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TMI Blog2018 (3) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... i as against the Corporate Debtor, REI Agro Limited for initiating Corporate Insolvency Resolution Process. 3. This adjudicating authority vide its Order dated 27-02-2017, admitted the application and in order to initiate the Corporate Insolvency Resolution Process, Mr. Anil Goel a Resolution Professional was appointed. 4. However, the Resolution Professional was not succeeded in finding out a Promoter for the revival of the Corporate Debtor and thereby, vide Order dated 24-08-2017, this adjudicating Authority passed an order under Section 33 of Chapter III of the Insolvency & Bankruptcy Code, 2016, requiring the Corporate Debtor to be liquidated and appointed the very same Resolution Professional, Mr. Anil Goel as the Liquidator. He filed this application contending that the Financial Creditor, namely, J&K Bank is not acting in accordance with the instructions of the Liquidator and it is taking earnest effort in dealing with the Security interest created by the Corporate Debtor. 5. The Liquidator also contends that the J&K Bank (in short the Bank) was requested to transfer the amount recovered as term loan instalment against the revenue and other receipts credited in the said E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er alleged that the above referred assets have been charged to the Bank exclusively. It has got every right to deal with it and it has got absolute right over and control of the Escrow Account vested with the Creditor and the vesting was prior to the initiation of the Corporate Insolvency resolution Process and thereby the moratorium under Section 14 of the Code does not apply. 14. The Bank also contends that the Liquidator has no right over the Escrow Account and since in order to see that the windmill (WTG) is in operation, the Bank is paying the charges towards the operation, maintenance of the WTGs and that payments were made after receiving the confirmation from the Liquidator and that the Liquidator did not take any steps to maintain the WTGs which has been exclusively charged to the Bank as a Creditor and therefore, the application is not at all maintainable and no direction can be issued as against the Bank as requested by the Liquidator. Upon the said contentions, the Bank prays for dismissal of the Application. 15. Heard the Ld. Counsel on behalf of the Liquidator as well as the Ld. Counsel appearing on behalf of the Bank at length and perused the record. 16. Upon hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional that Committee of Creditors (CoC) approved that to facilitate restart of generation of electricity and earning of Revenue amount of outstanding dues may be paid to O&M Agencies and the O&M Agencies shall be paid out of the bank balance available with the current account maintained with Jammu & Kashmir Bank." The above said facts are revealed from the various progress report submitted by the liquidator. Thus the operation of the Escrow Account by the Bank even during the period of moratorium was with the Bank with in the knowledge of the liquidator and no application seems to have filed by the liquidator during the period of moratorium was in force for preventing the operation and maintenance of the windmills by the Bank. 19. The Ld. Sr. Counsel, Mr. Abrojit Mitra, appearing for the Bank submits that since the windmills had to be maintained and to see that these are in operation, the Bank is liable to pay the maintenance charges towards O&M agencies and the O&M Agencies shall be paid out of the Bank balance available with the current account maintained with the Bank and that the Liquidator has been informed vide letter dated 02-11-2017, expressing the Bank's intention to rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to read Section 53(1)(b)(i) and (ii) of the Insolvency & Bankruptcy Code, 2016. It reads as follows: Section 53(1)(b): "(i) Workmen's dues for the period of twenty four months preceding the liquidation commencement date; and (ii) debts owned to a secured creditor in the event such secured creditor has relinquished security in the manner set out in Section 52". 24. On reading of sub-section (b) (i) and (ii) of Section 53 of the code what I understood is that in a case the secured creditor relinquish the security then alone the creditor can claim equality in regards distribution of assets of the corporate debtor. 25. Here, in the instant case, the Secured Creditor, the Bank herein, does not wish to participate in the liquidation process and not intending to relinquish the security interest and wish to stay outside the liquidation process in regard to the security interests which had admittedly charged to the Bank exclusively. 26. In Pegasus ARC v. Haryana Concast [2016] 4 SCC 47 the Hon'ble Supreme Court has held that the secured creditors can exercise such rights of enforcement under the SARFAESI Act and company court or official liquidator cannot interfere in the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of secured creditors' right to deal with the secured assets, cannot be questioned by the Liquidator on account of application of moratorium, for the period, which has been already expired. But the Liquidator has got every right to have verification of security interests and the account. Here, in this application, the Bank does not interfere the right of the Liquidator regarding the verification of the security interests held by the Bank. 30. Upon the above said discussion it appears to me that the option is with the secured Creditors to remain outside the liquidation proceedings and they can enforce the securities at their option. But, in such a case, their claim is not given the priority over other claimants, including the Government dues, as per the provisions of the Insolvency & Bankruptcy Code, 2016. If the secured Creditors join the liquidation proceedings and relinquish the security interests to liquidation assets, their claims along with the workmen dues for 24 months are given the priority over all other claims in accordance with section 53 of the code. As per section 36 (3) (g) of the code formation of Liquidation Estate of the assets of the corporate debtor in c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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