2024 (1) TMI 832 - AT - Insolvency and Bankruptcy

Status of second loan - Security Interest over the Secured Assets - Whether, the 2nd Loan is a Fresh Loan or whether it was given in lieu of the default committed by the Corporate Debtor in servicing the 1st Loan? - Whether it was given for restructuring of the 1st Loan and hence, the Appellant is entitled to retain the Security Interest over the Secured Assets in terms of the Tripartite Agreement entered into on 14.06.2017? HELD THAT - It is the main case of the Appellants that the emails dated 08.04.2019, 18.05.2019 and 22.05.2019 were not brought on record and these emails were essential for deciding the subject issue on hand. The Learned Senior Counsel Mr. V. Prakash, appearing for the Applicants / Appellants drew our attention to email dated 22.05.2019 and the Letter dated 08.04.2019, in support of his case that the First Respondent was requested for issue of NOC in favour of the Appellants. The Learned Senior Counsel Mr. E. Om Prakash appearing for the First Respondent, drew attention to the date and time of retrieval of these emails showing that the emails were printed within a few minutes from the Email ID of the Promoter of the Corporate Debtor Company and that nothing turns on these emails as the fact remains that there is no evidence on record that the 2nd Loan was taken to restructure the 1st Loan. Subsequent to letter dated 08.04.2019, the email dated 20.05.2019, seeking for release of NOC establishes that the restructuring never took place and the NOC was never issued for the 2nd Loan. It is apposite to reproduce the email dated 31.01.2019, subsequent to the Issuance of the Sanction Letter, which clearly evidences that the Appellants has agreed to Sanction of a New Loan, instead of rescheduling the existing Loan and close the existing Loan. This email clinches the issue that the Sanction of the Loan on 31.01.2019 is indeed a Fresh Loan . Additionally, the subsequent correspondence dated 09.07.2019, requesting to issue NOC further establishes that the NOC was never issued and therefore, the First Respondent continues to have the 1st Charge on the subject Assets. Appeal dismissed.

Summary

Issues Involved:
1. Liquidation of Corporate Debtors.
2. Secured Assets and Security Interest.
3. Jurisdiction of Adjudicating Authority.
4. Inter se disputes between Creditors.
5. Classification of Appellant as Secured Creditor.

Summary:

Issue 1: Liquidation of Corporate Debtors
The appeals were filed by Reliance Commercial Finance Limited against the orders passed by the NCLT, Chennai, directing the liquidation of JBM Homes Private Limited and JBM Shelters Private Limited. The Adjudicating Authority directed the Liquidator to complete the project 'GRT Grand' and manage the proceeds and receivables in specified bank accounts. The Liquidator was also instructed to handle the title deeds and categorize homebuyers for payment and possession of flats.

Issue 2: Secured Assets and Security Interest
The Appellants contended that the directions affected their interest in the secured assets. They argued that the Corporate Debtor had availed loans secured by mortgages and that the Appellant had the first charge on the project land. The Adjudicating Authority restrained the Appellant from enforcing the mortgage and directed the handover of documents to the Liquidator.

Issue 3: Jurisdiction of Adjudicating Authority
The Appellants argued that the Adjudicating Authority did not have jurisdiction over inter se disputes between creditors, which should be decided by Civil Courts. The Adjudicating Authority held that it had jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, to decide such disputes.

Issue 4: Inter se disputes between Creditors
The main issue was whether the second loan was a fresh loan or a restructuring of the first loan. The Sanction Letter dated 31.01.2019 did not indicate that it was for restructuring the first loan. The Tripartite Agreement and NOC were related to the first loan, and no fresh NOC was issued for the second loan.

Issue 5: Classification of Appellant as Secured Creditor
The Appellant was classified as a secured creditor for the second loan. The Adjudicating Authority found that the first loan was closed, and the second loan was a fresh loan without a new NOC, thus the first respondent retained the first charge on the secured assets.

Conclusion:
The appeals were dismissed, and the applications to reopen and rehear the matter were also dismissed. The Adjudicating Authority's orders were upheld, confirming the Liquidator's directions and the classification of the secured assets.