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2021 (12) TMI 1274 - Tri - Insolvency and BankruptcySeeking release of security interest from the liquidation estate - HELD THAT - The vehicle is registered in the name of the suspended Director of the corporate Debtor. Under Part II of IBC when an Application is admitted moratorium becomes applicable, the right to reach the vehicle under such contract would be affected will be subject to provisions of IBC. Under Section 18(1)(f) of the IBC Code, 2016, as soon as CIRP is initiated, the IRP is duty-bound to take control and custody of assets over which the Corporate Debtor has ownership rights. It appears from the records that the owner s name and address in the Certificate of Registration, confirms the ownership of the car to be that of the Corporate Debtor - the vehicle is purchased in the name of the suspended Managing Director for the Corporate Debtor. Therefore, the company is the owner of the vehicle. If the respondent wants to proceed with the liquidation proceedings without relinquishing his security interest he has to follow Section 52 of the I B Code in which it is specified that the CIRP cost due from the secured creditors who realize the security interest in the manner provided in Section 52 has to deduct the proceeds from the sale of the asset and shall transfer such amounts to be included in the liquidation estate. In this case the respondent has submitted Form D to realize his claim from the asset of the Corporate Debtor through Liquidation Proceedings. Thus, we are constrained to believe that the respondent has admitted themselves as the Financial Creditor and submitted the claim before the Liquidator and that the Liquidator considered the claim of the Respondent. Therefore, the Respondent is liable to follow the procedures prescribed under the I B Code - Since we found that the asset in question is registered in the name of the Managing Director of Corporate Debtor and in the address of M/s. Adhils Builders and Developers Pvt. Ltd, it is to be taken as a Liquidation asset of the Corporate Debtor. Application disposed off.
Issues Involved:
1. Release of security interest from the liquidation estate. 2. Ownership and right over the vehicle in dispute. 3. Compliance with Section 52 and Section 53 of the Insolvency and Bankruptcy Code (IBC), 2016. 4. Liability for Corporate Insolvency Resolution Process (CIRP) and liquidation costs. Issue-wise Detailed Analysis: 1. Release of Security Interest from the Liquidation Estate: The applicant, the Liquidator, sought the release of the security interest from the liquidation estate as requested by M/s. Daimler Financial Services Pvt. Ltd. The stakeholders' Consultative Committee (SCC) initially advised releasing the security interest with the stipulation that the amount to be paid for the realization of security interest was ?4,17,830/-. Despite several reminders, the respondent did not remit the amount, leading to the asset's value deterioration. The SCC later decided to continue the asset as part of the liquidation estate, relinquishing all security interests in favor of the liquidation estate. 2. Ownership and Right Over the Vehicle in Dispute: The respondent argued that the vehicle, a Benz Car CLA 200 CD, was owned by the borrower, Mr. Muhammed Kunju Asharaf, with the Corporate Debtor being a co-borrower. The vehicle was registered in the name of the suspended Director of the Corporate Debtor. The Tribunal noted that the vehicle's registration certificate confirmed the ownership of the car to be that of the Corporate Debtor, thus making the company the owner of the vehicle. The Tribunal referred to previous judgments and legal provisions to conclude that the vehicle is an asset of the Corporate Debtor and should be included in the liquidation estate. 3. Compliance with Section 52 and Section 53 of the IBC, 2016: The Tribunal examined whether the respondent, as a secured creditor, could realize the security interest in accordance with Section 52(1)(b) of the IBC. Section 52 allows a secured creditor to either relinquish its security interest to the liquidation estate or realize its security interest. The respondent had submitted a claim in Form D under Regulation 18 of the IBBI (Liquidation Process) Regulations, 2016, indicating their intention to realize the security interest. The Tribunal emphasized that the realization of security interest must comply with the procedures prescribed under the IBC, including the deduction of CIRP costs from the proceeds of the sale of the asset. 4. Liability for CIRP and Liquidation Costs: The respondent contended that they were not liable to pay the CIRP costs as they were not part of the Committee of Creditors (CoC) and were only responsible for the liquidation costs. The Tribunal noted that the respondent had filed a claim as a financial creditor and, therefore, was liable to follow the procedures under the IBC, including bearing the proportionate CIRP and liquidation costs. The Tribunal directed the Liquidator to appropriately address the respondent's claim and follow the prescribed regulations. Conclusion: The Tribunal concluded that the vehicle in question is part of the liquidation estate of the Corporate Debtor. The Liquidator was directed to follow the procedures prescribed in the IBC and appropriately address the claim of M/s. Daimler Financial Services India Private Limited. The application was disposed of with these directions. Dated this the 21st day of December, 2021.
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