Embassy Services Private Limited Vs Redwoods Infrastructure Private Limited (NCLT Bengaluru)
NCLT Bengaluru held that insufficiently stamped/ unstamped agreements do not present a bar to a Section 7 application under Insolvency and Bankruptcy Code, 2016. Thus, since default in payment of financial debt established, application u/s. 7 admitted.
Facts- The present Petition has been filed u/s. 7 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 on 22.09.2023 by M/s. Embassy Services Private Limited (‘Petitioners / Financial Creditors’) with a prayer to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Redwoods Infrastructure Private Limited (‘Respondent / Corporate Debtor’) for a total outstanding of Rs. 2,16,03,836, wherein the Principal amount is Rs. 1,00,00,000 along with interest at 18% therein being Rs. 1,16,03,836.
Conclusion- Held that it is a well settled law that insufficiently stamped/ unstamped agreements do not present a bar to a Section 7 application.
In Innoventive Industries Ltd. it was held that the mere fact that the debt is disputed does not affect the application, as long as the debt is due. It was further emphasized that once the debt and default are established, the Adjudicating Authority is obligated to admit the Section 7 application. Further, it should be noted that the Respondent has raised several technical objections; however, as both the Debt and Default have already been clearly established, these objections are without merit and do not stand.
