Interplay Between Insufficient Stamping Of Documents And IBC

Over the past few years, the constant interaction between Insolvency & Bankruptcy Code, 2016 ("IBC/Code") and the Indian Stamp Act, 1899 ("Stamp Act") has given rise to various intriguing questions, with one such primary question being "whether insufficient stamping can be a ground for rejection of an application under section 7 or 9 of the Code?".

While the IBC lays down provisions and procedures regarding initiation of insolvency procedure, however, the plea of "insufficient stamping" vide the provisions of the Stamp Act has been used as a defense to claim that the agreement/instrument in question cannot be admitted into evidence to establish the existence of debt between the parties as the instrument is not in compliance with the thresholds under the Indian Evidence Act, 1872.