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TMI Blog2025 (2) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.10.2015 to show the Appellant had granted a loan of Rs.11 crores to the Corporate Debtor on 29.10.2015, initially payable after three years, but the date was later extended from time to time. Two options were given qua interest payable on such loan (a) the interest @ 18% or (b) four flats bearing No.1501, 1502, 1504 and 1601 could be transferred in favour of the appellant towards interest in its full and final payment. It was one of the clauses of the agreement that in case the Corporate Debtor fails to pay the principal amount of Rs.11 crore then also four apartments bearing No.1901, 1902, 1904 and 2001 would be transferred in favour of the appellant. Admittedly the Corporate Debtor could not pay the principal amount of Rs.11 crore and the cheques given were dishonoured due to insufficient funds. 3. On 29.06.2020 the Corporate Debtor was admitted to CIRP. The appellant filed two claims, one in Form C for Rs.11 crore as a secured financial creditor and another in Form CA as the holder of four flats towards the interest payable. 4. The RP had admitted the claim of the appellant as home buyer qua four flats allotted in lieu of interest and the appellant has no grievance qua the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms and conditions more particularly set out therein. It is clarified that the Firm shall not be liable to pay to the Developer, any amount under any name whatsoever, in respect of the Allotted apartments save and except the amounts shown specifically payable in the Agreements for Sale and the Interest amount shall be deemed to be an adequate and full purchase consideration in respect of the transfer/conveyance of the Allotted Apartments in favour of the Firm. 4.1 In order to secure the due and punctual repayment of the Loan (in proportion to the amount lent by the Firm in terms of Clause Error ! Reference source not found) , the developer has allotted to the Firm, as and by way of security, four apartments being apartment No.1901, 1902, 1904 and 2001 admeasuring about 4508 sq ft carpet area and 9304 sq ft saleable area in aggregate, on the 19th and 20th floor of the building to be constructed on the Property by the Developer together with four car parking spaces in the (basement/podum/automatic) in the Building (the "Car Parking") (the aforesaid apartment No. No.1901, No.1902, No.1904 and No.2001 and the Car Parking are hereinafter collectively referred to as the "Secured Apar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or any of its undertakings or both, as the case may be, as security and includes a mortgage; "3(30) "secured creditor" means a creditor in favour of whom security interest is created; 3(31) "security interest" means right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person: Provided that security interest shall not include a performance guarantee; 3(33) "transaction" includes a agreement or arrangement in writing for the transfer of assets, or funds, goods or services, from or to the corporate debtor; 6. Thus it was argued per above facts and law, the appellant needs to be treated as a secured creditor and its name ought to have been included in the list of secured creditors. 7. Thus the issue is whether the appellant is a secured creditor?. The appellant did file an application before the Ld. NCLT to claim its status as a secured creditor for the principal amount of loan granted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 'recognise a charge' which is "registered as per section 77 of Companies Act". Further, the definition of "Liquidation Estate" under 36(3) (g) includes 'secured assets' only and only if the 'secured creditor' has relinquished its interest. Distinctively, Section 18 (1) (f) and 25 (2) (a) mandates the Resolution Professional to take control of 'all assets' of the Corporate Debtor irrespective of any encumbrance. Further, no secured creditor has right to 'realise' its 'security interest' during 'CIRP'. 14. For the same reason while Regulation 21 of Insolvency and Bankruptcy Board of India ('Liquidation' Process) Regulations, 2016 prescribes evidences for proving "security interest", consciously no such corresponding provision has been included in Insolvency and Bankruptcy Board of India (Corporate Insolvency Resolution Process) Regulations, 2016. Only under liquidation process a question of charge under section 77 comes into play and the same has nothing to do with "CIRP". 15. Legislature never intended that "registration of charge" under section 77 is sine qua non to qualify as "secured creditor". The Resolution Professional has to follow the provisions of IBC. Section 3 (4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (c) shall prejudice any contract or obligation for repayment of money secured by charge. The obligation is only on the Liquidator. In fact, Section 3 (4) of IBC defines charge and Section 3 (31) of IBC states secured interest means and includes "Charge". Thus, combine reading of all the section clarifies only a Liquidator will not consider a claim without registration, however, the RP is bound to consider a "Charge" and a Creditor having charge is a Secured Creditor. 19. In the case of Pashchimanchal Vidyut (Civil Appeal No.7976 of 2019) the Hon'ble Supreme Court has clarified Section 3(31) of IBC is wider than Section 77 and 78 of Companies Act and defines security interest, however, the issue of non registration of charge was kept open. 20. In fact, in Canara Bank (Supra) it was held Section 77 of the Companies Act, 2013 is not a sine qua non for a Creditor being a Secured Creditor and held it is not a sufficient ground to reject such claim of Creditor. The said Order was passed after considering Volkswagen case as well. 21. Thus non registration of charge per Section 77 of Companies Act, 2013 will not make a difference in the claim of the Applicant being treated as a Secu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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