Bank denied secured creditor status in corporate insolvency; loans to home buyers, not debtor.

The Tribunal dismissed the bank's application to be declared a secured financial creditor of the corporate debtor as the loans were extended to home buyers, not directly to the debtor. The bank's request for recognition as a secured creditor, voting rights in the CoC, and proportional treatment in resolution or liquidation was deemed misconceived. A subsequent application was scheduled for further consideration on 28.02.2020, with the outcome pending determination by the Tribunal.

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Issues: Application by a bank to be declared a secured financial creditor of a corporate debtor and participate in the Committee of Creditors (CoC).

Analysis:
In the first application (CA-639(PB)/2019), Axis Bank Ltd. sought to be recognized as a secured financial creditor of the corporate debtor. The bank requested the Resolution Professional (RP) to treat it as such, grant voting rights in the CoC, and ensure proportional treatment in case of a resolution plan or liquidation. The bank had provided loans to home buyers of the corporate debtor and argued that it should be considered a creditor. However, the Tribunal found no merit in the application as the loans were extended to the home buyers, not directly to the corporate debtor. Consequently, the application was dismissed as misconceived.

In the second application (CA-2231(PB)/2020), the matter was listed for a future date. This indicates that the Tribunal did not reach a decision on this application during the current hearing and scheduled it for further consideration on 28.02.2020. The outcome of this application remains pending for a future hearing and determination by the Tribunal.

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