Non-payment of stamp duty on agreements irrelevant for insolvency proceedings if debt proved otherwise: NCLT

The Mumbai Bench of National Company Law Tribunal (NCLT) on Thursday held that deficit or non-payment of stamp duty with respect to agreements relied upon by the creditor is immaterial when it comes to initiation of insolvency proceedings against the corporate debtor under the Insolvency and Bankruptcy Code, provided the debt stands proved otherwise [Vistra ITCL India Limited v. Satra Properties (India) Limited]..Judicial member HV Subba Rao referred to judgments of the Bombay High Court and the National Company Law Appellate Tribunal (NCLAT) to conclude that in Corporate Insolvency Resolution Process (CIPR), 'debt' and 'default' could be proved through the relevant records maintained by information utility without filing any documents by a party."The proper course of action that needs to be adopted is to dismiss the above Misc. Application (present application) without getting into the issue of stamp duty as it is irrelevant and uncalled for in a Section 7 Application (initiating CIRP) more so when the ‘debt’ and ‘default’ are proved otherwise without looking into those documents," the judicial member held..Rao gave this verdict in a question that was referred to him by the Acting President of the NCLT after the judicial and technical member on a Bench expressed opposing views..The facts leading to the reference were as follows.A company petition was filed under Section 7 of IBC by Vistra ITCL (India) Limited (financial creditors) against Satra Properties (India) Limited (corporate debtor).The debtor filed an application seeking dismissal of the petition on the ground that stamp duty was not paid on agreements (debenture trust deed and non-convertible debenture subscription agreement) relied upon by the creditor to prove the debt.The two member Bench, after hearing submissions on both petition and application, ordered the initiation of CIRP against the debtor by holding that 'debt' and 'default' stood proved without even without relying on the agreements.They, however, differed on the matter of impounding and paying the shortfall stamp duty on the papers.Judicial member Suchitra Kanuparthi ordered that the agreements in question be seized and submitted for payment of the required stamp duty.But technical member V Nallasenapathy without expressing anything on stamp duty, placed the record before the NCLT president for constituting an appropriate Bench to dispose of the application in accordance with the majority opinion. Accordingly, the application was placed before Rao.The question before the NCLT was whether the pleas of deficit stamp duty or non-payment of stamp duty can be raised by a corporate debtor in a Section 7 application more so when the ‘debt’ and ‘default’ are proved even without relying on those documents ?The judicial member noted that the NCLAT, Chennai Bench in the 2021 case of Ashique Ponnamparambath Vs. The Federal bank Limited had rejected the appeal with the observations that even if the loan documents are insufficiently stamped and it cannot be accepted in evidence, then also the debt and default were proved beyond doubt.Similar judgments were given by the Bombay High Court and by the NCLT itself. "In this scenario it is appropriate to mention here that a Section 7 application under the IBC can be filed in a simple form prescribed in the Code even without any pleadings. Similarly, the ‘debt’ and ‘default’ can be proved through the records of ‘debt’ and ‘default’ maintained by the 'information utility' even without filing any documents by the party," the NCLT said.When once the adjudicating authority is satisfied with these two legal requirements and if the application is complete in accordance with the code, the adjudicating authority has no option except to admit the company petition without going into any other trivial technical issues raised by the corporate debtor, the NCLT made it clear. "Therefore, in view of the above, I am of the opinion that the above plea of stamp duty is not available to the corporate debtor in the present case when once the debt and default are proved without looking into the above documents," the tribunal ruled..Advocates Nausher Kohli and Krushi Barfiwala briefed by Parinam Law Associates appeared for Satra Properties.Advocates Pulkit Sharma, Nishith Dhruva and Pratiksha Agarwal briefed by MDP Partners appeared for Vistra ITCL.[Read Order]