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TMI Blog2025 (1) TMI 1453X X X X Extracts X X X X X X X X Extracts X X X X ..... e the entire sale proceeds to the Punjab National Bank who has exclusive charge over the property of the Corporate Debtor. The Application was rejected by the Adjudicating Authority against which the Appeal was filed. The Appeal was heard and by the Judgment of this Tribunal dated 26.05.2022, the Appeal was dismissed. Coming to the undertaking which is relied by the Appellant, the undertaking submitted before the Adjudicating Authority was to the effect that excess money received as per distribution shall be returned, when Order is passed by Tribunal or Hon'ble Supreme Court the undertaking given by stakeholders was in terms of Regulation 43 of the Insolvency and Bankruptcy Board of India, Liquidation Process Regulations 2016, which undertaking has to be given while accepting any distribution of the sale proceeds in the Liquidation, which undertaking was for the benefit of the Secured Creditors, who is ultimately found to have larger share of sale proceeds in the Liquidation. Thus, undertaking given by the Parties in no manner can come in the way of Adjudicating Authority in issuing direction for re-distribution in accordance with law. Conclusion - The Adjudicating Authority has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibution of assets. Liquidator informed the IDBI that in reference to the list of stakeholders as on 07.12.2021, the share of IDBI is considered as 10%. Liquidator proposed to distribution of sale proceeds as per security interest which was opposed by the IDBI Bank. vii. IDBI Bank sent objection that proceeds be distributed in proportion to their admitted claim in pro-rata basis. viii. In 10th SCC Meeting held on 26.09.2022, the methodology adopted for distribution was discussed and despite objection by the IDBI Bank, Liquidator agreed for distribution of sale proceeds on the basis of charge on the security interest of individual Creditors. ix. An undertaking was given by Secured Creditors, including IDBI that they forthwith return any excess money received by them for distribution, in case, Tribunal or Hon'ble Supreme Court decides that they are not entitled for the same. x. The Respondent accepted the distribution of amount of ₹1,26,10,109/- under protest. An I.A. 1694/2022 was filed by IDBI opposing the distribution methodology adopted by Liquidator. In IA, IDBI prayed for a direction to distribute the assets as per admitted debt of Secured Creditors on pro-rata bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 752, hence, the Judgment of the 'Amit Metaliks Limited' (Supra) cannot be relied. It is submitted that this Tribunal while passing an Interim Order on 29.02.2024, has protected the interest of the parties and said arrangement be allowed to be continued, till the law is settled by the Hon'ble Supreme Court. Learned Counsel for the Appellant has also placed reliance on the Judgment of the Hon'ble Supreme Court in the matter of 'ICICI Bank Ltd.' Vs. 'Sidco Leathers Ltd. & Ors.' reported in (2006) 10 SCC 452, in which Judgment, Hon'ble Supreme Court while considering Section 529 and 529-A of the Companies Act, 1956, has held that although the debt due to the workmen and the Secured Creditors were to be treated as par or pari passu with each other, however, this does not signify that inter see priority amongst the Secured Creditors is excluded. Learned Counsel for the Appellant has also relied on Insolvency Law Committee (ILC) Report dated 26.03.2019, where ILC has opined that priority of charge on the secured assets has to be considered while returning the share of concerned Creditors. Learned Counsel for the Appellant has also referred to provisions of Section 30(4) as amended by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was raised in the I.A.1694/KB/2022 filed by the IDBI Bank before the Adjudicating Authority was challenge to the distribution as undertaken by the Liquidator, despite objections raised by the IDBI Bank. In I.A. No. 1694/KB/2022, IDBI has prayed for following reliefs: "a) The methodology adopted by the Respondent for distribution of the sale proceeds of the liquidation estate be set aside; b) To recall the amount from the secured creditors who has received more than the amount which they are legally entitled to as per the waterfall mechanism mentioned under Section 53 of Insolvency and Bankruptcy Code, 2016 and make payment to the Applicant in the same ratio as any other secured financial creditor; c) Pass such other or further and relief(s) as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the present case;" 9. The I.A.1694/2022 was objected by the Liquidator by filing a Reply where Liquidator supported the distribution as per the security interest of the Secured Creditors. Liquidator in the Reply, has noticed the objection by the IDBI Bank, Liquidator has further pleaded that the distribution the Liquidator is following the Order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.04.2021 passed by the Hon'ble Appellate Tribunal has been stayed by the Hon'ble Supreme Court of India vide an Interim Order dated 29.06.2021 and thus, as on date, the Order dated 27.02.2020 passed by the Hon'ble Tribunal prevails. Copy of the Email dated 19.09.2022 sent by the Respondent to the stakeholders of the Corporate Debtor is annexed herewith and marked as ANNEXURE - R-5. Copy of the Order dated 27.02.2020 passed by the Hon'ble National Company Law Tribunal, Ahmedabad Bench, at Ahmedabad in the matter of "Technology Development Board vs. Ani/ Goel Liquidator, Gujarat Oleo Chem Limited & Ors.; IA. No. 514 of 2019 in C.P. (IB) No. 4 of 2017'' is annexed herewith and marked as ANNEXURE - R-6." 10. The Order passed by the NCLT Ahmedabad dated 27.02.2020 was set aside by NCLAT and against the Order passed by NCLAT, Hon'ble Supreme Court has passed an Interim Order on 29.06.2021 in Civil Appeal Diary No. 11060/2021 in the matter of 'Kotak Mahindra Bank Ltd.' Vs. 'Technology Development Board & Ors.', which Order of the Hon'ble Supreme Court is as follows: "Permission to file Appeal is granted. Issue notice. In the meantime, there shall be stay of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt while holding that after disapproval of such term related with financial model proposed in the resolution plan, the adjudicating authority itself could not have modified the same and ought to have sent the matter back to CoC for reconsideration. However, that part of the decision in Jaypee Kensington, (2022) 1 SCC 401 is not relevant for the present purpose.] . In that context, this Court held that such action of "payment" could only be by handing over the quantum of money or allowing the recovery of such money by enforcement of security interest, as per the entitlement of a dissenting financial creditor. 19. This Court in Jaypee Kensington [Jaypee Kensington Boulevard Apartments Welfare Assn. v. NBCC (India) Ltd., (2022) 1 SCC 401 : (2022) 2 SCC (Civ) 165] further made it clear that in case a valid security interest is held by a dissenting financial creditor, the entitlement of such dissenting financial creditor to receive the amount could be satisfied by allowing him to enforce the security interest, to the extent of the value receivable by him and in the order of priority available to him. This Court clarified that by enforcing such a security interest, a dissenting fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2022) 2 SCC (Civ) 165] , this Court repeatedly made it clear that a dissenting financial creditor would be receiving the payment of the amount as per his entitlement; and that entitlement could also be satisfied by allowing him to enforce the security interest, to the extent of the value receivable by him. It has never been laid down that if a dissenting financial creditor is having a security available with him, he would be entitled to enforce the entire of security interest or to receive the entire value of the security available with him. It is but obvious that his dealing with the security interest, if occasion so arise, would be conditioned by the extent of value receivable by him. 21. The extent of value receivable by the appellant is distinctly given out in the resolution plan i.e. a sum of INR 2.026 crores which is in the same proportion and percentage as provided to the other secured financial creditors with reference to their respective admitted claims. Repeated reference on behalf of the appellant to the value of security at about INR 12 crores is wholly inapt and is rather ill-conceived." 12. This Tribunal in Comp. App. (AT) (Ins.) No.547/2022 in the matter of 'Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a different view is expressed by the Hon'ble Supreme Court is the reference made in 'DBS Bank Ltd. Singapore' (Supra). Paragraph 54 of the Judgment of this Tribunal is as follows: "54. Judgment of the Hon'ble Supreme Court in 'Vistara ITCL (India) Ltd.' (Supra) does not come to help of the Appellant in the present case. It is relevant to notice that Hon'ble Supreme Court in 'DBS Bank Ltd. Singapore v. Ruchi Soya Industries Ltd.' 2024 SCC OnLine SC 3, made a reference to the earlier Judgment of the Hon'ble Supreme Court in 'India Resurgence ARC Pvt. Ltd.' (Supra), which reference is pending consideration before the Hon'ble Supreme Court. Law declared by Hon'ble Supreme Court in 'India Resurgence ARC Pvt. Ltd.' (Supra) can very well be relied until a different view is expressed by the Hon'ble Supreme Court in the reference pending before it." 14. The Adjudicating Authority in the Impugned Order has relied on the Judgment of this Tribunal in 'Oriental Bank of Commerce' (Supra) and after noticing the scheme in Section 53(1) has made following observations in Paragraph 7 of the Judgment: "7. From the emphasized text in 53(1)(b)(ii), we note that two word h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p;However, to balance the equities of both the parties, we direct that the payments in pursuance of communication of reworking of redistribution by the Liquidator the said amount be kept in separate interest bearing account so in event of the dismissal of the Appeals, the said amount should be handed over to the beneficiary along with the interest. List this Appeal on 22nd April, 2024 at 02:00 pm." 18. Coming to the undertaking which is relied by the Appellant, the undertaking submitted before the Adjudicating Authority was to the effect that excess money received as per distribution shall be returned, when Order is passed by Tribunal or Hon'ble Supreme Court the undertaking given by stakeholders was in terms of Regulation 43 of the Insolvency and Bankruptcy Board of India, Liquidation Process Regulations 2016, which undertaking has to be given while accepting any distribution of the sale proceeds in the Liquidation, which undertaking was for the benefit of the Secured Creditors, who is ultimately found to have larger share of sale proceeds in the Liquidation. Thus, undertaking given by the Parties in no manner can come in the way of Adjudicating Authority in issuing direction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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