The assignment of debt under the SARFAESI Act is valid even if the document is inadequately stamped, as registered documents are presumed adequately stamped.

JUDGMENT

(28^th May, 2024)

Ashok Bhushan, J.

The Appeal by Corporate Debtor has been filed challenging the order dated 04.04.2024 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench (Court-II) in IA (IBC) 504/KB/2022 and IA (IBC) 1371/KB/2023. An application under Section 7 was filed by ‘L&T Finance Ltd.’ against the Corporate Debtor claiming the total default of Rs.74,99,25,691/- and date of default as 15.08.2016 on 27.01.2020. During the pendency of Section 7 application, by Assignment Agreement dated 29.03.2022, the debt was assigned to ‘Phoenix Arc Pvt. Ltd.’- Respondent No.2 herein and an IA (IBC) 504/KB/2022 was filed by ‘Phoenix Arc Pvt. Ltd.’ praying for its substitution in place of ‘L&T Finance Ltd.’. Subsequent to filing of the IA (IBC) 504/KB/2022, the Corporate Debtor filed an IA (IBC) 1371/KB/2023 seeking a direction to ‘L&T Finance Ltd.’ to produce the original Assignment Agreement dated 29.03.2022 and to impound the original agreement. Adjudicating Authority heard the parties on both the applications and by impugned order has allowed the IA (IBC) 504/KB/2022 permitting substitution of ‘Phoenix Arc Pvt. Ltd.’ and dismissed the IA (IBC) 1371/KB/2023. Challenging the impugned order, this appeal has been filed by the Corporate Debtor.

2. We have heard Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant, Shri Vishesh Kalra, Learned Counsel for the Respondent No.1 and Shri Krishnendu Datta, Learned Senior Counsel for the Respondent No.2.

3. Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant challenging the order contends that the Assignment Agreement dated 29.03.2022 was not duly stamped and a document which was not properly stamped under the Maharashtra Stamp Act, 1958 could not have been admitted, in event the Adjudicating Authority committed error in relying on the Assignment Agreement and permitting ‘Phoenix Arc Pvt. Ltd.’ to be substituted whereas the document which was not adequately stamped was required to be impounded and the application filed by the Corporate Debtor for impounding the document has been wrongly rejected. It is submitted that under Section 35 of the Stamp Act, no document which is not adequately stamped can be received in evidence. Adjudicating Authority committed error in relying on the Assignment Agreement. It is submitted that the provision of Section 5 (1A) of the SARFAESI Act, 2002 which grant exemption of payment of stamp duty is not applicable in the State of Maharashtra. It is submitted that the relief which was granted in payment of stamp duty in the State of Maharashtra with regard to Assignment Agreement by Government Order dated 06.05.2002 was subsequently withdrawn by order dated 26.08.2005. Hence, for Assignment Agreement, stamp duty as is required to be paid under the Maharashtra Stamp Act, 1958 is required to be paid.

4. Shri Krishnendu Datta, Learned Senior Counsel for the Respondent refuting the submissions of the Counsel for the Appellant submits that the Assignment Agreement being registered document has rightly been relied by the Adjudicating Authority. With regard to document which is registered there is presumption that document is also adequately stamped. It is submitted that the Adjudicating Authority has rightly allowed the substitution application filed by ‘Phoenix Arc Pvt. Ltd.’. It is submitted that Section 7 application filed by ‘L&T Finance Ltd.’ has been permitted to be prosecuted by ‘Phoenix Arc Pvt. Ltd.’ as per the provisions of the SARFAESI Act, 2002 . Counsel for the Respondent has relied on the recent judgment of this Tribunal in “Pawan Kumar Manguturam Bairagra vs. Encore Asset Reconstruction Company Ltd. & Anr.- Company Appeal (AT) (I