrument which is unstamped or insufficiently stamped is inadmissible in evidence and cannot be acted upon in terms of its provisions. Arbitration agreements are often embedded in underlying instruments or substantive contracts. When an application is made for the appointment of an arbitrator, an objection is raised on the ground that the arbitration agreement is inadmissible because it is in an instrument which is unstamped or inadequately stamped. The primary issue that arises is whether such arbitration agreements would be non-existent, unenforceable, or invalid if the underlying contract is not stamped. A brief description of the context in which this question arises follows.”
33. On the said issue, the majority judgment in Para 224 recorded its conclusions, which is as follows:
“224. The conclusions reached in this judgment are summarised below:
a. Agreements which are not stamped or are inadequately stamped are inadmissible in evidence under Section 35 of the Stamp Act. Such agreements are not rendered void or void ab initio or unenforceable;
b. Non-stamping or inadequate stamping is a curable defect;
c. An objection as to stamping does not fall for determination under Sections 8 or 11 of the Arbitration Act. The concerned court must examine whether the arbitration agreement prima facie exists;
d. Any objections in relation to the stamping of the agreement fall within the ambit of the arbitral tribunal; and
e. The decision in NN Global 2 (supra) and SMS Tea Estates (supra) are overruled. Paragraphs 22 and 29 of Garware Wall Ropes (supra) are overruled to that extent.”
34. Learned counsel for the Appellant has placed reliance on concurring judgment of Justice Sanjiv Khanna wherein in Para 1 of the judgment following has been observed:
“I respectfully agree with the view expressed by the Hon’ble the Chief Justice of India Dr. D.Y. Chandrachud in his elaborate exposition of the different contours which arise for consideration in the present reference. Complementing the same, I would like to provide additional justifications for the final conclusion, viz., unstamped or insufficiently stamped instruments inadmissible in evidence in terms of Section 35 of the Indian Stamp Act, 18991, are not rendered void and void ab initio; an objection as to the under-stamping or non-stamping of the underlying contract will not have any bearing when the prima facie test, “the existence of arbitration agreement”, is applied by the courts while deciding applications under Sections 82 or 113 of the Arbitration and Conciliation Act, 19964; and an objection as to insufficient stamping of the underlying agreement can be examined and decided by the arbitral tribunal. Accordingly, the majority decision of the Constitution Bench in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.5 should be overruled.”
35. Further reliance has been placed on Paras 7 to 11 of the judgment, which are as follows:
“7. Section 35 states that an instrument not duly stamped and chargeable with duty shall not be admitted in evidence by any person having by law or by consent of the parties the authority to receive evidence. The words “for any purpose” mean that the instrument cannot be relied upon for a collateral purpose either. Further, the instrument shall not be acted upon, registered or authenticated by such person or by any public officer, unless it is duly stamped. The words ‘acted upon’ are with reference to the acts or the proceedings before such officer or public officer, as the case may be.
8. Section 35 permits admission of an unstamped or under-stamped instrument after the same instrument is duly stamped. Proviso (a) requires payment of the chargeable duty and penalty, before an insufficiently stamped instrument is admitted in evidence, or is acted upon, registered or authenticated.
9. Section 40(1)(b) of the Stamp Act provides for payment of proper duty if the instrument impounded is not duly stamped. Section 42(1) provides for certifying that proper duty has been paid on the impounded instrument. Sub-section (2) of Section 42 provides that after certification the instrument shall be admissible in evidence, and may be registered, acted upon and authenticated as if it has been duly stamped.
10. Sections 33 and 35 do not apply when an instrument is produced or is acted upon by the parties themselves, or by a person who does not have authority by law or by consent of the parties to receive evidence, or a person who is not a public officer. Sections 33 does not authorise a police officer to examine and impound an instrument, even when insufficiently stamped. A Magistrate or a Judge of a criminal court may not examine or impound an instrument coming before him, and can admit an insufficiently stamped instrument in evidence, other than in the proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (Chapter X(D) and Chapter IX of the Code of Criminal Procedure, 1973). Thus, the same instrument may be admissible and acted upon before a criminal court, while being inadmissible before a civil court, public officer etc.
11. The negative stipulations in Sections 33 and 35 are specific, albeit not so absolute as to make the instrument invalid in law. A “void ab initio” instrument, which is stillborn, has no corporeality in the eyes of law. It cannot confer or give rights, or create obligations. However, an instrument which is “inadmissible” exists in law, albeit cannot be admitted in evidence by such person, or be registered, authenticated or be acted upon by such person or a public officer till it is duly stamped. As rightly observed by Hon’ble the Chief Justice, Section 35 deals with admissibility etc. of an instrument and not invalidity.”
36. Admittedly, Justice Sanjiv Khanna has recorded his concurrence with the judgment delivered by the larger bench. In Para 42 of the judgment, concurring with the conclusions following has been held:
“42. For the reasons set out in detail by Hon’ble the Chief Justice and recorded herein, I agree with the conclusions drawn, and referred to above. I also concur with the other findings and ratio in the judgment by Hon’ble the Chief Justice.”
37. The above judgment clearly indicates that the conclusions which were summarized in Para 224 were unanimous conclusions. It was held by the larger bench that agreements which are not stamped or are inadequately stamped are inadmissible in evidence under Section 35 of the Stamp Act. It was held that such agreements are not void or void ab initio or unenforceable.
38. Present is a case where the Assignment Agreement which is challenged by the Appellant is a registered document duly stamped for Rs.1,01,500 and it is submitted by the Respondent that the said stamp was paid as per the Maharashtra Stamp Act, 1958. Thus, present is not a case where document which is sought to be challenged is unstamped document. According to the own case of the Appellant, his complaint regarding insufficiency of stamp is pending adjudication before the Stamp Authority. Thus, as on date, there is no determination by any competent authority that the registered Assignment Deed is insufficiently stamped, therefore, we are unable to accept the submission of the Appellant that the registered Assignment Deed could not have been looked into by the Adjudicating Authority while admitting Section 7 application.
39. It is relevant to notice that the Appellant in his appeal at no place pleaded that there is no debt or default by the Corporate Debtor in making payment or there is no debt and default of the financial debt. Whole attack of the Appellant is regarding Assignment Agreement dated 07.08.2020 for the reasons as has been mentioned above. We are of the view that no error has been committed by the Adjudicating Authority in relying on the Assignment Deed dated 07.08.2020 on basis of which the Respondent No.1 has filed Section 7 application.
40. We may also notice judgment of Hon’ble Supreme Court relied by learned counsel for the Appellant i.e. judgment of “Anuj Jain vs. Axis Bank Limited, (2020) 8 SCC 401”. The above judgment has been cited by learned counsel for the Appellant to support his submission that by mortgage of the immovable property by the Corporate Debtor no financial debt shall come into existence.
41. In Anuj Jain’s Case the assets of Jaypee Infratech Ltd. (JIL) were mortgaged to secure the loans advanced by lenders banks in favour of Jaiprakash Associates Ltd. (JAL). The facts of the case are noticed in Para 1 of the judgment, which is as follows:
“1. These appeals are essentially directed against the common order dated 1-8-2019 as passed by the National Company Law Appellate Tribunal, New Delhi (hereinafter also referred to as “the Appellate Tribunal” or “NCLAT”) in a batch of appeals preferred by various banks and financial institutions whereby, the Appellate Tribunal set aside the order dated 16-5-2018, passed by the adjudicating authority, the National Company Law Tribunal, Allahabad Bench (hereinafter also referred to as “the Tribunal” or “NCLT” or “the adjudicating authority”) on the application moved by the interim resolution professional (“IRP” for short) in the corporate insolvency resolution process (“CIRP” for short) concerning the corporate debtor company viz. Jaypee Infratech Ltd. (“JIL” for short; also referred to as “the corporate debtor”) seeking avoidance of certain transactions, whereby the corporate debtor had mortgaged its properties as collateral securities for the loans and advances made by the lender banks and financial institutions to Jaiprakash Associates Ltd. (“JAL” for short), the holding company of JIL, as being preferential, undervalued and fraudulent, in terms of Sections 43, 45 and 66 of the Insolvency and Bankruptcy Code, 2016 (hereinafter also referred to as “the Code” or “IBC”).”
42. In the above case argument was raised on behalf of lenders of JAL that they are Financial Creditors of the Corporate Debtor, which argument was not accepted and repelled. It is relevant to notice Para 46 where essentials of financial debt and financial creditor have been noticed. Para 46 of the judgment is as follows:
“46. Applying the aforementioned fundamental principles to the definition occurring in Section 5(8) of the Code, we have not an iota of doubt that for a debt to become “financial debt” for the purpose of Part II of the Code, the basic elements are that it ought to be a disbursal against the consideration for time value of money. It may include any of the methods for raising money or incurring liability by the modes prescribed in clauses (a) to (f) of Section 5(8); it may also include any derivative transaction or counter-indemnity obligation as per clauses (g) and (h) of Section 5(8); and it may also be the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in clauses (a) to (h). The requirement of existence of a debt, which is disbursed against the consideration for the time value of money, in our view, remains an essential part even in respect of any of the transactions/dealings stated in clauses (a) to (i) of Section 5(8), even if it is not necessarily stated therein. In any case, the definition, by its very frame, cannot be read so expansive, rather infinitely wide, that the root requirements of “disbursement” against “the consideration for the time value of money” could be forsaken in the manner that any transaction could stand alone to become a financial debt. In other words, any of the transactions stated in the said clauses (a) to (i) of Section 5(8) would be falling within the ambit of “financial debt” only if it carries the essential elements stated in the principal clause or at least has the features which could be traced to such essential elements in the principal clause. In yet other words, the essential element of disbursal, and that too against the consideration for time value of money, needs to be found in the genesis of any debt before it may be treated as “financial debt” within the meaning of Section 5(8) of the Code. This debt may be of any nature but a part of it is always required to be carrying, or corresponding to, or at least having some traces of disbursal against consideration for the time value of money.”
43. Hon’ble Supreme Court ultimately in Para 57 recorded its summation on the second issue, which is as follows:
“57. For what has been discussed hereinabove, on the issue as to whether lenders of JAL could be treated as financial creditors, we hold that such lenders of JAL, on the strength of the mortgages in question, may fall in the category of secured creditors, but such mortgages being neither towards any loan, facility or advance to the corporate debtor nor towards protecting any facility or security of the corporate debtor, it cannot be said that the corporate debtor owes them any “financial debt” within the meaning of Section 5(8) of the Code; and hence, such lenders of JAL do not fall in the category of the “financial creditors” of the corporate debtor JIL.”
44. The present is a case where the Corporate Debtor has given a guarantee. The Corporate Debtor having given Corporate Guarantee, both the Cooperative Bank (the original lender) and Respondent No.1 (the Assignee) were fully entitled to file Section 7 application against the Corporate Debtor. The judgment of Hon’ble Supreme Court in Anuj Jain’s Case was on its own facts and there are distinguishing features in the present case with those of the Anuj Jain’s Case.
45. Learned counsel for the Appellant has also relied on judgment of Hon’ble Supreme Court in “Asset Reconstruction Company (India) Limited vs. Bishal Jaiswal, (2021) 6 SCC 366” in response to the submission of the Respondent that the Balance Sheet of the Corporate Debtor also reflect the liabilities of the Corporate Debtor. It is submitted that the Appellant’s Balance Sheet have not been brought before the Adjudicating Authority and they having been brought on record in this appeal for the purpose of this case. We see no necessity to enter into or examine the balance sheets and the auditor’s note contained therein, there being ample material on record to prove the financial debt and entitlement of the Respondent No.1 to initiate Section 7 proceeding. For the purpose of this case, we need not look into or examine the balance sheets of the Corporate Debtor.
46. Coming to the submission advanced by the Intervener, who is wife of the Appellant, we see no reason to enter into issues raised by the Intervener in Company Petition filed under Section 241-244 of the Companies Act, 2013 nor at the instance of Intervener, we can interfere with the impugned order passed by the Adjudicating Authority admitting Section 7 application. More so, Appellant who is Suspended Director of the Corporate Debtor filed the appeal and raised all possible grounds to challenge the admission order.
47. In view of the foregoing discussion and conclusions, we do not find any ground to interfere with the order passed by the Adjudicating Authority admitting Section 7 application against the Corporate Debtor. Appeal is dismissed. Interim order stands discharged.
[Justice Ashok Bhushan]
Chairperson
[Arun Baroka]
Member (Technical)
NEW DELHI
30th April, 2024
Original judgment copy is available here.
Click on below button to search similar judgments:
Follow for daily updates: