TMI Blog2021 (2) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... were not forming part of liquidation estate, correctly done by Liquidator to comply with the provisions of Section 36 of the Code and precedence of this Appellate Tribunal already exists the Code vide Section 36(4)(d) prohibits inclusion of assets of Indian or Foreign subsidiary of the Corporate Debtor in the liquidation estate, we have to set aside the impugned order of the Adjudicating Authority and allow the present appeal. Appeal allowed. - Company Appeal (AT) (Insolvency) No. 890 of 2020 - - - Dated:- 25-2-2021 - Justice Bansi Lal Bhat, Acting Chairperson and Dr. Ashok Kumar Mishra, Technical Member Appellant: Mr. Alok Kumar and Ms. Drishti Harpalani, Advocates. Respondents: Mr. Krishna Dev J., Mr. Sai Kaushal, Mr. G. Aniketh Reddy and Mr. T.P.S. Harsha, Advocates for R-1 to 4. Mr. Shashank Agarwal, Advocate for R-5. Mr. Sutanu Sinha, Liquidator JUDGMENT The present Appeal is filed by the Appellant Union Bank of India (Andhra Bank now merged with Union Bank of India, vide G.S.R.154 (e) dated 04th March, 2020, under the Amalgamation of Andhra bank and Corporation Bank into Union bank of India scheme, 2020), under Section 61 of the Insolvency and B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s proof of claim under Form-D dated 22.09.2019and the Liquidator admitted the claim of ₹ 660.15 crore of the Appellant as a Financial Creditor. The Appellant relinquished its interest only in common securities belonging to corporate debtor in liquidation estate and did not relinquish its rights of Exclusive Securities. As per the submission of Appellant, the Liquidator in its reply 23.06.2020 in IA No. 335 of 2020 has not mentioned that the assets have been included in the liquidation estate. The Appellant has also initiated proceedings under SARFAESI Act in respect of the securities created by Respondent No. 1 to 4. The Demand Notice dated 18.12.2019 and Possession Notice dated 11.03.2020 were issued by the Appellant in accordance with the provisions of SARFAESI Act and Security Interest (Enforcement) Rules, 2002. The Appellant is aggrieved by the order of Adjudicating Authority dated 20.08.2020 as they have directed the Appellant Bank not to take any coercive steps such as sale of the properties mortgaged to the bank by the Respondent Companies till the completion of the Liquidation proceedings of the corporate debtor. 5. The Respondents have objected to the Appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority), if allowed to proceed with the possession notice, there is every chance that it would dimmish the value of the liquidation estate and its shareholders. The Adjudicating Authority is of the view that there is no restraints on Financial creditor to proceed against the guarantor even after initiation of CIRP, approval of Resolution Plan or liquidation proceedings being commenced or closed and considering these submissions, the Adjudicating Authority has passed the order stated above. 7. We have gone through the submissions made by the learned counsels both Appellant and Respondents and we observe that the followings facts are not in dispute: a. The Respondents are Corporate guarantors and are subsidiaries companies of the corporate Debtor under Liquidation. b. The Respondents have mortgaged some properties as collateral properties to secure the financial debt of Corporate Debtor and one exclusive security which is an open land consisting of 133 properties admeasuring 75.94 crore in Tamil Nadu as stated above. c. Initiation of CIRP against the Corporate Debtor by State Bank of India and finally appointing the Resolution Professional as Liquidator. d. The Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not forming party of liquidation estate. 10. Liquidation Estate Section 36(4)(d) is reproduced below: Section 36(4)(d) :The following shall not be included in the liquidation estate assets and shall not be used for recovery in the liquidation:- (a) assets owned by a third party which are in possession of the corporate debtor, including- (i) assets held in trust for any third party; (ii) bailment contracts; (iii) all sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund; (iv) other contractual arrangements which do not stipulate transfer of title but only use of the assets; and (v) such other assets as may be notified by the Central Government in consultation with any financial sector regulator; (b) assets in security collateral held by financial services providers and are subject to netting and set-off in multi-lateral trading or clearing transactions; (c) personal assets of any shareholder or partner of a corporate debtor as the case may be provided such assets are not held on account of avoidance transactions that may be avoided under this Chapter; (d) assets of any Indian or ..... 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