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2024 Supreme(Online)(NCLAT) 587
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Barun Mitra (Member (Technical)) ,
UNITY SMALL FINANCE BANK LTD – Appellant
Versus
SRIPATHAM VENKATASUBRAMANIAN RAMKUMAR RESOLUTION PROFESSIONAL FOR PRIVILEGE INDUSTRIES LIMITED & ANR. – Respondent
601/ND/2024 COMPANY APPEAL(AT)(INS)
Advocates:
Mr. Alok Dhir, Ms. Varsha Banerjee, Mr. Karan Grover, Mr. Arun Kathpalia, Mr. Anand Sengar, Mr. Jash Shah, Mr. Varun Kalra, Mr. Aman Malik
Mr. Alok Dhir, Ms. Varsha Banerjee, Mr. Karan Grover, Mr. Arun Kathpalia, Mr. Anand Sengar, Mr. Jash Shah, Mr. Varun Kalra, Mr. Aman Malik
The court affirmed that a financial creditor's status as a secured creditor requires proof of registered security interest, which was not established, thus validating the approval of the Resolution Plan.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 30(2) - Companies Act, 2013 - Section 77 - Appeal by Financial Creditor against approval of Resolution Plan - Appellant claimed secured creditor status based on mortgage overdraft facility - Adjudicating Authority declared Appellant as unsecured creditor due to lack of registered charge - Approval of Resolution Plan upheld despite CIRP period expiration, as exclusion application was filed. (Paras 4, 5, 24, 27)
(B) Secured Creditor Status - Definition under IBC does not necessitate registration under Section 77 for recognition of security interest - Appellant failed to prove creation of security interest on Corporate Debtor's assets. (Paras 20, 23)
(C) Corporate Insolvency Resolution Process (CIRP) - Approval of Resolution Plan post-CIRP period permissible if exclusion application is filed and acknowledged by Adjudicating Authority. (Paras 26, 27)
Facts of the case:
The Appellant, a financial creditor, challenged the approval of a Resolution Plan by the Adjudicating Authority, claiming to be a secured creditor based on mortgage documents. The Adjudicating Authority found the Appellant's claims unsubstantiated, declaring them an unsecured creditor.
Findings of Court:
The Court upheld the Adjudicating Authority's decision, confirming the Appellant's status as an unsecured creditor and validating the approval of the Resolution Plan.
Issues: Whether the Appellant is a secured creditor and if the approval of the Resolution Plan post-CIRP period was lawful.
Ratio Decidendi: The Court ruled that the Appellant did not establish secured creditor status due to lack of registered charge and that the approval of the Resolution Plan was valid as the exclusion application was filed.
Result: Appeal dismissed.
JUDGEMENT
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ASHOK BHUSHAN, J. This Appeal by Financial Creditor of the Corporate Debtor – Privilege Industries Limited has been filed, challenging the order dated 23.02.2024 passed by National Company Law Tribunal, Mumbai Bench in IA no.4004 of 2023. IA No.4004 of 2023 filed by the RP for approval of Resolution Plan, has been allowed by the Adjudicating Authority. Aggrieved by which order, this Appeal has been filed.
2. Brief facts necessary to be noticed for deciding the Appeal are:
- (i) Punjab & Maharashtra Co-operative Bank Ltd. (erstwhile Lender/ “PMC Bank”) sanctioned mortgage overdraft facility to the Corporate Debtor vide Sanction letter dated 04.11.2011 and 17.01.2013. Various documents creating security interest in favour of the PMC Bank was executed including mortgage of immovable property situated at Village Thrikkakara, Tulka Kannyanur, district Ernakulam in the name of Blue Star Realtors Pvt. Ltd. and mortgage of land situated at Village Deewannmn and Chulne, Taluka Vasai, District Thane of Mr.
- Rakesh Kumar Wadhawan.
- (ii) The Corporate Debtor being unable to repay the overdraft amount, the account was declared as Non-Performing Asset (‘NPA’).
- (iii) The Ministry of Finance vidts its Gazette Notification amalgamated PMC Bank with the Appellant.
- (iv) The Adjudicating Authority vide order dated 15.02.2023 initiated Corporate Insolvency Resolution Process (“CIRP”)
- against the Corporate Debtor.
- (v) In pursuance to the publication made by the Resolution Professional (“RP”), Appellant field its claim on 03.03.2023. In the List of Creditors published by IRP, the Appellant’s claim only to the extent of Rs.2.53 crores was admitted as secured claim. On the request of the RP, the Appellant filed its revised claim in Form-C. The RP asked the Appellant to provide certain clarification by letter dated 22.05.2023. (vi) The RP sent list of updated claims to all Committee of Creditors (“CoC”) Members, wherein the Appellant’s claim is bifurcated into secured as well as unsecured. On 13.07.2023, final list of creditors was uploaded the RP, where claim of the Appellant for Rs.139,57,65,086/- was admitted as unsecured claim. The Appellant sent an email to the RP to accept the entire claim as secured creditor, which request was declined.
- (vii) Voting on the Resolution Plan commenced in pursuance of the Meeting dated 09.08.2023 and a decision was taken to file an Application for exclusion of 23 days from CIRP.
- (viii) The Appellant on 12.08.2023 filed an IA No.3592 of 2023 seeking quashing of the RP decision and seeking direction to declare the Appellant as secured creditor.
- (ix) The Resolution Plan of SNJ Breweries Private Limited was approved by the CoC and RP filed an IA No.4004 of 2023 on 30.08.2023 praying for approval of Resolution Plan. (x) IA no.3592 of 2023 was heard on 27.09.2023. The Appellant in October 2023 filed Form CHG-1 with the Registrar of Companies for creation of charges on the assets of the Corporate Debtor. The Appellant also filed a charge on the CERSAI portal. On 08.01.2024, IA No.3592 of 2023 filed by the Appellant was decided, directing the RP to reconsider the claim of the Appellant on the basis of documents available on record. In pursuance of the order dated 08.01.2024, the RP reconsidered the claim of the Appellant and on 30.01.2024, declared the Appellant as unsecured creditor of the Corporate Debtor.
- (xi) On 09.02.2024, the Appellant filed an IA No.698 of 2024 seeking direction to RP to reverify the claim of the Appellant as secured creditor.
- (xii) On 23.02.2024, the Adjudicating Authority approved the Resolution Plan of the Corporate Debtor.
- (xiii) On 05.03.2024, IA No.796 of 2024 filed by the Appellant was heard and reserved for orders.
- (xiv) The Appellant aggrieved by the order approving the Resolution Plan, in which he has been distributed the amount as an unsecured creditor of the Corporate Debtor has come up in this Appeal.
3. We have heard Shri Alok Dhir, learned Counsel
