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TMI Blog2024 (4) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... , its rights are affected. 3. Those properties were given as collateral by JM Finance Products Ltd on loan advanced to DSK Motors Private Limited whose account was declared NPA. The loan was assigned to the appellant on the proceeding under SARFAESI Act of 2002. 4. The appellant became a secured creditor in view of the assignment thus affected by the attachment, hence preferred this appeal. 5. The learned counsel for the appellant has made a reference to the application filed under section 32 A of the Indian Bankruptcy Code, 2016 ( in short the "Code of 2016" ) to seek release of the properties. 6. The application aforesaid was filed being a secured creditor of the liquidated properties. The prayer was accordingly made to allow the application and also the appeal in the light of the application under section 32 A of the Code of 2016. 7. The appeal as well as application have been contested by the counsel for the respondents. It was submitted that secured creditor does not get locus to seek release of the properties by invoking section 32 A of the Code of 2016. 8. It is further submitted that even if the properties in question were mortgaged to the appellant, though it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e management or control of the corporate debtor to a person who was not- (a) a promoter or in the management or control of the corporate debtor or a related party of such a person; or (b) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court: Provided that if a prosecution had been instituted during the corporate insolvency resolution process against such corporate debtor, it shall stand discharged from the date of approval of the resolution plan subject to requirements of this sub-section having fulfilled: Provided further that every person who was a "designated partner" as defined in clause (j) of section 2 of the Limited Liability Partnership Act, 2008 or an "officer who is in default", as defined in clause (60) of section 2 of the Companies Act, 2013, or was in any manner in-charge of, or responsible to the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he corporate insolvency resolution process.] 14. The learned counsel for the appellant has made emphasis on sub section 2 of section 32 A and was perused by us. The provision aforesaid would apply when the property is covered under the resolution plan approved by the Adjudicating Authority under section 31 and which results in change in control of the corporate debtor or sale of liquidation assets under the provisions of Chapter III of part II of the Code of 2016 to a person who was not a promoter or in management or control of the corporate debtor or a related party etc. The learned counsel for the appellant fairly admitted that no sale of liquidated asset has taken place and even no resolution plan has been approved under section 31 of the Code of 2016. 15. In those circumstances, how the application under section 32A would be maintainable, could not be clarified by the counsel for the appellant. They have made claim as a secured creditor of the property on assignment of loan to them by the institution who financed the loan to the defaulter whose account was declared to be NPA. 16. At this stage, it would be relevant to refer to the Judgement of the Apex court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (8) Where a property stands confiscated to the Central Government under subsection (5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore such confiscated property or part thereof a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering. Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering. Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as may be prescribed. 20. The appellant would press the claim being assignee of the debts pursuant to the proceedings under SARFAESI Act, 2002. At this stage, we need to reiterate the effect of the attachment of the property under section 5 of the Act of 2002. 21. We have already recorded finding that the attachment of the property does not effect or transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult in anarchy and explained further by following illustration:- If property is proceeds of crime or attached for the value thereof but was under mortgage with the financial institution and thereby to be released addressing the interests of the financial institution leaving and even affecting the claim of the victim who lodged the criminal case against the accused. In case of release of the property from attachment at the instance of financial institution, it can be auctioned where it may achieve the amount greater than what is due to the financial institution. In that case, the financial institution can retain the amount to the extent it is due to them and remaining has to be given to the person who mortgaged the property which would be none but can be the accused and thereby the accused would be benefited on release of the property in a given case by getting the amount over and above secured, out of the auction to settle the dues of financial institutions. In that case again victim would suffer whereas if the mechanism given under section 8 (8) is applied, safeguard would exist to settle the amount in favour of the rightful claimant". 27. We don't wish to comment as to what hap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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