NCLT Chennai (18.01.2018) A. Senthil Kumar V/s. Paragon Steels Pvt. Ltd., [CA No.38 of 2017 In CP No.553/IB/CB/2017] In the present case IRP rejected the claim on the grounds that the document evidencing the credit was not stamped. AA directed the appellant to fulfill the requirement under the stamp act in consultation with the IRP and provisions of the Tamil Nadu Stamp Act so that the MoU may be accepted as a valid evidence of the financial debt.
Excerpts of the order;
# 1. In this case, the applicant A.Senthil Kumar has advanced a sum of Rs.15 crores to the corporate debtor M/s.Paragon Steels Private Limited on 05.06.2013 through a MOU on the pledging of 51% of the Company shares by its Directors and other shareholders for the purpose of funding the working capital requirements of the Corporate Debtor. The claim was made by the applicant based on the public notice issued on 27.09.2017 and the claim has been made on 07.10.2017 by the applicant.
# 2. The applicant A.Senthil Kumar has stated that he had given an amount of Rs.15 crores on 05.06.2013 to the corporate debtor/2nd respondent to meet the working capital requirements of the corporate debtor and had given the details of disbursements of the loan also. It has been stated in the application that the loan is secured by a pledge of 51% of the shareholding of the properties of the corporate debtor. He has also stated that in connection with such loan and security creation, the applicant had executed a MoU on 05.06.2013 mentioning the terms of the financial credit including interest and the repayment schedule. The applicant has submitted an application in Form C after the public announcement giving details of the amount due to the applicant and enclosing the copy of the MoU and ledger extract. It is also evidenced by the entries in the balance sheet which clearly acknowledged the liability of the corporate debtor to the applicant. The applicant has also stated that they have responded to the clarifications sought by IRP. The main contention in this case relates to query (A) which is reproduced below along with the annexure that to given by the applicant.
A. MoU is a receipt and is sufficiently stamped: Clause 1.1 of MoU acknowledges the receipt of money by the borrower. It read as follows: “The lender has this date lent to the borrower aggregate sum of Rs. 15,00,00,000/- (Rupees Fifteen Crores only) in terms of details set out in Schedule II hereto, the receipt whereof is hereby acknowledged by the borrower” (at page no. 15 of CATS).
A receipt is defined in Section 2(23) of The Indian Stamp Act read as follows: Section 2(23) – Receipt: “receipt includes any note, memorandum or writing-(a) whereby any money, or any bill of exchange, cheque or promissory note is acknowledged to have been received, or (b) whereby any other movable property is acknowledged to have been received in satisfaction of a debt, or (c ) whereby any debt or demand, or any part of debt or demand, is acknowledged to have been satisfied or discharged, or (d) which signifies or imports any such acknowledgement, and whether the same is or is not signed with the name of any person”;
Schedule – I of the Indian Stamp Act, Article 53 states that the stamp duty on a receipt should be "One rupee” (for any money or the other property the amount or value of which exceeds Rupees Five Thousand). Therefore the MoU dated 05.06.2013 is sufficiently stamped.
# 3. The applicant has stated that the IRP has rejected the claim on the ground that the applicant has failed to provide a demand promissory note duly stamped in evidence of the claim, while accepting the fact that the amount claimed by the applicant was reflected in the books of accounts of the corporate debtor. The applicant has stated that vide Regulation 8 it is not mandatory that the debt ought to be proved only by production of the demand promissory note.
# 4. According to the applicant's submission that the MoU does not fall within the list of documents that are prescribed for Registration under the Indian Registration Act 1908. The document does not need Registration and the IRP has given no reason in support of his contention.
# 5. The applicant have prayed that the IRP may be directed to consider the claim of the applicant for Rs.15 crores as a valid claim and directing the IRP to recognize the applicant as a financial creditor for the purpose of proceedings under IBC and to declare as null and void the meeting of the COC and any decision taken thereat which have been conducted without the presence of the applicant.
# 6. In this case, the applicant was asked to submit any loan agreement or other legally valid document evidencing the debt based on the MOU. The learned counsel for the applicant has stated that there is no other documents and non-judicial stamp which was affixed on the MoU's was for the receipt of the money by the corporate debtor and in this case no demand promissory note was drawn on and there were no other legal documents apart from the MoU which has already been cited.
# 9. The perusal of the MoU reveals it not only contains the particulars of the cheques by which the credit was extended by the applicant but also the rate of interest and also the details of the pledging of shares held by its promoters and others as a security for the loan extended to the corporate debtor. In view of this it is felt that it is a financial contract/loan agreement and not mere receipt for the amount paid to the Corporate Debtor. In this connection the provisions of Section 23(A) of the Indian Stamp Act which is reproduced below may also been seen wherein by which is clear that instruments which are connected with mortgages of marketable securities are to be charged as agreements. In the instance case, since there is no other financial contract evidencing the pledging of securities the MoU is to be treated as an agreement which is to be taxed in terms of the Stamp Act. In this connection, Article 6 of Schedule I to the Indian Stamp Act may also be referred to 23A. Certain instruments connected with mortgages of marketable securities to be chargeable as agreements:
(1) Where an instrument (not being a promissory note or bill of exchange) (a) Is given upon the occasion of the deposit of any marketable security by way of security for money advanced or to be advanced by way of loan, or for an existing or future debt, or
(6) Makes redeemable or qualifies a duly stamped transfer, intended as a security, of any marketable security, it shall be chargeable with duty as if it were an agreement or memorandum of an agreement chargeable with duty under 53 [Article No.5(c)] of Schedule I.
# 10.In the absence of any other document as a follow up to the MoU like a loan agreement the Tribunal is inclined to agree with the contention of the IRP. The applicant is hereby directed to fulfill the requirements under the stamp act in consultation with the IRP and provisions of the Tamil Nadu Stamp Act so that the MoU may be accepted as a valid evidence of the financial debt. After this has been done the claim may be admitted by the IRP and may be included as a financial credit. The applicant may also be allowed to participate as a member of committee of creditors, with respect to further proceedings in the solution of a resolution plan. The petition is disposed of with these directions.
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