Applicant's Claim Rejected as Unsecured & Time-Barred

The Tribunal concluded that the Applicant's claim was rightly classified as 'Unsecured' due to the failure to register the charge as required by law. The application was also deemed time-barred, as it was filed well beyond the 14-day period stipulated under Section 42 of the IB Code. Consequently, the Tribunal rejected the application, emphasizing the importance of adhering to specific rules and regulations to maintain the sanctity of the liquidation process.

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Issues Involved:
1. Classification of the Applicant's claim as 'Unsecured' instead of 'Secured.'
2. Timeliness of the application filed by the Applicant.
3. Compliance with Section 77(3) of the Companies Act, 2013 and Regulation 21 of the Liquidation Regulations.

Detailed Analysis:

1. Classification of the Applicant's Claim as 'Unsecured' Instead of 'Secured':
The Applicant filed an application under Section 60(5) of the IB Code to rectify the classification of its claim as 'Unsecured' and categorize it as 'Secured.' The Applicant argued that the Corporate Debtor had provided securities, including a Deed of Hypothecation, Indenture of Collateral Security, and a Deed of Guarantee, to secure a Medium Terms Loan of Rs. 90 Crores. Additionally, an Escrow Account was established to secure the Shipbuilding Subsidy Scheme receivables.

The Applicant contended that the Corporate Debtor's security interest was acknowledged during the CIRP as 'Secured' and should be maintained during the liquidation process. The Applicant further argued that the Liquidator's classification of the claim as 'Unsecured' was arbitrary and lacked justification.

2. Timeliness of the Application Filed by the Applicant:
The Respondent/Liquidator argued that the application was time-barred, as it was filed 551 days after the Liquidator's decision on July 5, 2019, classifying the Applicant as an unsecured financial creditor. According to Section 42 of the IB Code, a creditor must appeal the Liquidator's decision within 14 days of receipt. The Respondent emphasized that the Applicant failed to object to the classification within the stipulated period and raised concerns only after an undue delay.

The Tribunal noted that the application was indeed filed after a significant delay of 551 days, and the Applicant did not provide any justification or seek condonation of the delay.

3. Compliance with Section 77(3) of the Companies Act, 2013 and Regulation 21 of the Liquidation Regulations:
The Liquidator argued that the Applicant failed to furnish documents such as the ROC charge registration certificate or CERSAI search reports to substantiate its security interest. Section 77(3) of the Companies Act, 2013, mandates that no charge created by a company shall be taken into account by the Liquidator unless it is duly registered. The Liquidator emphasized that the Applicant did not comply with this requirement, and therefore, the claim could not be recognized as 'Secured.'

The Tribunal upheld the Liquidator's stance, citing the express provisions of Section 77(3) of the Companies Act, 2013, and Regulation 21 of the Liquidation Regulations. The Tribunal referenced various case laws, including the Hon'ble Supreme Court's judgment in Kerala State Financial Enterprises Ltd. Vs. Official Liquidator, which held that unregistered charges are void against the Liquidator or creditors.

Conclusion:
The Tribunal concluded that the Applicant's claim was rightly classified as 'Unsecured' due to the failure to register the charge as required by law. The application was also deemed time-barred, as it was filed well beyond the 14-day period stipulated under Section 42 of the IB Code. Consequently, the Tribunal rejected the application, emphasizing the importance of adhering to specific rules and regulations to maintain the sanctity of the liquidation process.

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