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TMI Blog2019 (7) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... granted by the applicant to Borrower, but the Applicant s status as a Guarantor/Financial Creditor of the Corporate Debtor in the light of section 5(8) of the Code. Hence, being a Secured Creditor of the Corporate Debtor, the option to move U/s 52(1)(b) of the I B Code is always open to the Applicant for realising the security interest on its own. The Liquidator has rightly rejected the claim of the Applicant on the ground that the Applicant is not a Financial Creditor of the Corporate Debtor and the liability of the Corporate Debtor is restricted to the pledge of shares only which has already been meted with - application dismissed. - MA 1199/2018 in CP No.725/IBC/NCLT/MB/MAH/2017 - - - Dated:- 6-5-2019 - Mr V.P. Singh, Member (Judicial) And Mr Ravikumar Duraisamy, Member (Technical) For The Applicant : Advocate Bhargav Kosumi For The Respondent : PCS Tanmay S. Varadkar, for Liquidator ORDER 1. The Corporate Insolvency Resolution Process of Varun Corporation Limited ( Corporate Debtor ) began on 30.06.2017, under the admission of Section 7 application (CP 725/I BP/NCLT/MB/2017) filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action. 7. The Applicant submits that the Borrower had availed the financial facilities from the Applicant but has failed and neglected to repay the principal and interest thereon, which fell due on different dates. It is submitted that such non-payment of the outstanding amounts under the facilities constituted as an Event of Default in terms of the facility mentioned above agreements. 8. It is stated that Clause 11 of the Deed of Pledge dated 02.08.2016 creates an obligation on the Corporate Debtor to indemnify the Applicant for the indebtedness of the Borrower to the applicant. Therefore, it is submitted that the Corporate Debtor is liable to pay the entire outstanding amount owed by the Borrower to the applicant upon the occurrence of the event of default. The liability of the Corporate Debtor towards the Applicant constitutes a financial debt under section 5(8) of the I B Code making the applicant a Financial Creditor as per Section 5(7) of the I B Code. 9. The Applicant, on the initiation of Corporate Insolvency Resolution Process of the Corporate Debtor, had filed its Proof of Claim under Form-C of the IBBI (Insolvency Reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B Code, is applicable only to the original application under section 7, 9 or 10 of the I B Code and not on this appeal filed under section 42 against the decision of the liquidator. Hence, the delay in filing this application cannot be condoned under section 5 of the Limitation Act, 1963. For the sake of argument, even if it is assumed that the Limitation Act, 1963 is applicable only on the original applications under section 7, 9 or 10 of the I B code, the delay in filing this application cannot be condoned in view of the fact that the facts of this case do not suffice the requirement of sufficient cause under section 5 of the Limitation Act, 1963. Reliance has been placed on the decision of the Hon ble Supreme Court of India in SLP No. 25815 of 2013 in International Asset Reconstruction Company of India Limited V. The Official liquidator, order dated 24.10.2017 for asserting this proposition. 14. The next contention of the Liquidator is that Clause 11 of the Deed of Pledge dated 02.08.2016 whereby the Applicant alleges that it is entitled to be indemnified by the Corporate Debtor, is misconstrued. Throwing light on the above-said provision, it says ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady pledged the shares held by it of the borrower with the Security Trustee and in the absence of any Corporate Guarantee given by the Corporate Debtor, nothing further has to be done by the Corporate Debtor. The liquidator states that the said indemnity under the pledge deed is only for the obligation of the Corporate Debtor under the said pledge agreement. 17. Furthermore, the financial statements of the Corporate Debtor do not even recognise the debt of the borrower as a contingent liability. The borrower is also under liquidation under the I B Code and the right forum to claim this amount is the liquidator of the borrower. The liquidator denies that the liability of the Corporate Debtor constitutes a financial debt under Section 5(8) of the I B Code for the reasons stated above. 18. After hearing the contentions of both the sides and on perusing the documents produced on record, the primary issue which is to be dealt with is that whether the delay in filing this application can be condoned or not. In T.R. Rajakumari v. Motion Picture Producers Combine Ltd. AIR 1942 Mad. 349, it was held and thus well-settled proposition of the law that a cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. 21. It is worth to note that a collateral security given for the loan of a third party shalt not be treated as a Debt U/s 5(8) of the Code. Placing reliance on the Order dated 09.05.2018 in CA No. 81/2018 in CP No. 77/2017 in the matter of ICICI Bank V. Anuj Jain (RP for Jaypee Infratech Ltd.) by the NCLT, Allahabad Bench, the Applicant further contends that in the said matter, ICICI Bank held a third party security in the form of a mortgage given by Jaypee Infratech Ltd. (Corporate Debtor in the said case) for the facilities granted by ICICI Bank to Jaypee Associates Ltd.(JAL), the holding company of the said Corporate Debtor. The claim filed by the ICICI Bank with the RP of JIL was rejected by the RP who, inter alia , stated that the applicant cannot be termed as a Financial Creditor as defined U/s 5(7) of the Code and that the claim of ICICI Bank does not amount to a Financial Debt in terms of section 5(8) of the code in relation to the security provided by JIL for the loans of JAL. The Adjudicating authority upheld the decision of RP. 22. In the present case, what is denied by the RP is not the existence of security in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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