9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (7) TMI 311 - AT - Insolvency and BankruptcyApproval of Resolution Plan - Appellant submits that the Appellant having security interest in the immovable asset of the Corporate Debtor, the said land cannot be sold extinguishing the security interest of the Appellant by the Resolution Plan - HELD THAT - The Resolution Professional did not accept the claim of Appellant as Financial Creditor rightly. Law in this context is well settled. Reference made to judgment of Hon ble Supreme Court in Anuj Jain, Interim Resolution Professional for PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VERSUS AXIS BANK LIMITED ETC. ETC. 2020 (2) TMI 1259 - SUPREME COURT where the Hon ble Supreme Court had occasion to consider the role and status of Financial Creditor and a Creditor who has only security interest. A Financial Creditor who is part of the CoC has important role to play in the reorganisation and insolvency resolution of the Corporate Debtor. The Creditor who has only security interest is only interested in his security interest and have no interest in revival of the Corporate Debtor - On looking into the Scheme of I B Code, after moratorium is declared, there is prohibition on enforcement of any security interest created by the Corporate Debtor in respect of its property. The prohibition from enforcement of any security interest by one or other creditor including Secured Financial Creditor or third party Secured Creditor is for a purpose and object. Unless the prohibition is imposed, all assets of the Corporate Debtor shall not be available for revival and maximisation of the value of the Corporate Debtor, which is principal/primary objective of the I B Code. Financial Creditor who is part of the CoC is prohibited from enforcing any security interest. A third-party security holder like Appellant is equally bound by the provision of Section 14(1)(c) and cannot claim any enforcement of security interest in the CIRP. The Hon ble Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT while considering the provisions of Section 30, 50, 52 and 53 of the Code has held that provision of Section 53 cannot be applicable in the insolvency resolution process and the said provision is applicable only during liquidation. The argument of the Appellant that security interest contained by the Appellant in the asset of the Corporate Debtor cannot be dealt with in the plan is clearly contrary to the scheme delineated under Regulation 37. Further, Sub-clause (d) permit the resolution plan to contain provision for satisfaction or modification of any security interest. Thus, as per scheme of Regulation 37, security interest in assets of the Corporate Debtor can be dealt with, modified, satisfied and there is no exclusion to the resolution plan with regard to dealing of the security interest - When the security interest of Financial Creditor can be dealt with in the resolution plan in any manner, it is not found that how a third party having security interest in the assets of the Corporate Debtor can claim any higher status or different status from the Financial Creditor. When any asset including security interest in the asset is part of the CIRP process, there is no constraint or prohibition in I B Code or Regulations to deal with the said asset including a security interest - A third-party security interest holder is entitled to retain the security proceeds on the land of security interest under Section 52 of the Code. Section 52 and 53 becomes applicable only in Liquidation Proceeding and reference of Section 53 under Section 30(2) is for the purpose of computing the payment to Operational Creditors and dissenting Financial Creditors to which they may be entitled under Section 53. There are no error in the impugned orders passed by the Adjudicating Authority. There are no merit in both the Appeals. Both the Appeals are dismissed.
Issues Involved:
1. Validity of the rejection of the Appellant's claim as a Financial Creditor. 2. Approval of the Resolution Plan by the Adjudicating Authority. 3. Extinguishment of the Appellant's security interest in the immovable asset. Summary of Judgment: 1. Validity of the rejection of the Appellant's claim as a Financial Creditor: The Appellant's claim as a Financial Creditor was rejected by the Resolution Professional on 19.10.2020, as there was no default by the Principal Borrower (BGPPL). The claim was categorized as "Other Creditors' with a notional value of Re.1. The Appellant did not challenge this classification. The Tribunal upheld this rejection, referencing the Supreme Court's judgment in "Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd. vs. Axis Bank Ltd. & Ors.," which clarified that a person with only security interest over the assets of the corporate debtor does not qualify as a Financial Creditor. 2. Approval of the Resolution Plan by the Adjudicating Authority: The Resolution Plan submitted by Respondent No.3 was approved by the Adjudicating Authority on 31.03.2023. The Appellant challenged this approval, arguing that their security interest in the immovable asset (Choudwar land) should not be extinguished. The Tribunal found that the security interest was part of the CIRP process and could be dealt with in the Resolution Plan. The Tribunal referenced Regulation 37 of the CIRP Regulations, 2016, which allows for the sale of assets whether subject to any security interest or not, and concluded that the Resolution Plan's treatment of the security interest was valid. 3. Extinguishment of the Appellant's security interest in the immovable asset: The Appellant argued that their security interest could not be extinguished without their consent, citing the Supreme Court's judgment in "Jaypee Kensington Boulevard Apartments Welfare Association and Ors. vs. NBCC (India) Ltd. & Ors." The Tribunal distinguished this case, noting that in "Jaypee Kensington," the security interest was not part of the resolution process, whereas in the present case, the Appellant's security interest was part of the CIRP process. The Tribunal also referenced the Supreme Court's judgment in "Vistra ITCL (India) Ltd.," but concluded that the judgment was rendered under Article 142 of the Constitution and did not lay down a binding precedent under Article 141. Conclusion: The Tribunal upheld the Adjudicating Authority's orders rejecting the Appellant's I.A. No. 1311 of 2022 and approving the Resolution Plan. The Appeals were dismissed, affirming that the extinguishment of the Appellant's security interest was valid under the IBC and CIRP Regulations.
|
