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2022 (8) TMI 110 - Insolvency & Bankruptcy
CIRP proceedings - Evidence of debt - documents insufficiently stamped - validity and admissibility of documents - Redeemable Non-Convertible Debentures Subscription Agreement - Debenture Trust Deed - NCLT admitted the application u/s 7 - Appellant is personal guarantor - whether the two above-mentioned documents should be impounded by the Adjudicating Authority and forwarded to the competent judicial authority for adequate stamping? - HELD THAT:- It is revealed in the reply, that the Appellant (Applicant of section 7 application) has not denied the execution of the Non-Convertible Debenture Subscription Agreement and Debenture Trust Deed, rather they admit execution of the documents. - The Corporate Debtor has, in his reply as above, only raised the issue of these agreements being novated in light of the ‘settlement and larger understanding’ having taken place between the Appellant and the MJS Group. Thus, admittedly, he has not raised the question of execution of the said documents. - the issue of debt being due and payable in the present case is not interdicted by any law but only a technical deficiency of insufficiency of their stamping has been raised which can be cured.
Whether the agreement has been novated through the settlement - HELD THAT:- The “Settlement” record mentions the Satra Hills project in Ghatkopar and security related to Borivali and Washi Projects receivables but nowhere it mentions the Jodhpur Project for which money was raised to issuance of non-convertible debentures. Moreover, even this settlement (which does not cover the NCDs) was cancelled vide letter dated 17.1. 2019 of IIFL informing of default in compliance of the corporate debtor’s obligations and a letter dated 21.1.2019 of the MJ Shah Infra LLP addressed to M/s Sameer Sanghvi and Associates, (the escrow agent) stating that the transaction as contemplated under the purported “Settlement” stood cancelled. All these developments and circumstances/actions are very clear indication of the fact the Debenture Subscription Agreement and Debenture Trust Deed were not supposed to be part of the purported overall settlement dated 31.1.2018 - it is noted that the corporate debtor made a request to the debenture holders for resetting the interest rate from 12% to 9% vide letter dated 14.2.2018 (attached at page 69 of reply of Respondent Nos. 1 to 3). This request for resetting of the interest rate on redemption of NCDs was also done on a date after the date of “Settlement”, which also supports the inference that the “Settlement” did not cover the NCDs and that the NCD Subscription Agreement was novated.
The argument of the Learned Senior Counsel of the Appellant that the Debenture Subscription Agreement and the Debenture Trust Deed, both executed on 1.3.2014, stood novated through the “Settlement”, cannot be agreed upon.
Inadmissibility of the Debenture Trust Deed and the Non-Convertible Debenture Subscription Agreement as valid and legal documents which could be relied upon in the admission of the section 7 application as they are not sufficiently stamped as required under the Maharashtra Stamp Act - HELD THAT:- The Non-Convertible Debentures are clearly outside the purported “Settlement” arrived in the meeting held on 31.3.2018. Therefore, the Non-Convertible Debentures Subscription Agreement and the Debenture Trust Deed are not novated as a result of the “Settlement” and are relevant in establishing the debt of the corporate debtor as claimed in section 7 application, whose repayment is in default as per clause 11 of the Debenture Trust Deed.
The section 7 application was admitted correctly by the Adjudicating Authority - there are no merit in the appeal - appeal dismissed.