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TMI Blog2025 (3) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... mated amount from the Liquidator and no steps were taken under Regulation 37 by the Appellant, it is not open for the Appellant to contend that Regulation 21A, sub-regulation (2) shall not apply, since he was not communicated the estimated amount by the Liquidator. The second proviso clearly protects the interest of the secured creditor to the extent that if there is any difference between the amount payable under sub-regulation (2) and the amount paid under the first proviso, the Liquidator or the creditor, as the case may be, is to do the needful. Thus, even if, a secured creditor, who does not write to the Liquidator for any estimation or Liquidator does not send any estimate and any amount is paid by the secured creditor, he is well protected by second proviso and thus, the secured creditor cannot fall back on the argument that Liquidator having never communicated the estimated amount, sub- regulation (2) of Regulation 21A is not attracted. The view taken by the Liquidator as well as by the Adjudicating Authority that by virtue of sub-Regulation 2 of Regulation 21A, Haldia Unit is also part of the Liquidation Estate of the CD, is correct and cannot be faulted. It appears tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in Company Appeal (AT) (Ins.) No.98 of 2021. (ii) In pursuance of publication issued by Liquidator inviting claims, the Appellant filed its claim in Form-B dated 14.04.2021 for an amount of Rs.793,45,16,428/-. The Appellant also claimed security interest in the immovable property of 12.84 acres in District Purba, Medinipur, Mauza Debhog J.L. No.149 and all plant and machinery attached to it or permanently fastened to anything attached. In Form-D, the Appellant did not relinquish its security interest for "Haldia Unit", whereas security interest in respect of all other securities were relinquished. (iii) Some time was taken in the liquidation proceeding in considering a scheme submitted under Section 230 of the Companies Act, 2013. After scheme having been not approved, the NCLT vide its order dated 06.01.2023 directed the Liquidator to proceed with the liquidation. (iv) On 10.01.2023, the Appellant sent an email to the Liquidator reiterating its decision of non-relinquishment of its security interest of the Haldia Unit assets. On 20.01.2023, the Appellant sent a letter to the Liquidator claiming to handing over the possession of 8.02 acres, which in the earlier report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate. It was further noticed that inspite of handing over symbolic possession on 21.01.2023 of 12.84 acres of land, the Appellant could not take steps for sale of the secured assets. The Adjudicating Authority by the impugned order dated 16.02.2024 rejected the MA. Aggrieved by which order this Appeal has been filed. 3. IA No.1166 of 2025 has been filed by Halder Venture Limited seeking direction to the Liquidator to accept the balance consideration of Rs.51,39,54,500/- along with interest and further direction to the Liquidator to handover vacant and peaceful possession of Haldia manufacturing unit. 4. We have heard Shri Amit Singh Chadha, learned Senior Counsel appearing for the Appellant; Shri Vivek Sibal, learned Senior Counsel appearing for the Liquidator; Shri Krishnendu Datta, learned Senior Counsel appearing for Applicant in IA No.1166 of 2025; and Siddharth Sangal, learned Counsel for Respondent Nos.2 to 9 other secured creditors. 5. Learned Counsel for the Appellant submits that the Appellant while submitting its Form-D on 14.04.2021 has already indicated that it is not relinquishing its security interest in Haldia property assets. The Liquidator has also recognized th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.40 crores. After three failed auctions of Haldia Unit under the Sale Notice dated 30.01.2024, Haldia property was sold for Rs.57.10 crores in favour of Halder Venture, whose bid has also been approved. The LoI was also issued on 02.02.2024. It is submitted that as per Regulation 37, it was obligation of the Appellant to communicate the Liquidator the amount for which the secured creditor is proceeding to sale the assets. No steps were taken by the Appellant under Regulation 37, nor it made necessary payment towards the amount payable under clauses (a) of sub-section (1) of Section 53, which was required to be done within 90 days from liquidation commencement date, which having not been done, the Haldia Unit became the part of the Liquidation Estate. According to own case of the Appellant, the value of the assets of Haldia Unit was Rs.50 crores and Unit having been sold at Rs.57.10 crores, there is no error in auction conducted by the Liquidator. 7. Learned Counsel appearing for other Financial Creditors, i.e. Respondent Nos.2 to 9 has supported the decision of the Adjudicating Authority and submits that on account of Appellant having failed to comply with sub-regulation (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tehsil Ladpura, Kota, Rajasthan admeasuring 4.10 hectares v. Freehold factory land and building of the plant at Village KharaKheri, Ratlam in Madhya Pradesh" 11. Thus, the Haldia Unit measuring 12.84 acres together with plant and machinery was the assets for which security interest was not relinquished. With respect to other assets, security interest were relinquished. 12. It is an admitted fact that on 20.01.2023, the Appellant has written a letter to the Liquidator pleading that possession of assets and land parcel of 12.87 acres be handed over. In letter dated 20.01.2023, the Appellant also referred to 8.02 acres, which was not captured by Phoenix ARC Pvt. Ltd. in its earlier reporting. It is useful to notice email dated 20.01.2023, sent by the Appellant to the Liquidator, which is as follows: "Dear Sir, The captioned Corporate Debtor has been ordered to be liquidated vide NCLAT order 16.03.2021. Pursuant to the said order, Phoenix has submitted separate claims/ Form D before you for its outstanding amount under Phoenix Trust FY 15-15 and Phoenix Trust FY 14-3. The security interest mentioned in the Form-D for Phoenix Trust FY 15-15 consist of exclusive charge o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est of only 12.87Acres of land parcel at Haldia unit of the Corporate Debtor along with plant and machinery, building. stocks and all other assets on the 12.87acres are mortgaged to Phoenix Arc. As per your request, the undersigned hereby hand over symbolic possession, subject to payment of outstanding security costs for said assets built on land parcel of 12.87 Acres to Phoenix Arc, under section 52 of IB Code, as per your claim document submitted before the undersigned. You are also requested to file an additional Form D (including affidavit) for the balance land parcel as indicated in your trail mail along with all records available with you to establish the security for balance 8Acres (approx) land parcel of the Haldia Asset of the Corporate Debtor to enable the undersigned do the needful. Kind regards, Kuldeep Verma Liquidator of KS Oils Limited (in liquidation)" 14. The Appellant, thus, received the Haldia Unit, with regard to which it did not relinquish its security interest and thereafter, it was required to take steps for sale of its secured interest as per the Liquidation Regulations. 15. We may now notice relevant Regulations of IBBI (Liquidation Process) Regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether a person is willing to buy the secured asset before the expiry of thirty days from the date of intimation, at a price higher than the price intimated under sub- regulation. 17. Now we notice Regulation 21A, which fell for consideration in the present proceeding. Regulation 21A provides as follows: "21A. Presumption of security interest. (1) A secured creditor shall inform the liquidator of its decision to relinquish its security interest to the liquidation estate or realise its security interest, as the case may be, in Form C or Form D of Schedule II: Provided that, where a secured creditor does not intimate its decision within thirty days from the liquidation commencement date, the assets covered under the security interest shall be presumed to be part of the liquidation estate. (2) Where a secured creditor proceeds to realise its security interest, it shall pay - (a) as much towards the amount payable under clause (a) and sub-clause (i) of clause (b) of sub-section (1) of section 53, as it would have shared in case it had relinquished the security interest, to the liquidator within ninety days from the liquidation commencement date; and (b) the excess of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression "Provided that where the amount payable under this sub-regulation is not certain by the date the amount is payable, the secured creditor shall pay the amount, as estimated by the liquidator". The Appellant was part of the SCC and has throughout participated in the Meetings of the SCC. The Appellant himself has brought on the record the Minutes of the proceeding of SCC held on 20.11.2023, which indicate that the Appellant was also part of the said Meeting. With regard to Haldia Assets, the SCC in its Minutes of the Meeting, noticed following: "For Haldia Assets: It was suggested by all present members of the SCC (other than Phoenix Arc) that the reserve price should be reduced by 5% and further attempt should be made to sale movable (including all plant & machineries) and immovable assets (land and buildings) separately by the liquidator. Liquidator took note of the suggestions/advice from the SCC. Liquidator stated that he has already taken a decision that Haldia plant forms part of the liquidation estate and have published 3 sale notice for e-auction in the past. He is of the view that it will be in best interest of the creditors that sale notice is published by r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1347 4. IFSC: SBIN0001971" 20. The Phoenix ARC entire percentage of admitted claim is Rs.21.1 + Rs.6.1 and rest of the claims admitted belong to other secured creditors, i.e, Respondent Nos.2 to 9. 21. The present is a case where no steps were taken by the Appellant under Regulation 37 and at no point of time, even a communication was sent by the Appellant to the Liquidator for informing about the estimated amount required to be paid under Regulation 21A (2) (a). As noted above, the Applicant as a secured creditor was to make payment under sub- regulation (2) of Regulation 21A, within 90 days from the liquidation commencement date. When obligation is linked with the time period, the Appellant cannot fall back on the argument that the Liquidator has not communicated the estimated amount to the secured creditor. When secured creditor at no point of time even asked for estimated amount from the Liquidator and no steps were taken under Regulation 37 by the Appellant, it is not open for the Appellant to contend that Regulation 21A, sub-regulation (2) shall not apply, since he was not communicated the estimated amount by the Liquidator. In this context, we may further notice second p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the economy." 24. In paragraph-1 of the Appeal, the Appellant has stated following: "1. xxx xxx xxx ......The Respondent/Liquidator admitted the claim of Appellant/ Phoenix ARC 15-15 for a sum of Rs.793,45,16,428/- (Rupees Seven Hundred Ninety Three Crores Forty Five Lacs Sixteen Thousand Four Hundred & Twenty Eight Only), while the value of the secured asset was assesed by the Respondent/Liquidator itself below Rs. 60 Crores." 25. Thus, according to own case of the Appellant, the value of the secured assets of the Haldia property was less than Rs.60 crores and the Liquidator was able to sell the said assets at Rs.57.10 crores. Learned Counsel for the Appellant has contended that the Appellant had received offer from two interested parties for the Haldia assets of Rs.35 crores and Rs.40 crores. It is further relevant to notice that after the Liquidator sent an email dated 14.07.2023 at 18:24 informing the Appellant that under Regulation 21A, Haldia Unit is now part of the Liquidation Estate. The Appellant wrote on 14.07.2023 at 08:15 PM, stating following : From: Mahesh Malunjkar Sent: Friday, July 14, 2023 8:15 PM To: Kuldeep Verma Cc: Ajit Kewin ; Ramesh Verm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forward. However, to our surprise and shock we are in receipt of the appended email, the contents of which are contrary to the discussions and understanding the undersigned has been having with you in the matter. Kindly note that Phoenix strongly disputes and objects to the action and contents proposed and/or contemplated in the email appended hereto and calls upon you to desist from taking any action as contemplated in the notice failing which, Phoenix will be constrained to take such legal action as may be advised at your costs and expenses, which please note." 26. Thus, according to own case of the Appellant he had received quotation for the purchase of property as per the Regulation 37 with respect of Haldia Unit. It is to be noted that prior to the above email, at no point of time, the Appellant has intimated about any offer received by it to the Liquidator. In any view of the matter, due to non-fulfillment of obligation under Regulation 21A (2), the Haldia Unit has become part of the Liquidation Estate and the Liquidator has rightly proceeded to issue Sale Notice with the concurrence of SCC. We, thus, do not find any error in the order of the Adjudicating Authority, reject ..... 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