Company Appeal (AT) (Insolvency) No. 1510 of 2019
Re: Mr Srikanth Dwarakanath vs Bharat Heavy Electricals Limited
The Adjudicating Authority has admitted the Company Petition mentioned above under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short ‘I&B Code’) for initiation of CIRP. When no resolution was approved, then Corporate Debtor was ordered to be liquidated, and Appellant was appointed as Liquidator. After that during liquidation, the Respondent succeeded in Arbitration proceeding against the Corporate Debtor and exparte award was passed in favour of the Respondent. Based on the Arbitral Award the Respondent had been granted lien over the equipment and goods lying at the site of the Corporate Debtor (Secured Assets) and charged over its entirely or partially erected facilities at the site of the Corporate Debtor was created. The Secured Assets, on which the Respondent had been granted lien or a charge is the one which is already hypothecated to all other Secured Creditors.
The Liquidator could not commence a liquidation process on account of the some of the secured lenders not intimating in time about their decision concerning relinquishment of their securities. The Respondent is one of the last Secured Creditor who remain to intimate about the decision on relinquishment.
After that the Respondent informed about unwillingness to relinquish their Security Interest in the Asset of the Corporate Debtor. Further, all the Secured Creditors have relinquished their Security Interest into the liquidation estate of the Corporate Debtor except the Respondent. Consequently, the Secured Creditors with a value of 73.76% of the secured assets have relinquished the Security Interest into the liquidation estate. However, the Liquidator was unable to proceed with any further sale of assets without the receipts of relinquishment of Security Interest from all the Secured Creditors to whom the said assets are charged. In the circumstances, as stated above, the Liquidator filed a Misc. Application No.1052 of 2019 seeking permission from the Adjudicating Authority to sell the assets of the Corporate Debtor. The said Application was rejected by the Adjudicating Authority by the Impugned Order, feeling aggrieved by this Order; this Appeal has been preferred.
Learned Counsel for the Respondent has placed reliance on the decision of the Hon’ble Tribunal passed in case of JM Financial Asset Reconstruction Company Ltd. Vs. Finquest Financial Solutions Pvt. Ltd. and Others 2019 SCC OnLine NCLAT 918
It is pertinent to mention that the facts of the present case are different from that in the case of JM Financial Asset Reconstruction Company Ltd. (supra) because in this case, the Liquidator has already concluded that the respondents charge on the Secured Assets is not exclusive. Therefore, the Respondent can realise a Security Interest as per provision Section 13(9) of the SARFAESI Act. Since the Respondent does not have a requisite 60% value in Secured Interest, therefore, the Respondent does not have right to realize its security interest, because it would be detrimental to the Liquidation process and the interest of the remaining ten Secured Creditors.
NCLAT allow the Appeal and set aside the impugned Order dated 20th November 2019 and direct the Appellant/Liquidator to complete the Liquidation Process.