IFCI Ltd. vs Kondisetty Kumar Dushyantha & Ors.

This is an Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 filed by a Financial Creditor viz. IFCI Ltd. who is aggrieved by the decision of the Resolution Professional (RP) to consider the Respondents 2 to 5 as Secured Financial Creditors instead of treating as Unsecured Financial Creditors.

The Applicant herein states that it has provided a secured loan of Rs.7,24,86,000/- (Seven crore twenty-four lakh eighty-six thousand only) to the Corporate Debtor; Manali Sugars Ltd. vide Sanction Letter dated 14.08.2012 creating pari-pasu first charge on its fixed and movable assets. The Corporate Debtor executed Deed of Hypothecation on 12.08.2013 in favour of the Applicant herein creating charge in respect of movable assets of the Company to secure the Loan. The Corporate Debtor also executed Declaration and Undertakings on 12.08.2013. The loan of Rs. 7,24,86,000/-was disbursed on 12.08.2013. The charge was registered before the Registrar of Companies, Bangalore. The Clause 5(ix) of the Tripartite Agreement dated 15.03.2013 specifically provides as:

The Applicant further states that as the Corporate Debtor defaulted in repayment, the Applicant issued a Loan Recall Notice on 14.02.2019. As the Corporate Debtor failed to comply with the demand, the Applicant filed an Application before the Debts Recovery Tribunal-2 at Bengaluru on 18.06.2019, which is pending for adjudication. Meantime, the Corporate Debtor got admitted into CIRP vide an order dated 22.03.2021 of this Tribunal and IRP was appointed. IRP constituted CoC and the first meeting was held on 22.04.2021.

During the fifth meeting of the CoC held on 17.09.2021, the Applicant and IREDA had raised queries as to whether in absence of NoC from prior secured lenders for creation of any secured charge, subsequent registered charge was valid, and RP assured that status on NoC from all prior charge holders for secured lenders shall be received and details of the same shall be shared with CoC in due course. Subsequently thereto, the RP vide e-mail dated 18.11.2021 confirmed the Applicant that Corporate Debtor has registered charges on the assets of the Corporate Debtor subsequent to execution of documents with the Applicant and also confirmed that Corporate Debtor has no NoC from existing charge holders.

The Applicant further submits that despite the fact that subsequent charges created by the Corporate Debtor was without obtaining NoC from the existing charge holders; the Applicant and IREDA, RP categorized the subsequent charge holders as Secured Creditors, on which basis the Resolution Applicant submitted the Resolution Plan and during seventh CoC meeting held on 20.04.2022 the said Plan was approved.

In view of the above, the Applicant requests the Adjudicating Authority to declare the Respondents 2-5 are unsecured financial creditors and direct the Respondents 6&7 to submit revised resolution plan re-allocating the amount approved for the secured and unsecured Financial Creditors.

In reply to the above, the Respondent-1 submits that the charges in question have been registered as per the MCA records between 2014 and 2020, while the Applicant's charge was created on 15.03.2013. Further submits that as per Section 80 of the Companies Act, 2013 the notice is deemed to have been provided and it was up to the Applicant to check with the appropriate authority rather than geopardising the interest of the larger stakeholders. The Applicant approached this Tribunal at the last minute although multiple opportunities were available to the Applicant. He further submits that the present Application will hinder the approval of the resolution plan of the Corporate Debtor and further cause delay in the implementation of the resolution plan.

This bench observes that the Applicant's claim is valid as the agreement was executed well before the creation of second charge. Here, the Corporate Debtor violated the terms of agreement thereby Respondents 2-5 became victims. At the same time, as stated by the Respondent-1, the Applicant should have been taken appropriate legal step well in advance as the second creation of charge began since 2014 and as per Section 80 of the Companies Act, 2013, notice is deemed to have been provided to the Applicant. At present, the Corporate Debtor is under CIRP and the Resolution Plan is approved by CoC except the aggrieved members. At this juncture, it is critical for the Adjudicating Authority to adjudicate with full fairness to the Applicant as well the Respondents. However, considering the grievance of the Applicant and the interest of other stakeholders, the bench hereby orders to restructure the secured Financial Creditors into two categories as below:

Accordingly, the above structure of the secured Financial Creditors will be reflected in the Resolution Plan.

With the above directions, the IA-224/2022 is partly allowed and disposed of.