Case Title:- Mr. Aashish Kadam & Anr. v. Nagpur Nagarik Sahakari Bank Ltd.
The National Company Law Appellate Tribunal, Principal Bench while hearing an appeal observed that an unstamped credit facility agreement will not affect a petition under Section 7 of the Insolvency and Bankruptcy Code. It can be admitted based on other material on the record which proves the existence of a financial debt.
It was the case of the Appellant that document by which the Secured Cash Credit Facility was extended to the Corporate Debtor is not stamped and owing to this very reason, the said document could not have been relied on in entertaining an Application under Section 7 of the Insolvency and Bankruptcy Code.
The Appellate Authority, however, while perusing the material on record found that the document was unstamped and this fact was taken due notice of by the Adjudicating Authority, but the present case is still a situation of a mortgage. It was noticed that the Adjudicating authority relied upon the fact that the title deed had been deposited and the amount had been secured in its lieu. Therefore, the Appellate Authority found no merit in this appeal and observed that “Even if the facility agreement was not stamped, there was other materials on the record which clearly prove the financial debt which was owed by the Appellant, hence, we do not find any error in the order of the Adjudicating Authority admitting the Application under Section 7.”
The Appellate Authority further ordered that if the Corporate Debtor fails to pay the amount in 2 weeks’ time from the day of passing of this order, the Respondent would be at liberty to pursue the section 7 application, and the Commitee of Creditors would be formed unless either the payment is effectuated, or any settlement is arrived at.