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2020 (1) TMI 275 - AT - Insolvency and BankruptcyCIRP Proceedings - ‘Secured Creditor’ has relinquished ‘security interest’ or not - Jurisdiction - power of Adjudicating Authority u/s 52 r/w Regulation 37 of the IBBI (Liquidation Process) Regulations, 2016 to decide disputed question of fact with regard to realization of ‘security interest’ by a ‘Secured Creditor’ - HELD THAT:- After enforcement of right under Section 52 by one of the ‘Secured Creditor’, no other ‘Secured Creditor’ can enforce his right subsequently for realization of the amount for the same secured assets, as the excess amount by way of proceeds pursuant to the first enforcement is deposited in the account of the Liquidator. Only one ‘Secured Creditor can enforce his right for realization of its debt out of the secured assets as per Section 52 - There is nothing on record to suggest that 1st Respondent has moved before the Liquidator in terms of sub-section (2) of Section 52 for realizing the ‘security interest’. It is also not clear whether the records of such ‘security interest’ has been maintained by an information or utility or in the manner as specified by the Board or verified by the Liquidator. In absence of any allegation that there is resistance in recovering the secured assets, the question of entertaining the application by the Adjudicating Authority under sub-section (6) of Section 52 does not arise. Therefore, except the manner as prescribed under sub-section (2), (3) and (4) of Section 52, if a ‘Secured Creditor’ directly applies before the Adjudicating Authority for allowing it to recover the secured assets under sub-section (6) of Section 52, such application is not maintainable. As in the present case, all the ‘Secured Creditors’ have claimed right over the same secured asset, which is 91% of the total secured asset and particularly when a suit is pending for declaration, as to which ‘Secured Creditors’ has the first charge, in such a case, it was not open to the Adjudicating Authority to allow the application filed by the 1st Respondent to realise the ‘security interest’ under Section 52 - as the Liquidator has abdicated its power and the Adjudicating Authority without any jurisdiction by the impugned order directed the Liquidator to handover the symbolic possession of the fixed assets of the ‘Corporate Debtor’ to Finquest Financial Solutions Pvt. Ltd. with a finding that the said Applicant is entitled to realise the ‘security interest’ without noticing the relevant provisions, the impugned order passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Mumbai cannot be upheld. The matter is remitted to the Liquidator to proceed in accordance with law, following Section 53 r/w Section 52 of the I&B Code - appeal allowed by way of remand.
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