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Judgment
This is an application praying for condonation of 15 days delay in filing of the appeal.
This appeal has been filed by the financial creditor of the corporate debtor.
Learned counsel for the respondent opposing the application submits that appeal was deliberately filed on 45th day and the appellants were waiting to receive the offers to make a case on merits.
Sufficient cause has been shown in paragraphs 3 & 4 of the application for condonation of delay which is within the condonable period.
After having heard learned counsel for the parties, we are of the view that sufficient cause has been shown for condonation of delay.
Delay condoned.
Comp. App. (AT) (Ins.) No. 2037/2025
Heard learned counsel for the appellant as well as learned counsel appearing for the liquidator.
This appeal has been filed against an order dated 31.10.2025, which order was passed in I.A. No. 404/2025 filed by the liquidator. The liquidator in the application has made the prayers which has been quoted in paragraph 1 of the order which is as follows:
“a)be pleased to allow the inclusion of the assets of Corporate Debtor into the Liquidation estate in respect to which security interest has not been relinquished by Respondents as they have failed to realise the security interest within 180 days from liquidation commencement date;
b)be pleased to direct Respondents to pay pro rata costs and be directed to join the Stakeholders Consultation Committee;”
The adjudicating authority by the impugned order has allowed the application and issued following directions in paragraph 31, which is as follows:
“i.The application is allowed;
ii.the assets in respect of which security interest has not been relinquished by Respondents i.e., Gala No. 115, 301, 401, 407 & 408 at Navyug Industrial Estate, Sewree, Mumbai and Flat No. 202 and 203 in Block Hampton at Hiranandani Palace Garden, Chennai, are included in the Liquidation estate of the Corporate Debtor, the applicant is directed to take necessary steps for realizing the said assets;
iii.the Respondents are directed to pay pro rata costs and join the Stakeholders Consultation Committee.”
Appellant, the secured financial creditor, aggrieved by the order has come up in this appeal.
It is the case of the appellant that appellant has communicated to the liquidator within 30 days period that he is not relinquishing his security and the assets i.e., 2 flats shall be sold by the appellant itself. Appellant’s case is that appellant has also paid the necessary relevant share of the cost as contemplated by Regulation 21A(2)(a) of the IBBI (Liquidation Process) Regulations, 2016 (for short the Liquidation Regulations, 2016) to the liquidator and the assets having not yet been sold, there was no occasion to pay any excess amount as contemplated by Regulation 21A(2)(b) of the Liquidation Regulation, 2016. Regulation 21A which is relevant in the present case is 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 liquidation estate or realise its security interest, as the case may be, in Form C or Form D of Schedule II:
Provided that, where a secured creditor does not intimate its decision within thirty days from the liquidation commencement date, the assets covered under the security interest shall be presumed to be part of the liquidation estate.
[(2) Where a secured creditor proceeds to realise its security interest, it shall pay –
(a)as much towards the amount payable under clause (a) and sub-clause (i) of clause (b) of sub-section (1) of section 53, as it would have shared in case it had relinquished the security interest, to the liquidator within ninety days from the liquidation commencement date; And
(b)the excess of the realised value of the asset, which is subject to security interest, over the amount of his claims admitted, to the liquidator within one hundred and eighty days from the liquidation commencement date:
Provided that where the amount payable under this sub-regulation is not certain by the date the amount is payable under this sub-regulation, the secured creditor shall pay the amount, as estimated by the liquidator:
Provided further that any difference between the amount payable under this sub-regulation and the amount paid under the first proviso shall be made good by the secured creditor or the liquidator, as the case may be, as soon as the amount payable under this sub-regulation is certain and so informed by the liquidator.
(3)Where a secured creditor fails to comply with sub-regulation (2), the asset, which is subject to security interest, shall become part of the liquidation estate.]]
[Explanation.- It is hereby clarified that the requirements of this regulation shall apply to the liquidation processes commencing on or after the date of the commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019.]”
Learned counsel for the appellant submits that he has already paid the cost that is not the ground taken in the impugned order for passing the order that appellant has not paid the cost. The adjudicating authority has referred to time limit of 180 days which is occurring in Regulation 21A(2)(b), which period according to the liquidator expired on 23.03.2024.
The period as mentioned of 180 days is the period for deposit of the excess amount realised by the secured creditors.
It is not the case that liquidator has communicated any amount for which the secured creditor has sell the flats, however, by virtue of Regulation 37 of the Liquidation Regulation, 2016, in event the liquidator informs the secured creditors about a willing buyer at a price higher than the price intimated by the secured creditors, the secured creditor has to sell according to such information. Regulation 37 of the Liquidation Regulation, 2016 is as follows:
“37. Realization of security interest by secured creditor.–
(1)A secured creditor who seeks to realize its security interest under section 52 shall intimate the liquidator of the price at which he proposes to realize its secured asset.
(2)The liquidator shall inform the secured creditor within twenty one days of receipt of the intimation under sub-regulation (1) if a person is willing to buy the secured asset before the expiry of thirty days from the date of intimation under sub-regulation (1), at a price higher than the price intimated under sub-regulation (1).
(3)Where the liquidator informs the secured creditor of a person willing to buy the secured asset under sub-regulation (2), the secured creditor shall sell the asset to such person.
(4)If the liquidator does not inform the secured creditor in accordance with sub-regulation (2), or the person does not buy the secured asset in accordance with sub-regulation (2), the secured creditor may realize the secured asset in the manner it deems fit, but at least at the price intimated under sub-regulation (1).
(5)Where the secured asset is realized under sub-regulation (3), the secured creditor shall bear the cost of identification of the buyer under sub-regulation (2).
(6)Where the secured asset is realized under sub-regulation (4), the liquidator shall bear the cost 1[**] incurred to identify the buyer under sub-regulation (2).
(7)The provisions of this Regulation 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.]”
In the facts of the present case, we are of the view that ends of justice be served in disposing of the appeal by giving liberty to the liquidator to intimate the financial creditor that is the appellant about the amount on which willing buyer is ready to purchase the flat, in that event appellant is to sell to the said buyer as indicated by the liquidator failing which it shall be open for the appellant to sell the assets and make the deposits as per the Regulation 21A(2)(b) of the Liquidation Regulation, 2016.
Learned counsel for the liquidator submits that appellant has intimated the proposal for sale of Rs.1.4 crore for both the flats.
We, however make it clear that the sale of the assets shall be conducted as indicated above and financial creditor is not to surrender the flats as per the impugned order. Secured creditor shall provide access to liquidator for all purposes.
The appeal is disposed of accordingly.