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TMI Blog2022 (12) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Rs.1,27,77,777.05 in terms of the Trip Loan agreement dated 17.4.2018; (ii) Legal charges of Rs.24,135/-; and (iii) Additional Financial charges of Rs.77,56,165/- in respect of the very same claim. Therefore, the Liquidator of the respondent Company seeks to recover its dues qua the applicant/respondent Company in accordance with the procedure envisaged under Insolvency and Bankruptcy Code, 2016 - a recovery certificate issued in respect of the same claim, which is essentially a crystallization of the claim through the process of adjudication, had also be classified as a financial debt under Insolvency and Bankruptcy Code, 2016. Consequently, the nature of the underlying claim of the creditor, would determine the categorisation of the amount payable under the final decree passed adjudication of the same claim. The liability arising out of an arbitral award or a court decree would be categorised as either financial or operational debt depending on the nature of the underlying claim which stands crystallised through the arbitral or court proceedings. The appellant, as per Section 9 of Insolvency and Bankruptcy Code, 2016, is a Non Banking Finance Company and admittedly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Garnishees from making payment of a sum of Rs.1,96,06,986.08 to the respondent herein and subsequently by another order dated 06.11.2019, has directed the Garnishees to deposit the said amount, if any lying with them, upto a limit of Rs.1,96,06,986.08, which is due and payable by the respondent herein. The appellant had also initiated arbitration proceedings and final award was also passed in favour of the appellant in Arbitration Case (CHOLA) No.TL9 of 2019 dated 23.12.2019. While so, the Garnishee No.5 Viz., M/s.Havells India Limited deposited a sum of Rs.5,55,949.10 and Garnishee No.4 Viz., M/s.Carrier Midea India Private Ltd. deposited a sum of Rs.9,99,341/- to the credit of Application No.3703 of 2019. The respondent filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal (Ahmedabad Bench) wherein a moratorium under Section 14(1) of Insolvency and Bankruptcy Code, 2016 was declared, inter alia, against the continuation of pending proceedings against the respondent Company herein by order dated 24.2.2020. Further, National Company Law Tribunal (Ahmedabad bench) ordered liquidation of the respondent Company by order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qua the applicant/respondent Company in accordance with the procedure envisaged under Insolvency and Bankruptcy Code, 2016. According to the Liquidator of the respondent Company, Section 35 of Insolvency and Bankruptcy Code, 2016 read with Regulation 39 of the IBBI (Liquidation Process) conferred right to the Liquidator to recover and realize all assets of and dues to the corporate debtor in a time bound manner for maximization of value for the stakeholders. 5. On overall consideration of the submissions and the materials, the main issue raised around herein is whether the proceedings initiated under Insolvency and Bankruptcy Code, 2016 can replace the execution of the arbitral awards? 6. In this context, it would be helpful to extract Section 53(1) of Insolvency and Bankruptcy Code, 2016 which prescribes the order of priority of distribution of assets on liquidation. The priority is as follows: (a) The insolvency resolution process costs and the liquidation costs paid in full. (b) The following debts which shall rank equally between and among the following:- (i) workmen s dues as assigned to it in section 326 of the Companies Act, 2013, for the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal amount of Rs.1,27,77,777.05 in terms of the Trip Loan agreement dated 17.4.2018; (ii) Legal charges of Rs.24,135/-; and (iii) Additional Financial charges of Rs.77,56,165/- in respect of the very same claim. Therefore, the Liquidator of the respondent Company seeks to recover its dues qua the applicant/respondent Company in accordance with the procedure envisaged under Insolvency and Bankruptcy Code, 2016. According to the Liquidator of the respondent Company, Section 35 of Insolvency and Bankruptcy Code, 2016 read with Regulation 39 of the IBBI (Liquidation Process) conferred right to the Liquidator to recover and realize all assets and dues to the corporate debtor in a time bound manner for maximization of value for the stakeholders. 11. We have also gone through the impugned order passed by the learned Single Judge. Learned Single Judge, after careful consideration of the provisions envisaged under Insolvency and Bankruptcy Code, 2016, has held that the amount lying in the deposit to be made available for distribution amongst the creditors qua M/s.Navrang Roadlines Private Limited, inter alia, in accordance with Section 53 of Insolvency and Bankruptcy Code, 2016 in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have to be categorised as a financial debt under Insolvency and Bankruptcy Code, 2016. Therefore, a recovery certificate issued in respect of the same claim, which is essentially a crystallization of the claim through the process of adjudication, had also be classified as a financial debt under Insolvency and Bankruptcy Code, 2016. Consequently, the nature of the underlying claim of the creditor, would determine the categorisation of the amount payable under the final decree passed adjudication of the same claim. The liability arising out of an arbitral award or a court decree would be categorised as either financial or operational debt depending on the nature of the underlying claim which stands crystallised through the arbitral or court proceedings. 13. The appellant, as per Section 9 of Insolvency and Bankruptcy Code, 2016, is a Non Banking Finance Company and admittedly an unsecured financial creditor. As per the decisions laid down by the Hon'ble Supreme Court cited supra and Section 53 of Insolvency and Bankruptcy Code, 2016, the financial debts owed to unsecured creditors have to be distributed by the liquidator as per the preference set out under Section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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