2019 (5) TMI 1749 - Tri - Insolvency and Bankruptcy

Recovery of dues - charge over the properties - liquidator submits that the applicant is the sole first charge holder of the immovable property of the corporate debtor at Mysore and the movable fixed assets of the corporate debtor - Whether the applicant is entitled to realize their security interest in the manner specified under section 52(1)(b) read with regulation 37 of the IBBI (Liquidation process) Regulations 2016? - HELD THAT - The most important aspect of the realization of security interest by the secured creditor who is having the first charge is to be verified and vetted by the liquidator who in this particular case had verified the same in terms of section 52(3) of the Insolvency and Bankruptcy Code 2016 and in all categorical terms ascertained that the applicant is the first charge holder of the fixed assets of the corporate debtor - the applicant is entitled to realize their security interest under section 52(1)(b) read with regulation 37 of the IBBI (Liquidation Process) Regulations 2016. The issue is decided in favour of the applicant - As regards the current assets it is held that the applicant does not have the first charge. Whether this Tribunal has jurisdiction to determine on the issue of disputed question of fact as to who the first charge holder is? - HELD THAT - There is not a single document which raises even an iota of doubt as to the question who the first charge holder is. When the entire documents are in favour of the applicant excepting a frivolous/untenable claim by the Edelweiss on the issue of first charge does not create a bar on this Tribunal to decide the issue as to who is the first charge holder on the basis of uncontradictable/undisputable documentation. First of all there is no tenable dispute as regards the facts in question for the reason all the documents are uncontradictable and the genuine of the same is not in question. Even otherwise it is held that it is the exclusive prerogative of this Tribunal which is exclusively vested with the power to adjudicate the matters relating to and connected with the insolvency and bankruptcy law particularly the process of liquidation and the related measures to be adopted in the said process of liquidation. This is just not a substantive law but also a procedural law. Thus this Tribunal can decide on the issues of disputed question of fact when the documents unequivocally prove the point that is sought to be decided. The so-called dispute raised by the Edelweiss is just frivolous and is hereby rejected. The applicant is entitled to realize their security interest as provided under section 52(1)(b) read with regulation 37 of the IBBI (Liquidation Process) Regulations 2016 - Decided in favor of applicant.

Summary

Issues Involved:
1. Entitlement of the applicant to realize their security interest under section 52(1)(b) read with regulation 37 of the IBBI (Liquidation Process) Regulations, 2016.
2. Jurisdiction of the Tribunal to determine the issue of disputed facts regarding the first charge holder.

Issue-wise Analysis:

Issue 1: Entitlement to Realize Security Interest
The applicant, Finquest Financial Solutions P. Ltd., sought permission to sell/dispose of the secured assets of the corporate debtor, Reid and Taylor India Ltd. (RTIL Ltd.), under section 52(1)(b) read with regulation 37 of the IBBI (Liquidation Process) Regulations, 2016. The applicant claimed a sole first charge over all the fixed assets and a first pari passu charge over the current assets of the corporate debtor. The Tribunal noted that the documents on record, including annexures 2 to 11, supported the applicant's claim as the first charge holder of the immovable/fixed assets of RTIL Ltd. The MCA portal also depicted the register of charges in favor of the original lender, subsequently modified in favor of the applicant. The liquidator's table further confirmed the applicant as the first charge holder. The Tribunal concluded that the applicant is entitled to realize their security interest under the specified provisions, while noting that the applicant does not have the first charge over the current assets.

Issue 2: Jurisdiction to Determine Disputed Facts
The Tribunal examined whether it had the jurisdiction to determine the issue of disputed facts regarding the first charge holder. The Tribunal found that the documents unequivocally established the applicant as the first charge holder, and there was no tenable dispute regarding the facts in question. The Tribunal emphasized its exclusive prerogative to adjudicate matters relating to insolvency and bankruptcy law, including the liquidation process. The Tribunal rejected the objections raised by Edelweiss Asset Reconstruction Co. Ltd. (Edelweiss) as frivolous and untenable, affirming that the Tribunal could decide on disputed questions of fact when the documents clearly proved the point.

Conclusion:
The Tribunal decided both issues in favor of the applicant, Finquest Financial Solutions P. Ltd., and directed the liquidator to hand over the symbolic possession of the fixed assets of the corporate debtor to the applicant. The applicant was permitted to proceed with the sale of the assets in accordance with section 52(1)(b) read with regulation 37 of the IBBI (Liquidation Process) Regulations, 2016. The liquidator was also instructed to inform the Tribunal of the progress of the sale from time to time for further directions.