Karur Vysya Bank Ltd. vs M/s. Aneetha Subramaniam

(Hybrid Mode)

[Oral Judgment: Justice Sharad Kumar Sharma, Member (Judicial)]

The genesis of the instant Company Appeal, filed under the provisions contained under Section 61(1) of I&B Code, is the order of Learned NCLT, Chennai, passed on 24.03.2026, as passed in IA(IBC)/1048/CHE/2025 as preferred in CP (IB)/1275/CHE/2018, wherein the Appellant had questioned propriety of the decision dated 04.04.2025 passed by Respondent No. 1 (Resolution Professional/Liquidator). The Learned Tribunal had passed an order dismissing the application, IA/1048/2025, filed by the Appellant, observing thereof that, on account of the fact that, the order of 31.05.2024 as passed in MA/1305/2019 in CP/1275/(IB)/2018, is already a subject matter of challenge in Company Appeal (AT) (CH) (Ins) No. 356/2024 pending before this Tribunal and therefore, it is not inclined to record any findings on the decision of the Liquidator dated 04.04.2025, in respect of distribution of sale proceeds qua its order of 31.05.2024.

The said application, being IA(IBC)/1048/CHE/2025 on which the impugned order has been passed, had been preferred by the Appellant challenging the decision of Liquidator/Resolution Professional dated 04.04.2025, regarding the determination of security interest and distribution entitlements to the stakeholders. By virtue of the decision made on 04.04.2025, the Liquidator/Resolution Professional had come to following conclusions:

Further, as three of the banks have preferred certain applications before the Hon'ble NCLAT, in due deference of the said proceedings, the liquidator is passing this order to place the same before the Hon'ble NCLAT.

Accordingly, the determination of security interest and distribution entitlements under the waterfall mechanism in terms of the IBC stand determined, in terms of the order of the Hon'ble NCLT dated 31-05-2024.

Further, to protect the interest of the creditors, although there is no consensus amongst the creditors on putting the monies in an interest-bearing deposit, pending distribution, the sum of Rs. 147.50 Crores is being deposited as an interest-bearing Fixed Deposit, for a period of 7 (Seven) Days, in KVB for the time being.

I shall be placing this decision before the Hon'ble NCLAT on the next date of hearing.

The Appellant seeks to challenge this decision of 04.04.2025, particularly, with regard to the observation made in Para 45 of the decision dated 04.04.2025. What has been construed by the Appellant while interpreting the decision dated 04.04.2025 of the Liquidator is that, the decision of the Liquidator/ Resolution Professional on the distribution of sale proceeds among all secured creditors is contrary to the order of Ld. NCLT, dated 31.05.2024, which is under challenge before this Appellate Tribunal in CA 356/2024. This inference as drawn by the Appellant may not be a correct interpretation, for the reason being that, the observation made therein itself makes it very clear, that the determination of security interest and distribution under the waterfall mechanism has been as per the order dated 31.05.2024, subject to the decision of NCLAT in the pending Appeal.

Besides that, the concluding part of the decision of Resolution Professional dated 04.04.2025 clearly shows that they were not having any immediate consequential effect or bearing for the reason being that, the Liquidator himself had indicated therein that the said decision is to be placed on record of the Company Appeal, where the order of Learned NCLT dated 31.05.2024 has been challenged and pending consideration before the NCLAT. Therefore the decision of the Liquidator dated 04.04.2025, in itself cannot be taken as to be a decision, which has attached finality as regards observations made in it, overriding the order of Ld. NCLT dated 31.05.2024, under challenge in the Company Appeal.

Hence, while closing the Company Appeal, we clarify that the observations made in Para 45 of the decision dated 04.04.2025 may not be construed as to be a final determination in itself on the aspect of security interest and distribution entitlements. Rather, owing to the observations made therein, it has to be inferred that the conclusion drawn by the RP/Liquidator on the aspects of security interest and distribution entitlements, has been based on the order of Ld. NCLT, dated 31.05.2024, and that it is tentative in nature and subject to outcome of Appeal CA (AT) (CH) No. 356/2024.

Having gone through the decision of 04.04.2025 in its entirety, we are of the view that the Liquidator/Resolution Professional had made certain determinations in his decision dated 04.04.2025 based upon the order of Ld. NCLT dated of 31.05.2024, that the said decision does not attach any finality on the issue of distribution of sale proceeds among the secured creditors, including the Appellant and that no capital benefit can be derived by any of the parties to the proceedings from this decision as per Para 47 of the decision because, he will be placing the same on records of the pending Company Appeal as against the order of 31.05.2024. What effect the decision dated 04.04.2025 will have, is a question that will be answered by us in the pending Company Appeal, once the said decision is placed on the records of the pending Company Appeal. Hence, the argument of the Learned Counsel for the Appellant that, the decision of the Liquidator/RP is a conclusive observation with regards to the aspect of determination of security interest and of the entitlement of secured creditors may not be logical and correct, if analysed in context of the implications flowing from the decision dated 04.04.2025.

Hence, we make it clear that, the observation in Para 45, is not a conclusive determination on the aspect of security interest and the distribution entitlements. Further, the decision dated 04.04.2025 of the Liquidator/RP, which has been directed to be kept in record of the pending Company Appeal, would be taken into consideration at the stage when the order of 31.05.2024 itself will be considered on its own merits by this Appellate Tribunal. Subject to the aforesaid, the Company Appeal would stand closed.