Appellant denied secured creditor status, liquidator's actions questioned, assets sold, goods to be released.

The Tribunal held that the appellant could not be considered a secured creditor and rejected the claim of lien/charge. The liquidator's approach in issuing the sale certificate before deciding the appellant's claim was deemed incorrect. Despite inconsistencies in the auction process, cancellation was not feasible as assets had been dismantled and sold. The liquidator was directed to allow the lifting of goods after notifying the appellant. Other contentions were dismissed, and the cases were disposed of with no costs awarded.

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Issues Involved:
1. Lien/charge of the appellant on goods sold and services rendered for the corporate debtor.
2. Action of the liquidator in selling goods/equipment through auction.
3. Determination of the appellant's status as a secured or unsecured operational creditor.
4. Compliance with the Tribunal's order dated 10.05.2019.
5. Validity and fairness of the auction process.
6. Possibility of cancellation of the auction and restitution.

Detailed Analysis:

1. Lien/Charge of the Appellant on Goods Sold and Services Rendered:
The appellant claimed a statutory charge/lien on the plant and machinery erected at the project site and on unused material. The liquidator provisionally admitted the monetary claim but rejected the claim of lien/charge, categorizing the appellant as an unsecured creditor. The appellant argued that the agreement between the appellant and the corporate debtor was an EPC contract, wherein the appellant retained custody of the material until it was consumed, erected, and successfully commissioned. The appellant also maintained insurance for all the supplied and erected material, indicating possession remained with the appellant.

2. Action of the Liquidator in Selling Goods/Equipment Through Auction:
The liquidator initiated the auction process despite the pending claim of the appellant regarding lien/charge. The appellant contended that the liquidator, as a custodian, held the assets in trust for the benefit of all creditors and should have disclosed these facts to the Tribunal. The liquidator argued that possession and ownership of goods/equipment had been transferred to the corporate debtor and formed part of the liquidation estate as per section 36(3)(a) of the IBC, 2016.

3. Determination of the Appellant's Status as a Secured or Unsecured Operational Creditor:
The Tribunal examined whether the appellant is a secured creditor or an unsecured operational creditor. The appellant claimed to be a secured operational creditor based on lien and charge under the Sale of Goods Act, 1930, and the Transfer of Property Act, 1882. The Tribunal analyzed the definitions of "secured creditor" and "security interest" under sections 3(30) and 3(31) of IBC, 2016, and concluded that the provisions of the Sale of Goods Act, 1930, and the Transfer of Property Act, 1882, were inconsistent with the specific provisions of IBC, 2016. Therefore, the appellant could not be considered a secured creditor.

4. Compliance with the Tribunal's Order Dated 10.05.2019:
The Tribunal had directed the liquidator to pass a reasoned order regarding the appellant's claim. The liquidator issued a sale certificate on 20.05.2019 and subsequently passed a reasoned order on 03.06.2019, rejecting the appellant's claim of lien/charge. The Tribunal found that the liquidator's approach was incorrect, as the claim of lien/charge should have been decided before issuing the sale certificate. The liquidator's assumption that only a reasoned order was required was not justified.

5. Validity and Fairness of the Auction Process:
The appellant challenged the valuation and auction process, alleging inconsistencies and undervaluation. The liquidator argued that the valuation was done as per norms by registered valuers and that the auction process was transparent. The Tribunal noted inconsistencies in the valuation reports and the classification of assets, indicating a case of improper valuation. The Tribunal also found that the eligibility criteria for bidders were inadequate, as only a 10% deposit of the bid amount was required without considering the bidders' financial credentials.

6. Possibility of Cancellation of the Auction and Restitution:
The Tribunal considered whether the auction could be canceled and restitution granted. It concluded that returning the plant and machinery was physically impossible, as the assets had been dismantled and sold as scrap. The Tribunal also noted that the appellant's conduct in executing the contract and waiving the LC provision without securing payment contributed to the situation. Therefore, the auction sale could not be canceled, and restitution was not feasible.

Conclusion:
The Tribunal held that the appellant could not be considered a secured creditor and rejected the claim of lien/charge. The liquidator's approach in issuing the sale certificate before deciding the appellant's claim was incorrect. The auction process had inconsistencies, but the auction sale could not be canceled, and restitution was not feasible. The liquidator was directed to allow the lifting of goods after giving due notice to the appellant, who would oversee the process. The appellant's other contentions were rejected, and both C.A.s were disposed of with no order as to costs.

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