2022 (8) TMI 325

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....n filed under section 61(1) of the Insolvency & Bankruptcy Code, 2016 (hereinafter called "IBC") by the Appellant, who is aggrieved by the order dated 02.12.2019 (hereinafter called "Impugned Order") passed in MA 520/2019 in C.P. (IB) 1339 (MB)/2017 by the National Company Law Tribunal, Mumbai Bench (Adjudicating Authority). 2. The Adjudicating Authority vide Impugned Order has held that the question of the right of second charge holder to claim priority over the first charge holder has been answered in the court and, inter-alia, directed the liquidator 'to distribute the funds strictly adhering to the ratios as arrived by him for the first charge holder as per the Code. If at all any grievance on the part of the second charge holder, th....

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....ation in distribution of funds has been made clear to him as the Impugned Order is not clear on these points. 6. The Learned Counsel for Respondent (Liquidator) has argued that the Appellant had filed his claim with delay. He has further argued that the minutes of the meeting of the joint lenders held on July 7, 2017 (attached at Annexure A/8 - pp. 172-173 of the appeal paperbook) only records a point of discussion in relation to distribution of sale proceeds arising out of action under SARFAESI Act, and moreover, the principle of distribution of funds to first and second charge holders in 80:20 ratio, which is claimed by the Appellant to have been decided in the meeting of lenders, was discussed between the Term Lenders and Working Capi....

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....(attached at pp. 71-74 of the appeal paperbook) wherein the detailed proposed distribution structure, which was in accordance with provisions of section 53 of the IBC) was communicated to the lenders, and therein the claim of ASREC (India) Limited/Appellant was fixed at 18.8%. amongst second charge holders. He has also claimed that the Appellant was communicated about his share through email dated December 9, 2018. 7. We perused the prayer made by the Appellant in MA 520/2019 (attached at pp. 29-38 of the appeal paperbook), wherein the following prayer is made:- "a. That the Liquidator be directed to provide bifurcation of the amounts to be distributed to the lenders; b. That, the liquidator be directed to follow waterf....

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....'s (ARSEC (India) Limited) prayers. 10. The Hon'ble Supreme Court in the matter of M/s Steel Authority of India Ltd vs Sales Tax Officer, Rourkela-I, Circle 2008 (9) SCC 407 held as follows:- "10. Reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same it becomes lifeless. 11. ............."Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound....