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TMI Blog2018 (3) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... y initiated action under section 13 of the SARFAESI Act, this Adjudicating Authority Cannot issue direction against the Bank holding that the Liquidator can have any manner of control over the assets secured to the Bank. However, the liquidator’s right to verify the account and participation in the sale proceedings if any to be initiated by the Bank so as to see the interest of workmen dues is to be safeguarded and to see whether any surplus comes out of the sale cannot be interfered by the Bank. Upon the above said observation this application is liable to be dismissed. - C.A. (IB) NO. 540/KB/2017 And C.P. (IB) NO. 73/KB/2017 - - - Dated:- 9-2-2018 - MR. JINAN K. R., J. For The Applicant : Smt. Mamta Binani, Pr. CS, Miss Kiran Sharma, Pr. CS, Mr. Abrojit Mitra, Senior Advocate, Mr Munawar Naseem, Advocate, Mr. S. Nigam, Advocate And Arya Chatterjee, Advocate ORDER Per Shri Jinan K. R., Member (Judicial) 1. This is an application filed by the Liquidator under Section 35 of the Insolvency Bankruptcy Code, 2016, praying for issuance of the directions to one of the Financial Creditors of the Corporate Debtor, namely, J K Bank to take into the custody and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only) executing the Facility Agreement dated 20-03-2014 created the first ranking exclusive charge by way of assignment/hypothecation of all the Book Debts, Operating cash flows, receivables, commissions, revenues whatsoever nature and wherever arising from the Project/WTGs both present and future of the Corporate Debtor. 10. The Bank further contends that by way of mortgage of all the immovable properties owned by the Corporate Debtor, leased out in favour of the Corporate Debtor including the immovable properties, being utilised for the Project, i.e., the land on which the WTGs, are installed and that in pursuance of the execution of the facility agreement, the Corporate Debtor also entered into an Escrow Agreement towards the term loan facility for the purpose of depositing of the proceeds, revenue and earning of the Projects including but not limited to the insurance proceeds and lease rentals in the Escrow Account. 11. The Bank further alleged that the Corporate Debtor had failed in the repayment of the instalments upon due dates and had become unable to or admitted in writing its inability to pay its debts as they mature and files Petition for suspension of payments o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank who is in the custody of the assets of the corporate debtor, has, in no manner of right, to continue control of the assets which mainly includes the windmill and also has no right to appropriate the proceedings derived out of the operation of the windmill. According to her, this Adjudicating authority is competent to issue directions in order to take into his custody or control of all the assets of the corporate debtor including the secured assets of the Bank subject to Section 52 of the Insolvency Bankruptcy Code, 2016. She also would submit that since the moratorium becomes applicable as on 27-02-2017, the operation of the Account and appropriating any amount from the accounts by the Bank is illegal and the Bank is liable to revert back the amount appropriated by the Bank so as to restore original status of the account. According to her, the Bank is liable to repay the amount transferred from the Escrow accounts at least during the period of moratorium and also has no right to deal with the secured assets without prior permission of the Liquidator and therefore, this application is liable to be allowed. 18. The secured assets in dispute in the application includes wind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a Facility Agreement. The right of the Bank to deal with the secured assets, certainly comes under the purview of Section 52(4) of the Insolvency Bankruptcy Code, 2016. It is good to read Section 52(4) of the Insolvency Bankruptcy Code, 2016. It read as follows: Section 52(4) : A secured creditor may enforce, realise, settle, compromise or deal with the secured assets in accordance with such law as applicable to the security interest being realised and to he secured creditor and apply the proceeds to recover the debts due to it. 22. A reading of sub-section(4) of Section 52 of the Insolvency Bankruptcy Code, 2016 above referred, no doubt, a proceeding already initiated by the Bank under the SARFAESI Act, 2002 squarely fall within the purview of Section 52(4) of the Insolvency Bankruptcy Code, 2016. Therefore, the question is whether the Liquidator can impose any condition on the Creditor against realisation of Security assets which has been exclusively charged to the Bank?. 23. It appears to me that imposition of conditions on the creditors of its rights to initiate the appropriate legal action on the secured assets cannot be done in view of Section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idator. As noted earlier, the Official Liquidator, as a representative of the borrower company under winding up has to be associated, not for supplying in omission in the SARFAESI Act but because of express provision therein as well as in the roles. Hence, the exercise of harmonising the act, the Supreme Court has to undertake in the context of the SFC Act or the RDB Act is no longer warranted in respect of the SARFAESI Act vis-a-vis the Companies Act 27. However, the rights of secured creditors have been modified by the Insolvency and Bankruptcy Code, 2016. As per the code in a case, a Resolution Professional did not submit any resolution plan approved by the Committee of Creditors (COC), and order of liquidation to be passed, in such case, no suit or proceedings can be filed against the Company, except the enforcement of security by the secured Creditors. In the case in hand the assets in dispute is a secured asset of the Bank. Admittedly, the Bank herein, already initiated the proceedings under the SARFAESI Act. 28. Section 14 of the Insolvency Bankruptcy Code, 2016 provides that, on commencement of the Insolvency Resolution Process, the Adjudicating authority, shall, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the course of realising a secured asset, any secured creditor faces resistance from the corporate debtor or any person connected therewith in taking possession of, selling or otherwise disposing off the security, the secured creditor may make an application to the Adjudicating Authority to facilitate the secured creditor to realise such security interest in accordance with law for the time being in force. 32. Thus, a reading of above refereed provisions of the Insolvency Bankruptcy Code, 2016 what I understood is that subject to section 52(7) of the code the secured creditor can proceed with the remedy available to have recourse with the secured assets in accordance with Law for the time being in force. That being so, no directions interfering the right of a secured creditor can be passed in a case of this nature. Since the secured creditor already initiated action under section 13 of the SARFAESI Act, this Adjudicating Authority Cannot issue direction against the Bank holding that the Liquidator can have any manner of control over the assets secured to the Bank. However, the liquidator s right to verify the account and participation in the sale proceedings if any to be i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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