TaxTMI 
TaxTMI 
2025 (3) TMI 1070
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....urt No.1 in MA No.3 (MP) of 2023 rejecting MA No.3(MP) of 2023 filed by the Appellant objecting to the decision of Liquidator to include the Haldia property in the Liquidation Estate. 2. Brief facts necessary to be noticed for deciding the Appeal are: (i) The liquidation process against the Corporate Debtor ("CD") KS Oils Ltd. commenced vide order dated 16.03.2021 passed by this Tribunal in Company Appeal (AT) (Ins.) No.98 of 2021. (ii) In pursuance of publication issued by Liquidator inviting claims, the Appellant filed its claim in Form-B dated 14.04.2021 for an amount of Rs.793,45,16,428/-. The Appellant also claimed security interest in the immovable property of 12.84 acres in District Purba, Medinipur, Mauza Debhog J.L. No.149 and all plant and machinery attached to it or permanently fastened to anything attached. In Form-D, the Appellant did not relinquish its security interest for "Haldia Unit", whereas security interest in respect of all other securities were relinquished. (iii) Some time was taken in the liquidation proceeding in considering a scheme submitted under Section 230 of the Companies Act, 2013. After scheme having been not approved,....
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....he 10% of the amount as EMD. (viii) The Adjudicating Authority by the impugned order rejected MA No.03 of 2023. The Adjudicating Authority held that non- compliance by the Appellant of Regulation 21A, sub-regulation (2), the assets of Haldia Unit has become the Liquidation Estate of the CD. It was held that the Appellant failed to comply with the requirements of Regulation 21A(2). Hence, entire property is part of the Liquidation Estate. It was further noticed that inspite of handing over symbolic possession on 21.01.2023 of 12.84 acres of land, the Appellant could not take steps for sale of the secured assets. The Adjudicating Authority by the impugned order dated 16.02.2024 rejected the MA. Aggrieved by which order this Appeal has been filed. 3. IA No.1166 of 2025 has been filed by Halder Venture Limited seeking direction to the Liquidator to accept the balance consideration of Rs.51,39,54,500/- along with interest and further direction to the Liquidator to handover vacant and peaceful possession of Haldia manufacturing unit. 4. We have heard Shri Amit Singh Chadha, learned Senior Counsel appearing for the Appellant; Shri Vivek Sibal, learned Senior Counsel appeari....
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....ssary charges as required to be paid by the Appellant under Regulation 21A, sub-regulation (2) was paid, nor there was any communication till the expiry of 180 days. On 14.07.2023, the Liquidator intimated that Haldia Unit form part of liquidation and thereafter Sale Notice was issued on 19.07.2023 for Haldia assets. On 17.07.2023, for the first time, the Appellant informed that he has received two offers from interested parties of Rs.35 crores and Rs.40 crores. After three failed auctions of Haldia Unit under the Sale Notice dated 30.01.2024, Haldia property was sold for Rs.57.10 crores in favour of Halder Venture, whose bid has also been approved. The LoI was also issued on 02.02.2024. It is submitted that as per Regulation 37, it was obligation of the Appellant to communicate the Liquidator the amount for which the secured creditor is proceeding to sale the assets. No steps were taken by the Appellant under Regulation 37, nor it made necessary payment towards the amount payable under clauses (a) of sub-section (1) of Section 53, which was required to be done within 90 days from liquidation commencement date, which having not been done, the Haldia Unit became the part of the Liqu....
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....ixed assets: i. Leasehold factory land and building at A. B. Road, Industrial Area, Morena ii. Freehold factory land and building at Gram Silavati, Guna (24 different Khasra Nos.) admeasuring 31.08 hectares iii. Freehold factory land and building at Khasra No. 838, 839 and 840, Village Tatjode, tehsil Ladpura, Kota admeasuring 3.36 Hectares iv. Khasra no. 783 and 792 in village Tathode, Tehsil Ladpura, Kota, Rajasthan admeasuring 4.10 hectares v. Khasra no. 783 and 792 in village Tathode, Tehsil Ladpura, Kota, Rajasthan admeasuring 4.10 hectares v. Freehold factory land and building of the plant at Village KharaKheri, Ratlam in Madhya Pradesh" 11. Thus, the Haldia Unit measuring 12.84 acres together with plant and machinery was the assets for which security interest was not relinquished. With respect to other assets, security interest were relinquished. 12. It is an admitted fact that on 20.01.2023, the Appellant has written a letter to the Liquidator pleading that possession of assets and land parcel of 12.87 acres be handed over. In letter dated 20.01.2023, the Appellant also referred to 8.02 acres, which was not captured by Phoenix ARC Pvt. Ltd.....
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.... To: Mahesh Malunjkar Cc: Ajit Kewin; Kinnary Silgiri Subject: Re: Phoenix mortgage on entire haldia plant-20.46 acres Dear Sir, Thanks for your mail. As per our detailed discussions regarding your request for the handover of symbolic possession of the Haldia Asset including 20Acres approx land parcel of the Corporate Debtor. The udnersigned has carefully gone through all the records available including the MRA entered into by the then secured financial creditors of the Corporate Debtor and the Security Trustees namely SBI Caps which clearly indicates security interest of only 12.87Acres of land parcel at Haldia unit of the Corporate Debtor along with plant and machinery, building. stocks and all other assets on the 12.87acres are mortgaged to Phoenix Arc. As per your request, the undersigned hereby hand over symbolic possession, subject to payment of outstanding security costs for said assets built on land parcel of 12.87 Acres to Phoenix Arc, under section 52 of IB Code, as per your claim document submitted before the undersigned. You are also requested to file an additional Form D (including affidavit) for the balance land pa....
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....egulation shall not apply if the secured creditor enforces his security interest under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the Recovery of Debts and Bankruptcy Act, 1993 (51 of 1993). (8) A secured creditor shall not sell or transfer an asset, which is subject to security interest, to any person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor." 16. The first step which secured creditor has to take is to intimate the Liquidator of the price at which he proposes to realize its secured asset and it was thereafter the Liquidator was to inform as to whether a person is willing to buy the secured asset before the expiry of thirty days from the date of intimation, at a price higher than the price intimated under sub- regulation. 17. Now we notice Regulation 21A, which fell for consideration in the present proceeding. Regulation 21A provides as follows: "21A. Presumption of security interest. (1) A secured creditor shall inform the liquidator of its decision to relinquish its security interest to the liquidat....
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....) (a) is 90 days from the liquidation commencement date. In the present case order of liquidation was passed on 16.03.2021 and Adjudicating Authority directed the Liquidator to proceed on with liquidation on 06.01.2023, which is treated to be liquidation commencement date. Ninety days' time came to an end on 06.04.2023. The assets were handed over to the Appellant of Haldia Unit on 21.01.2023, as noted above. There was no communication by the Appellant to the Liquidator. The learned Counsel for the Appellant submitted that the Liquidator having never estimated the expenses, there was no occasion for the Appellant to deposit the amount. The learned Counsel for the Appellant has relied on proviso to Regulation 21A, sub- regulation (2). The proviso begins with the expression "Provided that where the amount payable under this sub-regulation is not certain by the date the amount is payable, the secured creditor shall pay the amount, as estimated by the liquidator". The Appellant was part of the SCC and has throughout participated in the Meetings of the SCC. The Appellant himself has brought on the record the Minutes of the proceeding of SCC held on 20.11.2023, which indicate that the Ap....
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....,163,247 3 IDBI Bank Limited 16.2 2,422,794 4 Life Insurance Corporation of India 2.6 397,353 5 Phoenix ARC Private Limited (Acting in Capacity as Trustee of Phoenix Trust FY 15-15) 6.1 921,937 6 Central Bank of India 6.8 1,018,281 7 Union Bank of India (Erstwhile Andhra Bank) 6.7 1,009,941 8 The Federal Bank Limited 2.6 390,035 9 Punjab National Bank 4.4 657,008 10 Jammu & Kashmir Bank Limited 2.5 370,264 Total 100.0 15,000,000" Liquidator informed that the contribution shall be considered as Liquidation cost and shall have priority at the time of distribution under Section 53 of IBC, 2016. The contribution can be made to the following bank account: 1. Beneficiary: KS Oils Limited (in liquidation) 2. Bank-State Bank of India 3. Account number: 40085751347 4. IFSC: SBIN0001971" 20. The Phoenix ARC entire percentage of admitted claim is Rs.21.1 + Rs.6.1 and rest of the claims admitted belong to other secured creditors, i.e, Respondent Nos.2 to 9. 21. The present is a case where no steps were taken by the Appell....
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....sub-Regulation 2 of Regulation 21A, Haldia Unit is also part of the Liquidation Estate of the CD, is correct and cannot be faulted. It is further relevant to notice that the Appellant in its Appeal in paragraph 9.4 has pleaded that secured assets/ Haldia property is worth more than Rs.50 crores. It is useful to notice the following part of paragraph 9.4: "8.4 xxx xxx xxx In the present case, Liquidator has created a disastrous situation where against an admitted claim of Rs.793,45,16,428/- (Rupees Seven Hundred Ninety Three Crores Forty Five Lacs Sixteen Thousand Four Hundred & Twenty Eight Only) and despite having an exclusive specific charge on a secured asset/Haldia property worth more than 50 crores, the Appellant/Phoenix ARC is now forced to accept a fraction of the sale consideration of Haldia property and lose its mortgagee rights on Haldia property forever. Such an interpretation of law has never been intended and would be disastrous for the economy." 24. In paragraph-1 of the Appeal, the Appellant has stated following: "1. xxx xxx xxx ......The Respondent/Liquidator admitted the claim of Appellant/ Phoenix ARC 15-15 for a sum of Rs.79....
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....email dated January 20, 2023. Although no action has been taken by your office in furtherance to the email, phoenix has continued with its efforts in realizing the security and has received two expressions of interests (hereinafter referred to as "EO") for purchase of the property as per the provisions of Regulation 37 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016. Bid amounts quoted by the two interested parties are Rs. 35,00,00,000/-(Rupees Thirty-Five Crores Only) and Rs. 40,00,00,000/- (Rupees Forty Crores Only) respectively, among the two bids phoenix has considered the bid of Rs. 40,00,00,000/- (Rupees Forty Crores Only) as the highest bid. In furtherance to the OIs submitted with Phoenix during the month of June, 2023 as informed to your good office immediately over meeting and as per the procedure laid down under Regulation 37 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, had communicated to you about the bids and also requested you to let us know the way forward. However, to our surprise and shock we are in receipt of the appended email, the contents of which are ....