Inadequate Stamping Of Loan Documents Is Curable Defect, Does Not Bar Admission Of Plea U/S 7 Of IBC: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Shri Ashish Kalia (Judicial Member) and Shri Sanjiv Dutt (Technical Member) has held that inadequate stamping of loan documents does not bar the admission of a petition under section 7 of the IBC. Background Dombivli Nagari Sahakari Bank Ltd. (“DNS Bank”) advanced financial facilities, including cash credit and term loans, between 2014-17. The accounts of the corporate debtor were classified as Non-Performing Assets (NPA). Thereafter, the debt was assigned to the Pegasus through a registered assignment deed. The corporate debtor failed to repay the outstanding dues despite repeated acknowledgements through financial statements and an email dated 16.02.2024. The Applicant submitted that in the present case, the debt and default were clearly established and the debt was also acknowledged by the corporate debtor, which extended the period of limitation under section 18 of the Limitation Act.It was stated that the objections raised by the corporate debtor regarding inadequate stamping and absence of a certificate under section 65B of the Indian Evidence Act were curable in nature, which could not bar a petition under section 7 of the IBC. Per contra, the Respondent submitted that the application lacked valid authorisation at the time of filing. The loan documents were not adequately stamped. A certificate under section 65B of the Evidence Act was furnished for electronic evidence. Rule 4(3) of the IBC (Application to Adjudicating Authority) Rules, 2016 was not followed regarding service upon the IBBI. Lastly, it was argued that proceedings under section 65 of the IBC should be initiated against the Applicant as the petition was filed fraudulently despite the corporate debtor being solvent. Analysis The Tribunal at the outset rejected the submission with respect to inadequate stamping and non-furnishing of electronic certificates under section 65B on the ground that these defects were curable in nature and did not affect the maintainability of the petition under section 7 of the IBC. It relied on the Supreme Court's judgment in N.N. Global Mercantile, where it was held that inadequate stamping is a curable defect; therefore, it cannot bar the petition under section 7 of the IBC. It further held that the corporate debtor's acknowledgement in the financial statements and communications extended the limitation period under section 18 of the Limitation Act. Accordingly, the present petition was admitted. Case Title: PEGASUS ASSETS RECONSTRUCTION PRIVATE LIMITED VERSUS DEE PLONE POLYSTER PVT.LTD Case Number: CP (IB) No. 141/MB/2024 Order Date: 02/09/2025 Click Here To Read/Download The Order

Inadequate Stamping Of Loan Documents Is Curable Defect, Does Not Bar Admission Of Plea U/S 7 Of IBC: NCLT Mumbai

Mohd Malik Chauhan

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