Tribunal includes mortgaged properties in Liquidation Estate, supports Liquidator's application for asset maximization

The Tribunal reaffirmed its decision to include mortgaged leasehold lands into the Liquidation Estate, emphasizing the importance of maximizing asset realization for stakeholders. Secured creditors supported the Liquidator's application, with objections from Personal Guarantors dismissed. The Tribunal asserted its jurisdiction to include mortgaged properties under the Insolvency and Bankruptcy Code, highlighting the duty to settle creditor claims comprehensively. The order directed the handover of properties to the Liquidator for proper inclusion in the estate, ensuring a fair and efficient liquidation process.

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Issues Involved:
1. Inclusion of mortgaged leasehold land into the Liquidation Estate.
2. Rights and objections of the Respondents regarding the mortgaged properties.
3. Jurisdiction and powers of the Liquidator and Tribunal under the Insolvency and Bankruptcy Code (IBC), 2016.
4. Objections from Personal Guarantors regarding their properties being included in the Liquidation Estate.

Issue-wise Detailed Analysis:

1. Inclusion of mortgaged leasehold land into the Liquidation Estate:
The Applicant, Liquidator of the Corporate Debtor, sought directions to include mortgaged leasehold lands (Express Lease-100.16 Ares & Implied Lease-78.45 Ares) into the Liquidation Estate. The Tribunal initially allowed this inclusion on 01.02.2021, directing the Respondents to hand over possession of these lands to the Liquidator. The Tribunal reaffirmed its decision on 21.01.2022, emphasizing the necessity of including the land and building together in the Liquidation Estate to realize better value for stakeholders.

2. Rights and objections of the Respondents regarding the mortgaged properties:
Respondent No. 1 (Union Bank of India) and Respondent No. 2 (Meenachil East Urban Co-operative Bank Limited) are secured creditors with mortgaged interests in the properties. Respondent No. 1 supported the Liquidator's application, while Respondent No. 2 initially objected but conditionally agreed to relinquish possession if their claims were prioritized under Section 53(b) of the IBC. The Tribunal noted that both Respondents were willing to cooperate, ensuring that their claims would be addressed as per the IBC regulations.

3. Jurisdiction and powers of the Liquidator and Tribunal under the Insolvency and Bankruptcy Code (IBC), 2016:
The Tribunal highlighted the Liquidator's duty to include all relevant assets in the Liquidation Estate to settle claims of creditors. The Tribunal has the authority to direct the inclusion of mortgaged properties into the Liquidation Estate under Section 36 of the IBC. It was noted that the properties mortgaged by the Promoters/Directors (Personal Guarantors) to secure loans for the Corporate Debtor could be included in the Liquidation Estate, given their integral role in the Corporate Debtor's operations.

4. Objections from Personal Guarantors regarding their properties being included in the Liquidation Estate:
The Personal Guarantors objected to their properties being included in the Liquidation Estate, arguing that these were personal assets and not part of the Corporate Debtor's estate. They contended that the lease agreements were void and that the properties could not be used to discharge the Corporate Debtor's liabilities. However, the Tribunal rejected these arguments, stating that the Personal Guarantors had leased their properties to the Corporate Debtor for business purposes and had mortgaged them to secure loans. Thus, these properties were rightly included in the Liquidation Estate to maximize asset realization for creditors.

Conclusion:
The Tribunal reaffirmed its order from 01.02.2021, directing the Respondents to hand over the mortgaged leasehold lands to the Liquidator for inclusion in the Liquidation Estate. The Liquidator was instructed to follow the necessary procedures as per the IBC regulations. The objections from the Personal Guarantors were dismissed, and the Tribunal emphasized the need to include the properties in the Liquidation Estate to ensure a comprehensive and fair liquidation process. The intervention petitions were also disposed of, as the primary issue had been resolved.

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