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TMI Blog2020 (3) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... 'I B Code' the secured assets and the interest of the secured creditor to recover the proceeds of debts due to it has not been specifically prescribed, it does not make that the procedure prescribed under the 'SARFAESI Act, 2002' will be applicable to secured creditor to sale the proceeds. Even if section 52(4) is silent relating to sale of secured assets to one or other persons, the Explanation below section 35(1)(f) makes it clear that the assets cannot be sold who are ineligible under section 29A - If during the liquidation process assets cannot be sold to a person who is ineligible under section 29A, the said provision only applicable to the 'Liquidator' but also to the 'secured creditor', who opt out of section 53 to realise the claim in terms of section 52(1)(b) read with section 52(4) of the 'I B Code'. Section 52 does not create any right in favour of one or other 'secured creditor' to realise its security interest in the manner specified in the said section where the 'secured creditor' realises security interest under clause (b) of section 52 is required to inform the liquidator of such security interest and ide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 36(4)(a)(iii), when SBI exercises its rights u/s 52 of the Code and such dues should not be made a part of the liquidation estate u/s 53. 2. The Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Mumbai by impugned order dated 8th April, 2019 disposed of the application while partly allowed by granting permission to the 'Secured Creditors' to opt out of the liquidation process but impose bar on the 'secured creditors' to sell the assets of the 'Corporate Debtor' to disqualified persons under section 29A. 3. The State Bank of India - the 'Secured Creditor', who moved such application for opting out of section 53 by filing an application under section 52(1)(b) before the Liquidator, has challenged the impugned order. As according to it, there is no bar for 'secured creditor' to sell the assets to any person including the 'Promoters' and others who have ineligible in terms of section 29A of the 'I B Code' for filing the 'Resolution Plan'. 4. The question arises for consideration in this appeal is whether the Appellant, who is a 'Secured Financial Creditor', while opting out of liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isqualified under section 29A of the 'I B Code', then the entire purpose of section 29A of the 'I B Code' would get defeated. According to him, the objective of the restriction imposed upon the liquidator under the 'Explanation given below to section 35(1)(f) are in two-fold - (i) firstly, to ensure protection of public interest to keep the 'not eligible person' out of the process to ensure that the assets should not go back to the same management or defaulting parties, who have committed the default and (ii) secondly, to prevent the misuse and impose restriction in order to ensure that any cartel that may be formed by the defaulting parties hand in glove with the 'Financial Creditor', and if allowed will defeat the objective of the 'I B Code' of maximization of value of stressed assets which has putting to 'Liquidation'. 9. Section 35(1)(f), reads as under: 35. Powers and duties of liquidator.- (1) Subject to the directions of the Adjudicating Authority, the liquidator shall have the following powers and duties, namely: - (f) subject to section 52, to sell the immovable and moveable property and actionable claims of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, compromise or deal with the secured assets in accordance with such law as applicable to the security interest being realised and to the secured creditor and apply the proceeds to recover the debts due to it. 12. From sub-section (4) of section 52, it is clear that secured creditor is entitled to 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 the secured creditor and apply the proceeds to recover the debts due to it. 13. In terms of 'I B Code' the secured assets and the interest of the secured creditor to recover the proceeds of debts due to it has not been specifically prescribed, it does not make that the procedure prescribed under the 'SARFAESI Act, 2002' will be applicable to secured creditor to sale the proceeds. 14. The object of the 'I B Code' is to maximize the assets of the 'Corporate Debtor' and then to balance the stakeholders including maximization of the assets of the 'Financial Creditor' and other creditors including secured creditors. In Arcelor Mittal India (P.) Ltd. v. Satish Kumar Gupta [2019] 2 SCC 1, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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