Secured creditor's liability for liquidation costs follows when security is enforced outside the liquidation estate under insolvency regulations.

A secured financial creditor that chose to realise its security interest outside the liquidation estate remained bound by the liquidation framework and had to contribute its share of liquidation process costs under the Insolvency and Bankruptcy Code, 2016 and the Liquidation Process Regulations. Its contention that it was not a financial institution was rejected on the facts, including its investment in secured redeemable non-convertible debentures and its role as a financial creditor in the committee of creditors. The impugned order was treated as a reasoned order, and the absence of a certified copy with the appeal did not warrant relief once the defect had been addressed.

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Issues: Whether the appellant, being a secured financial creditor and investment manager of debenture holders, was liable to contribute its share of liquidation process costs despite electing to realise its security interest outside the liquidation estate, and whether the impugned order suffered from any legal infirmity warranting interference.

Analysis: The appellant's claim that it was not a financial institution was rejected on the facts found, including its investment in secured redeemable non-convertible debentures and its role as a financial creditor in the committee of creditors. The Tribunal held that, under the Insolvency and Bankruptcy Code, 2016 and the Liquidation Process Regulations, a secured creditor who chooses to realise security interest without relinquishment remains bound by the obligations attached to that choice, including contribution towards liquidation process costs in the manner contemplated by Regulation 2A and the related liquidation framework. The Tribunal also treated the impugned order as a reasoned order, and held that the absence of a certified copy with the appeal did not justify relief in the facts, especially after the appeal had been entertained and the defect had been addressed by direction.

Conclusion: The appellant was held liable to defray its share of liquidation process costs, and no ground for appellate interference was found.

Ratio Decidendi: A secured creditor that opts to realise its security interest outside the liquidation estate remains subject to the liquidation framework, including liability to contribute liquidation process costs where the regulations so provide, and its status as a financial institution is determined on the statutory definition and the nature of its business activities.

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