The priority of distribution of assets on liquidation as prescribed under Section 53(1) of the Insolvency and Bankruptcy Code, 2016 must be followed, and the nature of the underlying claim determines the categorization of the amount payable under the final decree passed through arbitral or court proceedings.

JUDGMENT :

D. KRISHNAKUMAR, J.

The challenge in the instant intra Court appeal is against the order permitting the Liquidator of the respondent Company to withdraw a sum of Rs.15,55,290.10 which is lying to the credit of Application No.3703 of 2019.

2. Brief facts leading to filing of the instant appeal are as follows:

2.1. M/s.Navrang Roadlines Private Ltd., the respondent herein entered into Trip Loan Agreement dated 17.04.2018 with the appellant/Non Banking Finance Company for a permitted limit of Rs.1,75,00,000/- and availed Trip loan facility from the appellant. The respondent utilized the said loan facility during the term of Agreement and availed a sum of Rs.50,00,000/- on 14.8.2018, Rs.35,00,000/- on 21.8.2018 and Rs.50,00,000/- on 21.8.2018 and Rs.40,00,000/- on 1.9.2018. However, the respondent had committed default in repayment of the loan amount and the tenure for repayment had also expired and accordingly, the respondent is liable to pay a sum of Rs.1,96,06,986.08 as on 15.5.2019 to the appellant. Therefore, the appellant invoked Section 9 of the Arbitration and Conciliation Act, 1996 by filing Application No.3703 of 2019 to prohibit the Garnishees to make payment to an extent of Rs.1,96,06,986.08 or any amount to the respondent and also directing the Garnishees to deposit the sum of Rs.1,96,06,986.08 or any amount to the credit of A.No.3703 of 2019.

2.2. This Court, in its order dated 07.06.2019 prohibited the Garnishees from making payment of a sum of Rs.1,96,06,986.08 to the respondent herein and subsequently by another order dated 06.11.2019, has directed the Garnishees to deposit the said amount, if any lying with them, upto a limit of Rs.1,96,06,986.08, which is due and payable by the respondent herein. The appellant had also initiated arbitration proceedings and final award was also passed in favour of the appellant in Arbitration Case (CHOLA) No.TL9 of 2019 dated 23.12.2019. While so, the Garnishee No.5 Viz., M/s.Havells India Limited deposited a sum of Rs.5,55,949.10 and Garnishee No.4 Viz., M/s.Carrier Midea India Private Ltd. deposited a sum of Rs.9,99,341/- to the credit of Application No.3703 of 2019. The respondent filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal (Ahmedabad Bench) wherein a moratorium under Section 14(1) of Insolvency and Bankruptcy Code, 2016 was declared, inter alia, against the continuation of pending proceedings against the respondent Company herein by order dated 24.2.2020. Further, National Company Law Tribunal (Ahmedabad bench) ordered liquidation of the respondent Company by order dated 17.9.2020. Pursuant to the liquidation of the respondent company, the Liquidator of the respondent Company has filed Arb. Application No.84 of 2022 praying to withdraw a sum of Rs.15,55,290.10 which is lying to the credit of Application No.3703 of 2019 and the same was permitted by this Court in the order impugned in the instant appeal.

3. The contention of the learned counsel for the appellant is that pursuant to the filing of Application No. 3703 of 2019 before this Court by the appellant herein, the Garnishees 4 & 5 have deposited the amount to the credit of Application No.3703 of 2019, in compliance of the order dated 06.11.2019. The appellant had also initiated arbitration proceedings which culminated into an award dated 23.12.2019 in their favour in Arbitration Case (CHOLA) No. TL9 of 2019, therefore the learned Judge ought not to have allowed the Arb. Application 84 of 2002 on the ground that the appellant itself on its own volition had filed claim under Regulation 18 in Form D and having filed claim after filing application under Section 9 of the Arbitration and Conciliation Act, 1996 and after actual deposit of amount by two garnishees. Learned counsel for the appellant further contends that mere filing of claim before the liquidator and admitting of the same cannot tantamount to abandonment of right to secure the same amo