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2024 (4) TMI 727 - AT - Insolvency and BankruptcyApproval of Resolution Plan - whether the Appellant is secured creditor of the Corporate Debtor or not? - whether the decision of the RP declaring the Appellant as unsecured creditor is in accordance with law? - HELD THAT - It is true that Section 3(31) does not refer to any registration of charge under Section 77. The judgment of the Hon ble Supreme Court in Paschimanchal Vidyut Vitran Nigam Ltd. vs. Raman Ispat Pvt. Ltd. 2023 (7) TMI 831 - SUPREME COURT , which has been relied by learned Counsel for the Appellant, is noticed. The above was a case where a claim was filed under IBC for government dues. The assets of the Corporate Debtor were attached and in the above context issue arose as to whether Electricity Department is secured creditor or not and further in the above context Section 77 of the Companies Act was looked into - Hon ble Supreme Court did not consider it appropriate to rule on the submissions of the Liquidator, vis- -vis the fact of non-registration of charges under Section 77 of the Companies Act. On looking into the definition of Section 3(31), it is clear that right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of any obligation and includes mortgage, charge, hypothecation, assignment and encumbrances or any other agreement or arrangement securing payment or performance of any obligation of any person , no transaction has been placed on record, under which a security interest is created in favour of the Corporate Debtor with regard to assets of the Corporate Debtor. As noted above, mortgages of immovable property and non-agricultural land were mortgages, which were referred in Sanction Letter, were mortgages by Guarantors and no assets of the Corporate Debtor was mortgaged to the Appellant. The Sanction Letter cannot be said to be a transaction, which secures payment or performance of an obligation. The Adjudicating Authority, thus, was very well aware that Application has been filed for extension on 11.08.2023 and the Plan was approved on 23.08.2023. The mere fact that no formal orders were passed on that Application are not sufficient to set aside the impugned order on this ground. It is to be noted that 13.08.2023 was a date when 180 days was expiring. Present is not a case that there was any other extension claimed for. The Adjudicating Authority after noticing the aforesaid fact, approved the Resolution Plan, which makes it clear that Adjudicating Authority did not find any infirmity in approval of the Resolution Plan on 23.08.2023. In any view of the matter, exclusion having been prayed for and no order having been passed by the Adjudicating Authority on the said extension, no infirmity can be found on that ground and exclusion as prayed for was fully admissible and is required to be granted. There are no error in order of the Adjudicating Authority approving the Resolution Plan - appeal dismissed.
Issues Involved:
1. Whether the appellant is a secured creditor of the Corporate Debtor. 2. Whether the decision of the Resolution Professional (RP) declaring the appellant as an unsecured creditor is in accordance with law. 3. Whether the approval of the Resolution Plan after the expiry of the Corporate Insolvency Resolution Process (CIRP) period is valid. Issue 1: Secured Creditor Status The appellant, a financial creditor, contended that it should be classified as a secured creditor based on the sanctioned mortgage overdraft facility granted to the Corporate Debtor by letters dated 04.11.2011 and 17.01.2013. The RP and the Adjudicating Authority did not recognize the appellant as a secured creditor due to the absence of registered charges u/s 77 of the Companies Act, 2013. The Sanction Letters referred to mortgages by guarantors and not the Corporate Debtor's assets. The appellant's reliance on a letter of Lien and Set-off dated 04.11.2011 was also deemed insufficient to establish a security interest on the Corporate Debtor's assets. Issue 2: Decision of the RP The RP's decision to classify the appellant as an unsecured creditor was upheld. The Tribunal noted that the appellant failed to provide any documents proving the creation of security interest in the Corporate Debtor's assets. The Tribunal referenced Section 3(31) of the Insolvency and Bankruptcy Code (IBC), which defines "security interest" and concluded that no transaction securing payment or performance of an obligation was established by the appellant. Issue 3: Approval of Resolution Plan Post-CIRP Period The appellant argued that the approval of the Resolution Plan after the expiry of the CIRP period on 13.08.2023 was invalid. However, the Tribunal noted that the RP had filed an application for the exclusion of 23 days from the CIRP period on 11.08.2023, which was acknowledged by the Adjudicating Authority. The Resolution Plan was approved on 23.08.2023, and the Tribunal found no error in this approval, considering the exclusion application was pending and admissible. Conclusion: The Tribunal dismissed the appeal, affirming the RP's decision to classify the appellant as an unsecured creditor and validating the approval of the Resolution Plan despite the CIRP period concerns. The appeal was dismissed with no order as to costs.
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