Liquidation claim classification and security status: limitation for claim rejection appeals does not bar supervisory review of creditor status.
A challenge to a liquidator's classification of a creditor as unsecured was held maintainable because it concerned liquidation classification and priority, not rejection of the claim itself; the limitation period for appeals against claim rejection could not be imported to bar that remedy. On charge registration, the absence of registration under company law did not defeat secured status where the creditor's right to recover from mortgaged or hypothecated assets had crystallised through a Debt Recovery Tribunal order treated as akin to a decree. The liquidation classification as unsecured was therefore incorrect, and the liquidator was directed to classify the claim as secured.
Issues: (i) Whether an application challenging classification of a creditor as unsecured was barred by limitation under the appeal provision governing decisions of the liquidator. (ii) Whether non-registration of charge under the Companies Act, 2013 prevented the creditor from being treated as secured despite an adjudicatory order of the Debt Recovery Tribunal.
Issue (i): Whether an application challenging classification of a creditor as unsecured was barred by limitation under the appeal provision governing decisions of the liquidator.
Analysis: The challenge was not to rejection of the claim itself but to its classification in liquidation. Such a grievance fell within the NCLT's residuary and supervisory jurisdiction over claims and questions of priority in liquidation. The appeal provision dealing with acceptance or rejection of claims could not be invoked to curtail an application under the broader jurisdictional provision. The statutory period applicable to an appeal could not be imported into a different remedy that was duly maintainable.
Conclusion: The objection on limitation was unsustainable and the application was maintainable.
Issue (ii): Whether non-registration of charge under the Companies Act, 2013 prevented the creditor from being treated as secured despite an adjudicatory order of the Debt Recovery Tribunal.
Analysis: The statutory bar against taking an unregistered charge into account applies to a charge created by a company in the ordinary contractual sense. Where a competent adjudicatory order has crystallised the creditor's right and provided for recovery from mortgaged or hypothecated assets on default, the matter is not confined to the original contract. The Tribunal treated the debt recovery order as akin to a decree, and held that the security interest arose from that adjudication. In that situation, absence of company charge registration did not defeat the secured character of the creditor's claim, particularly after relinquishment of security in liquidation.
Conclusion: The creditor remained entitled to be treated as secured, and the liquidation classification as unsecured was incorrect.
Final Conclusion: The order rejecting the application was set aside and the liquidator was directed to correct the claim classification as secured.
Ratio Decidendi: A challenge to creditor classification in liquidation is maintainable under the insolvency adjudicatory jurisdiction and is not confined by the limitation applicable to appeals against rejection of claims; further, where a security interest flows from an adjudicatory order akin to a decree, non-registration of charge under company law does not by itself prevent secured-creditor status in liquidation.
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