TaxTMI 
TaxTMI 
2024 (4) TMI 727
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....ority. Aggrieved by which order, this Appeal has been filed. 2. Brief facts necessary to be noticed for deciding the Appeal are: (i) Punjab & Maharashtra Co-operative Bank Ltd. (erstwhile Lender/ "PMC Bank") sanctioned mortgage overdraft facility to the Corporate Debtor vide Sanction letter dated 04.11.2011 and 17.01.2013. Various documents creating security interest in favour of the PMC Bank was executed including mortgage of immovable property situated at Village Thrikkakara, Tulka Kannyanur, district Ernakulam in the name of Blue Star Realtors Pvt. Ltd. and mortgage of land situated at Village Deewannmn and Chulne, Taluka Vasai, District Thane of Mr. Rakesh Kumar Wadhawan. (ii) The Corporate Debtor being unable to repay the overdraft amount, the account was declared as Non-Performing Asset ('NPA'). (iii) The Ministry of Finance vidts its Gazette Notification amalgamated PMC Bank with the Appellant. (iv) The Adjudicating Authority vide order dated 15.02.2023 initiated Corporate Insolvency Resolution Process ("CIRP") against the Corporate Debtor. (v) In pursuance to the publication made by the Resolution Professional ("RP"), Appellan....
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....d the amount as an unsecured creditor of the Corporate Debtor has come up in this Appeal. 3. We have heard Shri Alok Dhir, learned Counsel appearing for the Appellant; Shri Arun Kathpalia, learned Senior Counsel appearing for RP; and Shri Aman Mali, learned Counsel appearing for Respondent No.2. 4. The learned Counsel for the Appellant challenging the order passed by the Adjudicating Authority submits that Appellant being secured creditor, approval of the Resolution Plan is in contravention of Section 30, sub-section (2) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC"). It is further submitted that CIRP 180 days of period got completed on 13.08.2023, whereas the Plan was approved on 23.08.2023 with 79.61% vote share, in which Appellant has abstained. The period of CIRP having come to an end on 13.08.2023, the approval of the Plan after expiry of the CIRP period is contrary to the provisions of the IBC and deserved to be set aside on this ground alone. The Appellant is secured Financial Creditor of the Corporate Debtor and the RP without considering the scheme of the IBC has raised objection that there is no registration of charge under Sectio....
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....n is on the basis of creating security over book debts of the Corporate Debtor in Sanctioned Letter dated 04.11.2011. The fact that after the initiation of CIRP and after the Appellant having declared as unsecured creditor, the Appellant took steps for filing CHG-1 Form with Registrar of Companies on 26.10.2023, clearly indicates that the Appellant was well aware that he is not a secured creditor. The Appellant could not have created charge over book debts of the Corporate Debtor in CERSAI portal after initiation of CIRP, which does not in any manner help the Appellant. In pursuance of the order of the Adjudicating Authority dated 08.01.2024, the RP reverified the claim of the Appellant and has come to the opinion that there are no document to prove creation of any security interest in favour of the Appellant. Hence, the Appellant was declared as unsecured creditor by letter dated 30.01.2024. Thus, the order dated 08.01.2024 was fully complied with and the Appellant having been declared unsecured creditor, approval of Resolution Plan, treating the Appellant as unsecured creditor does not suffer from any error. It is submitted that in any view of the matter, the Appellant has failed....
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....plnex Builders Pvt. Ltd. 3) Book Debts. Rate on Interest 16.50% .a. (Floating Rate) subject to revision in rate of interest by bank from time to time or as per RBI Directives Repayment On Demand/ Annual renewal Penal Interest 2% on overdrawn Amount Inspection Yearly Sureties Mr. Rakesh Kumar Wadhawan SUBJECT TO COMPLIANCE OF FOLLOWING TERMS & CONDITIONS:- 1. All Terms and Conditions to be observed and documents to be submitted 2. Conditions for Mortgage of Property: * Mortgage of property to be put through as per Bank's procedure and requirement. * Our Bank's charge to be noted in Recover of Right (7/**** * All Original Title deeds pertaining to the said property should be submitted such as Chain of agreements, July transferred in name of Owners' name, registration and stamp duty paid receipts etc. * Inspection of property will be done by Bank official and cost for the same to be borne by applicant. * To ensure that all conditions stated in legal opinion report obtained for the said property for sustaining a c....
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.... and located at different places should be insured against all applicable risks for full market value thereof, with the Bank Clause and the policy/ policies will be held by the Bank. The cost of the insurance will be borne by the applicant/s. It will be necessary for the borrower's to make punctual payment of all premium amounts and to ensure that no acts/ omissions occur in this regard which may invalidate such insurance during the currency of the advance. 12. In case of default in repayment of the Principle amount or interest amount thereon or any of the agreed Principle/ Interest or both of the limit on due date/s by the borrower, the Bank and/ or the RBI will have an unqualified right to disclose or publish the borrower name or the name of borrower company/ unit and its directors/ partners/ proprietors as defaulter in such manner and through such medium as the Bank or the name of the borrower company/ unit and its directors/ partner/ proprietors as defaulter in such manner and through such medium as the Bank or RBI in their absolute discretion may think fit. Acknowledgment: Please return to us the duplicate copy of this letter duly signed by the Direc....
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.... TO COMPLIANCE OF FOLLOWING TERMS & CONDITIONS:- 1. All Terms and Conditions to be observed and documents to be submitted by you. 2. Conditions for Registered Mortgage of Property : a. All our usual terms and conditions of registered mortgage of above-mentioned property should be complied with. b. Registered Mortgage of the said property to be done in Bank's favour. c. Deed of Mortgage duly stamped will be obtained from owners of the property. d. All Original Title deeds pertaining to the said property should be submitted such as Chain of agreements, duly transferred in name of Owners' name, registration and stamp duty paid *** etc. e. Property owner should give an undertaking to our bank that during the pendency of the limit they will not deal with, dispose off, or part with or create any third party interest or induct any third party in the said property until an intimation is given by the Bank to that effect. Further Company should incorporate the clause for crediting the ***********(not readable)*** 3. Stamp & document charges as per State Stamp Act will have to be borne by you. 4. The rate of inte....
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....ue will not be returned in the account for want of funds. d. That the account will be operated within the sanctioned limit. Acknowledgement Please return to us the duplicate copy of this letter duly signed by the Director in Token of the acceptance of the terms and conditions stipulated herein above. Assuring you of our best services. Yours faithfully, Sd/- Authorised Signatory I/We accept the above Terms and conditions M/s. Privilege Industries Ltd. Sd/- Director" 10. The above Sanction Letter does not even contemplate creation of any other security apart from the security as mentioned in the Sanction Letter, which were security by Guarantors and not by Corporate Debtor. 11. The learned Counsel for the Appellant, during his submissions has referred to a letter given by Corporate Debtor dated 04.11.2011, which is claimed to be letter of Lien and Set-off. According to the Appellant, by the said letter, security shall be created on the debt of the Corporate Debtor. The letter is also part of the record, which is as follows: To, The Manager, Punj....
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....t Vitran Nigam Ltd. vs. Raman Ispat Pvt. Ltd. - Civil Appeal No.7976 of 2019 - (2023) 10 SCC 60 and State Tax Officer vs. Rainbow Papers Limited - (2023) 9 SCC 545. 14. Section 77 of the Companies Act, 2013 is as follows: "77. Duty to register charges, etc.-(1) It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation : Provided that the Registrar may, on an application by the company, allow such registration to be made within a period of three hundred days of such creation on payment of such additional fees as may be prescribed: Provided further that if registration is not made within a period of three hundred days of such creation, the company shall seek extension of time in accordance with section 87: Provided also that ....
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....aph 43 of the judgment Hon'ble Supreme Court has noted the statutory provisions, wherein it was noted that outstanding dues will be first charge on the assets of the company. Paragraph 43 of the judgment is as follows: "43. By virtue of Section 181(2)(x) of the 2003 Act, State Commissions are empowered to frame regulations. Section 50 empowers the State Commissions to frame the "Electricity Supply Code" to provide for recovery of electricity charges, intervals for billing of electricity charges, disconnection of supply of electricity for non-payment, etc. These provisions in the 2003 Act and the respective Codes form the legal framework for recovery of dues by various kinds of licensees under the 2003 Act. In the present case, the Uttar Pradesh State Commission had framed the 2005 Supply Code. Clause 4.3(f)(iv) of the 2005 Code is relevant, which inter alia provides as follows: "4.3. (f)(iv) The outstanding dues will be first charge on the assets of the company, and the licensee shall ensure that this is entered in an agreement with new applicant."" 17. In paragraphs 45 and 46 notes the creation of charge over the assets, which are as follows: "45. As ....
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....itor" as per law. This finding was not disturbed, but rather affirmed by the impugned order [Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat (P) Ltd., 2019 SCC OnLine NCLAT 883] . In these circumstances, the conclusion that Pvvnl is a secured creditor cannot be disputed." 18. The learned Counsel for the Appellant in the above judgment has specifically relied on paragraphs 59, 60 and 61, which are as follows: "59. Lastly, the liquidator had urged that without registration of charge, the same was unenforceable under liquidation proceedings. Section 77 of the Companies Act, 2013 reads as follows: "77. Duty to register charges, etc.-(1) It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation : Provided that the Registrar may, on an app....
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....ents, this Court does not consider it appropriate to rule on the submissions of the liquidator vis-à-vis the fact of non-registration of charges under Section 77 of the Companies Act, 2013." 19. When we look into paragraph 61, it is clear that Hon'ble Supreme Court did not consider it appropriate to rule on the submissions of the Liquidator, vis-à-vis the fact of non-registration of charges under Section 77 of the Companies Act. The question was thus left open. 20. We in the facts of the present case, proceed to examine the submission of the Appellant as to whether there are any material on record to declare the Appellant as 'secured creditor' despite the charge being not registered under Section 77 of the Companies Act. As noted above, the Appellant has not filed any documents proving to create charge on the assets of the Corporate Debtor, except for Sanction letters as noted above as well as letter dated 04.11.2011 referred to as letter of Lien and Set-off. When we look into the definition of Section 3(31), it is clear that right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a "transaction which secures ....
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....ater Noida Industrial Development Authority vs. Prabhjit Singh Soni and Anr. - (2024) SCC OnLine SC 122. The Hon'ble Supreme Court in Greater Noida's case was considering Section 13A of the Uttar Pradesh Industrial Area Development Act, 1976 and on the basis of Section 13, an observation was made that Greater Noida Industrial Development Authority was a operational/ secured creditor. The above judgment also does not render any help to the Appellant in the facts of the present case. We, thus, are satisfied that RP did not commit any error in declaring the Appellant as unsecured Financial Creditor. There was no document on the basis of which Appellant could have been declared as secured Financial Creditor of the Corporate Debtor. 25. The next submission of the Appellant is that CIRP period has come to an end, hence, the approval of Resolution Plan subsequently, is without jurisdiction. It is to be noted that 180 days period came to an end on 13.08.2023. In the 7th CoC Meeting a decision was taken to file an Application for exclusion for 23 days, which Application was filed by the RP on 11.08.2023. The Adjudicating Authority in the impugned order has noted Form-H, where at Item No.....