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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 ..... n person JUDGMENT ASHOK BHUSHAN , J. These two Appeals have been filed against the same Order dated 20.12.2023 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Court-II, Kolkata) in IA (IB) No.1694/KB/2022 in CP (IB) No.1284/KB/2019. Both the Appeals having raised same issues of facts and law have been heard together and are being decided by this common Judgment. It shall be sufficient to refer to the facts and pleadings in Comp. App. (AT) (Ins.) No.321/2024 for deciding both the Appeals. 2. Brief facts of the case giving rise to these Appeals are: i. On an Application under Section 7 filed by the State Bank of India (SBI), the Corporate Debtor, ESS DEE Aluminium Limited was admitted to Corporate Insolvency Resolution Process (CIRP) by Order dated 14.02.2020 passed by the NCLT, Kolkata Bench. ii. No Resolution Plan having been approved in the CIRP, Adjudicating Authority vide Order dated 08.10.2021 directed for Liquidation of the Corporate Debtor. The R-2 was appointed as Liquidator. Liquidator published 'Form-B' inviting claim from stakeholders. iii. IDBI Bank submitted its claim in 'Form-D' for an amount of Rs.1,46,12,18,998/-. iv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shnan Venugopal for the SBI. Learned Counsel Mr. Amish Tandon and Learned Counsel Ms. Anushree Kulkarni has appeared for the IFCI Limited. Learned Sr. Counsel Mr. Abhijeet Sinha and Learned Counsel Ms. Prachi Johri has appeared for IDBI Limited. We have also heard Liquidator, who appeared in person. 4. Similar submissions having been raised in both the Appeals by the Appellant which are referred to as submissions of the Appellant. 5. Learned Counsel for the Appellant submits that the distribution made by Liquidator was not in accordance with law. It is submitted that Liquidator by making distribution has relied on the Judgment of the NCLT Ahmedabad in the matter of 'Technology Development Board of India' Vs. 'Anil Goel, Liquidator of M/s. Gujarat Oleo Chem Ltd. & Ors.' in IA No. 514 of 2019 in CP (IB) No. 4/NCLT/AHM/2017, which Judgment, NCLT has held that inter see priority amongst the Secured Creditors will remain valid and prevail in the distribution of assets in Liquidation. Though the above Order was set aside by NCLAT, however, Judgment of the NCLAT has been stayed by the Hon'ble Supreme Court vide its Order dated 29.06.2021, therefore, the Liquidator followed the Judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NCLAT 667, where it was held that until a different view is expressed by the Hon'ble Supreme Court in reference made in 'DBS Bank Ltd. Singapore' (Supra), 'Amit Metaliks Limited' (Supra) need to be followed. Respondent has also relied on the Judgment of this Tribunal in the matter of 'Paridhi Finvest Private Ltd.' Vs. 'Value Infracon Buyers Association & Anr.' in Comp. App. (AT) (Ins.) No.654/2022, where this Tribunal relying on 'Amit Metaliks Limited' (Supra), has held that there is no scope of distribution of assets based on the security interest, which Judgment was also upheld by the Hon'ble Supreme Court. It is submitted that Adjudicating Authority in the Impugned Order has correctly applied Section 53(1) and held that as per Section 53(1) distribution has to be as per admitted claim and cannot be on the basis of security interest of difference Secured Creditors. It is submitted that in view of the law laid down by the Hon'ble Supreme Court, reliance by the Appellant on the undertaking given before the Adjudicating Authority is not relevant. When the law is clear, any undertaking cannot justify an illegal distribution. It is submitted that the distribution needs to be made as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bution of the sale proceeds is totally based on the Interpretation of Section 53 of the Code read with the Interpretation laid down in the Insolvency Law Committee Report dated 26.03.2018. That further, the Respondent informed the stakeholders of the Corporate Debtor that the aforesaid issue at hand regarding priority of charge has been decided by the Hon'ble National Company Law Tribunal, Ahmedabad Bench, at Ahmedabad in the matter of "Technology Development Board vs. Ant"/ Goel Liquidator, Gujarat Oleo Chem Limited &Ors.; IA. No. 514 of2019 in C.P. (IB) No. 4 of 2017'' vide Order dated 27.02.2020 wherein the Hon'ble Tribunal held that Section 53 of the Code read with ILC Report *talks about the Priority and the Distribution should be done as per the Charge of respective Banks and their Security Interest. That the Respondent further informed * the stakeholders of the Corporate Debtor that .the said Order dated 27.02.2020 passed by the Hon'ble Tribunal was thereby challenged by the Technology Development Board before the Hon'ble National Company Law Appellate Tribunal, New Delhi wherein the Hon'ble Appellate Tribunal vide Judgment dated 05.04.2021 direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like the appellant cannot suggest a higher amount to be paid to it with reference to the value of the security interest. 18. In Jaypee Kensington [Jaypee Kensington Boulevard Apartments Welfare Assn. v. NBCC (India) Ltd., (2022) 1 SCC 401 : (2022) 2 SCC (Civ) 165] , the proposal in the resolution plan was to the effect that if the dissenting financial creditors would be entitled to some amount in the nature of liquidation value in terms of Sections 30 and 53 IBC read with Regulation 38 of the CIRP Regulations, they would be provided such liquidation value in the form of proportionate share in the equity of a special purpose vehicle proposed to be set up and with transfer of certain land parcels belonging to corporate debtor. Such method of meeting with the liability towards the dissenting financial creditors in the resolution plan was disapproved by the adjudicating authority; and this part of the order of the adjudicating authority was upheld by this Court with the finding that the proposal in the resolution plan was not in accord with the requirement of "payment" as envisaged by clause (b) of Section 30(2) of the Code [ In Jaypee Kensington, (2022) 1 SCC 401, after disapprovi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme of the Code, the expression "payment" is clearly descriptive of the action of discharge of obligation and at the same time, is also prescriptive of the mode of undertaking such an action. And, that action could only be of handing over the quantum of money, or allowing the recovery of such money by enforcement of security interest, as per the entitlement of the dissenting financial creditor. 164.2. We would hasten to observe that in case a dissenting financial creditor is a secured creditor and a valid security interest is created in his favour and is existing, the entitlement of such a dissenting financial creditor to receive the "amount payable" could also 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. Obviously, by enforcing such a security interest, a dissenting financial creditor would receive "payment" to the extent of his entitlement and that would satisfy the requirement of Section 30(2)(b) of the Code [Per Dinesh Maheshwari, J.- Though it is obvious, but is clarified to avoid any ambiguity, that the "security interest" referred herein for the purpose of mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down by the Hon'ble Supreme Court in 'Amit Metaliks Limited' (Supra) need to be followed. Paragraph 6 of the Judgment of this Tribunal in 'Oriental Bank of Commerce' (Supra) lays down following: "6. We thus, do not find any merit in the submissions of the Learned Counsel for the Appellant. The submission that earlier judgment of this Tribunal in "Technology Development Board" having been stayed by the Hon'ble Supreme Court on 29.06.2021, no reliance can be placed on the said judgment looses its importance in view of the subsequent judgment of the Hon'ble Supreme Court dated 13.05.2021 M/s. Amit Metaliks Ltd. (supra). The issue is no more res integra and no error is committed by the Adjudicating Authority in rejecting the Application filed by the Appellant. There is no merit in the Appeal. The Appeal is dismissed." 13. Insofar as submissions of the Counsel for the Appellant that correctness of the Judgment of Hon'ble Supreme Court in 'Amit Metaliks Limited' (Supra) has already been referred to the larger bench by Judgment of the Hon'ble Supreme Court in 'DBS Bank Ltd. Singapore' (Supra), this Tribunal in 'Beacon Trusteeship Ltd.', (Supra) had occasion to notice Judgment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inclined to agree with the contention of the applicant that the distribution made by the respondent is not as per the stipulations of section 53." 15. The Adjudicating Authority has rightly taken the view that the distribution amongst the Secured Creditors has to be on the basis of their admitted claim, which is the statutory scheme delineated by Section 53(1) and the law declared by the Hon'ble Supreme Court existing as on date in 'Amit Metaliks Limited' (Supra). 16. Learned Counsel for the Appellants have also relied on the ILC Report dated 26.03.2018. Learned Counsel for the Respondent is right in his submissions that ILC Report cannot be relied in view of the law declared by the Hon'ble Supreme Court in 'Amit Metaliks Limited' (Supra), which is binding on all concern under Article 141 of the Constitution of India. 17. 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.' (Supra). The Judgment of the Hon'ble Supreme Court on which reliance has been placed by the Appellant was Judgment dealing with Section 529 and Section 529-A of the Companies Act 1956. The said Judgment was pre-IBC Judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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