# In the matter of Safal Developers Private Limited CP (IB) No. 1167-MB-IV-2020

> NCLT judgment dated 2021-10-06. Citation: TCN-2021-NCLT-00820. Magnate Industries LLP, the Financial Creditor/Applicant, filed an application under Section 7…

- **Court:** NCLT
- **Order date:** 6 Oct 2021
- **Citation:** TCN-2021-NCLT-00820
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/safal-developers-private-limited-cp-ib-no-1167-mb-iv-2020-a109739a

## Summary

### Background

Magnate Industries LLP, the Financial Creditor/Applicant, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016 (I&B Code) against Safal Developers Private Limited, the Corporate Debtor, for initiating Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed a total default of Rs.29,68,04,589/-, which included a pending Refundable Security Deposit of Rs.25,00,00,000/- and pending Interest Amount of Rs.4,68,04,589/-. The Date of Default as mentioned in the Part IV (2) of Form 1 of the Petition is 07.08.2019. A Memorandum of Understanding (‘MOU’) was executed between the Petitioner and the Respondent, where the Petitioner was to arrange third party capital required by the Respondent and Harmony to meet certain costs

…

## Facts

Magnate Industries LLP (Financial Creditor) filed an application under Section 7 of the IBC against Safal Developers Private Limited (Corporate Debtor) to initiate CIRP, claiming a default of Rs.29,68,04,589/-. This amount included a refundable security deposit of Rs.25 crore and pending interest of Rs.4,68,04,589/-. The default date was stated as 07.08.2019. A Memorandum of Understanding (MOU) was established where Magnate Industries was to arrange third-party capital for Safal Developers' redevelopment project, advancing Rs.25 crore as a refundable security deposit. Safal Developers issued two cheques for repayment, which were later dishonored. Safal Developers argued that no 'debt' existed under the IBC, the MOU was unstamped, and the security deposit wasn't a

…

## Issues and analysis

### Issue 1: Whether an undated, unstamped and unregistered Memorandum of Understanding (MoU) signed by the …

**Ratio:** An unstamped document cannot be relied upon by the Tribunal as a valid document to

…

**Reasoning:** The Hon'ble Supreme Court has laid down that an unstamped document cannot be relied upon

…

**Interpretation:** The legal principle is that an unstamped document is inadmissible as evidence

…

**Application:** The MOU in this case was undated, unstamped, and unregistered. Therefore, the

…

## Parties

- **Judges:** RAJESH S…; SUCHITRAKAN…
- **Appellants:** Magnate Industries…
- **Respondents:** Safal Developers…

## Timeline

- **2019-05-09 — Payment of Security…**: The sum of Rs.25 crore was paid by the Petitioner through its parent company, Sunteck…
- **2019-08-07 — Default Date…**: The Financial Creditor claimed the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

---

This is a preview. The full structured summary, issues, precedents and source judgment are available on CaseEase - Legal Intelligence Simplified: https://caseease.in/cases/ibc/nclt-chandigarh/safal-developers-private-limited-cp-ib-no-1167-mb-iv-2020-a109739a