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Issues: (i) whether the respondent No. 2 could be treated as a secured financial creditor on the basis of the consent decree and the deed of charge creating a second charge over the corporate debtor's assets; (ii) whether non-registration of the charge with the Registrar of Companies under Section 77 of the Companies Act, 2013 barred recognition of the security interest in liquidation.
Issue (i): whether the respondent No. 2 could be treated as a secured financial creditor on the basis of the consent decree and the deed of charge creating a second charge over the corporate debtor's assets.
Analysis: The consent order of the High Court expressly recorded that the respondent No. 2 would have a second charge, while the appellant's predecessor had the first charge. The deed of charge executed in pursuance of that order crystallised the second charge arrangement. Since the second charge was subordinate to the first charge and did not impair the appellant's priority, the treatment of respondent No. 2 as a secured financial creditor did not suffer from legal infirmity.
Conclusion: The recognition of respondent No. 2 as a secured financial creditor on the basis of the consent decree and deed of charge was and is upheld.
Issue (ii): whether non-registration of the charge with the Registrar of Companies under Section 77 of the Companies Act, 2013 barred recognition of the security interest in liquidation.
Analysis: Regulation 21 of the Liquidation Process Regulations permits proof of security interest through specified modes, but the provision is not exhaustive. The deed of charge was registered with the Sub-Registrar, and the Tribunal held that non-registration with the Registrar of Companies was not, by itself, sufficient to deny secured creditor status when a valid charge otherwise stood established. The appellant's reliance on the absence of RoC registration was therefore rejected.
Conclusion: Non-registration with the Registrar of Companies did not negate the respondent No. 2's secured creditor status.
Final Conclusion: The impugned order was sustained, and the appeal failed because the second charge in favour of respondent No. 2 was legally recognised and the objection based on RoC non-registration was held untenable.
Ratio Decidendi: A second charge created pursuant to a binding consent decree and supported by a duly executed charge instrument can be recognised in liquidation as a valid security interest, and non-registration of that charge with the Registrar of Companies does not, by itself, defeat secured creditor status where the charge is otherwise established.
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