TaxTMI 
TaxTMI 
2022 (8) TMI 1113
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.... Bank' seeking a direction to the Liquidator for release of money realized on the sale of vehicles which were stated to be hypothecated to the Appellant Bank, was dismissed by the Adjudicating Authority. 2. Facts in brief are that the Company under Liquidation/M/s. R.S. Ajit Singh and Company (Automotive Private Limited), was the dealer of Volvo & Eicher Commercial Vehicles, to whom the Appellant Bank had extended Dealer Finance Specialty vide sanctioned letter dated 28.09.2015. The 'Corporate Debtor' was having a tie-up with various manufacturers including Tata Motors, Eicher Vehicles and several 'Financial Creditor'/Banks namely SBI, ICICI Bank Limited, Reliance Capital and Tata Capital Financial Services were financing the 'Corporate Debtor Company' for procuring vehicles from the manufacturers. The Dealership of Volvo Eicher Commercial Vehicle Limited ('VECVL') was cancelled in 2019. While so, pursuant to an Application filed under Section 9 of the Code, CIRP was initiated against the 'Corporate Debtor Company' vide Order dated 31.07.2019. During the CIRP period, the Committee of Creditors ('CoC') took a decision to sell the unsold vehicles back to the respective manufacture....
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....t submitted that the proceeds from the sale of the vehicles have already been distributed between the Secured Financial Creditors in proportion of their 'debt' and even the Appellant has received their share of proceeds on 01.03.2021. It is the case of the Respondent that having once deemed to have relinquished its charge and consented to the sale thereof, the Appellant is estopped from collecting any charge over the asset which had already been sold. 6. It is the further case of the Respondent that the Appellant had never been able to prove its Security Interest for specific vehicles through a Certificate of Charge, and therefore the Liquidator cannot take it into account as per Section 77 of the Companies Act, 2013, and also in accordance with Section 51 of the Motor Vehicles Act, 1988. Learned Counsel for the Respondent placed reliance on the ratio of the Hon'ble Supreme Court in 'Pegasus Assets Reconstruction (P) Ltd.' Vs. 'Haryana Concast Ltd.', (2016) 4 SCC 47, to buttress his argument that 'Section 13(9) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2022 (SARFAESI Act) provides that in the case of financing of a f....
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.... 9. The documentary evidence on record establishes that the Appellant had entered into a Deed of Hypothecation with the 'Corporate Debtor' on 28.01.2019, pursuant to which the charge was registered with the RoC, which describes the charge to be on all vehicle inventory and receivables thereof. Annexure R-2 is a Certificate of Registration of Charge which is reproduced as hereunder: 10. It is the case of the Respondent that there is a discrepancy between the description of Charge in the Hypothecation Deed of the Appellant and Form CHG-I filed under the RoC. There is no list of vehicles mentioned in that CHG-I. The record also shows that the 'Corporate Debtor' utilized the inventory financing facilities provided by different Financial Institutions and none of the Secured Financial Creditors having charge on the inventory of vehicles financed exhibited the list of vehicles mentioned in their CHG-I. Item III in the Minutes of the third CoC Meeting records as follows: "COORDINATION AND INTERACTION WITH THE VECV FOR SALE OF VEHICLE The Chairman apprised the members of the COC that he has been constantly in contact with VECV for the sale of vehicles of the Corporat....
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....red creditor and apply the proceeds to recover the debts due to it. (5) If in the course of realising a secured asset, any secured creditor faces resistance from the corporate debtor or any person connected therewith in taking possession of, selling or otherwise disposing of the security, the secured creditor may make an application to the Adjudicating Authority to facilitate the secured creditor to realise such security interest in accordance with law for the time being in force. (6) The Adjudicating Authority, on the receipt of an application from a secured creditor under sub-section (5) may pass such order as may be necessary to permit a secured creditor to realise security interest in accordance with law for the time being in force. (7) Where the enforcement of the security interest under sub-section (4) yields an amount by way of proceeds which is in excess of the debts due to the secured creditor, the secured creditor shall- (a) account to the liquidator for such surplus; and (b) tender to the liquidator any surplus funds received from the enforcement of such secured assets. (8) The amount of insolvency resolution process ....