NCLAT Chennai rejects appeal over security interest in loan restructuring case finding second loan was fresh not restructured

The NCLAT Chennai dismissed an appeal regarding security interest over secured assets in a loan restructuring dispute. The corporate debtor had obtained a second loan, with appellants claiming it was for restructuring the first loan, entitling them to retain security interest under a tripartite agreement. The tribunal examined email correspondence from April-July 2019 and found the second loan was a fresh loan, not a restructuring of the first loan. Key evidence included an email dated 31.01.2019 showing appellants agreed to sanction a new loan instead of rescheduling the existing one. The first respondent retained first charge on assets as no NOC was issued for the second loan.

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Issues Involved:
1. Liquidation of Corporate Debtors.
2. Secured Assets and Security Interest.
3. Jurisdiction of Adjudicating Authority.
4. Inter se disputes between Creditors.
5. Classification of Appellant as Secured Creditor.

Summary:

Issue 1: Liquidation of Corporate Debtors
The appeals were filed by Reliance Commercial Finance Limited against the orders passed by the NCLT, Chennai, directing the liquidation of JBM Homes Private Limited and JBM Shelters Private Limited. The Adjudicating Authority directed the Liquidator to complete the project 'GRT Grand' and manage the proceeds and receivables in specified bank accounts. The Liquidator was also instructed to handle the title deeds and categorize homebuyers for payment and possession of flats.

Issue 2: Secured Assets and Security Interest
The Appellants contended that the directions affected their interest in the secured assets. They argued that the Corporate Debtor had availed loans secured by mortgages and that the Appellant had the first charge on the project land. The Adjudicating Authority restrained the Appellant from enforcing the mortgage and directed the handover of documents to the Liquidator.

Issue 3: Jurisdiction of Adjudicating Authority
The Appellants argued that the Adjudicating Authority did not have jurisdiction over inter se disputes between creditors, which should be decided by Civil Courts. The Adjudicating Authority held that it had jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, to decide such disputes.

Issue 4: Inter se disputes between Creditors
The main issue was whether the second loan was a fresh loan or a restructuring of the first loan. The Sanction Letter dated 31.01.2019 did not indicate that it was for restructuring the first loan. The Tripartite Agreement and NOC were related to the first loan, and no fresh NOC was issued for the second loan.

Issue 5: Classification of Appellant as Secured Creditor
The Appellant was classified as a secured creditor for the second loan. The Adjudicating Authority found that the first loan was closed, and the second loan was a fresh loan without a new NOC, thus the first respondent retained the first charge on the secured assets.

Conclusion:
The appeals were dismissed, and the applications to reopen and rehear the matter were also dismissed. The Adjudicating Authority's orders were upheld, confirming the Liquidator's directions and the classification of the secured assets.

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