Case Law Details
Assets Care & Reconstruction Enterprise Limited Vs Ankit Metal & Power Limited (NCLT Kolkata)
The case of Assets Care & Reconstruction Enterprise Limited Vs Ankit Metal & Power Limited, adjudicated by the National Company Law Tribunal (NCLT) in Kolkata, delved into several legal aspects surrounding the stamping of bank documents for asset reconstruction under the SARFAESI Act. The Corporate Debtor contended that the assignment agreements executed in favor of the Financial Creditor were not sufficiently stamped. However, citing legal precedents and statutory provisions, the NCLT arrived at a conclusive understanding.
Firstly, the Corporate Debtor referenced a Supreme Court decision in Asset Reconstruction Company (India) Limited vs. Chief Controlling Revenue Authority, highlighting an amendment in the SARFAESI Act exempting from stamp duty any document executed by a bank in favor of an Asset Reconstruction Company for the purpose of asset reconstruction or securitization. This exemption, established by Amendment Act 44 of 2016, delineates a clear provision within the law that relieves such documents from stamp duty obligations.
Moreover, the NCLT referred to a ruling by the National Company Law Tribunal, New Delhi bench, in CFM Asset Reconstruction Pvt. Ltd. vs. Nikhil Footwears Pvt. Ltd. The tribunal acknowledged assignment of debt as a valid mode of transfer recognized under the Insolvency and Bankruptcy Code (IBC) and emphasized the limitations of its adjudicative authority in IBC proceedings. It reiterated that matters such as the requirement or exemption of registration of assignment agreements fall beyond the scope of the Adjudicating Authority under the IBC’s summary jurisdiction. Essentially, the tribunal emphasized that the legality of assignment agreements cannot be challenged within the purview of an IBC petition.
Furthermore, a decision by the National Company Law Appellate Tribunal (NCLAT) in the case of Mr. Praful Nandi Stara vs. Vistra ITCL (India) Limited & Ors. was cited, emphasizing that while a technical deficiency of insufficiency of stamping may exist, it does not interdict the issue of debt being due and payable. This underscores the distinction between procedural irregularities, such as stamping deficiencies, and the substantive issue of debt repayment.
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