TMI Blog2021 (4) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... tions to the Liquidation process, has clarified that the Amended Regulations are not applicable to the Liquidation Processes, which had commenced before coming into force of the said Amended Regulations and that they are applicable only to the Liquidation processes, which commenced on or after the said Amended Regulations came into force. Thus, this circular amply clarifies the issues as to the prospective applicability of the Amended Regulations to the Liquidation process of the Corporate Debtor - since the Liquidation process in relation to the Corporate Debtor has commenced on 25.04.2018, the IBBI (Liquidation Process) Regulations, 2016, which was prevalent at that point of time only will apply to the facts and circumstances of the present case. Whether the Applicant is entitled to claim the possession of the entire Unit VII comprising of 164.05 acre, when they purportedly have security interest over only 85 acre of land? - HELD THAT:- Once the Secured Creditor has expressed his willingness to stand outside the liquidation process, the Liquidator cannot have any hold over the said property and as such the property over which the secured creditor exercises his security inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 before this Tribunal against the Corporate Debtor and this Tribunal vide order dated 16.06.2017 admitted the application and initiated the CIRP against the Corporate Debtor and appointed the 1st Respondent herein as the Interim Resolution Professional. Thereafter, since no viable Resolution Plan was forthcoming, the Corporate Debtor was ordered for Liquidation by this Tribunal vide order dated 25.04.2018 passed in MA/32/IB/2018. 3. The Applicant is a secured creditor of the Corporate Debtor. It is stated that the a Factory Unit (Unit VII) situated at Boothagudi and Melapachangudi Village, Illupur Taluk, Viralimalai, Pudukottai District and the Plant Machinery available inside the said units are hypothecated to the Applicant herein. It was also submitted that the ICICI bank has pari passu charge in the existing assets of the Corporate Debtor and at present these mortgaged property and hypothecated machineries are in the possession of the Liquidator. 4. It was submitted by the Learned Senior Counsel for the Applicant that the Applicant being a secured creditor has expressed his willingness to stand outside the purview of liquidation proceedings under Section 52 of IBC, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso too high and the applicant has not even spared a single penny for the CIRP cost and inspite of the repeated request made by the 1st Respondent, the Applicant has not chosen to pay any amount. Further, it was submitted that the inspection of the factory premises and the plant and machinery allowed by the Respondent as and when the requests are received from the Applicant and it was informed that handing over the possession of the Applicant would endanger the interest of other security interest holders and other stakeholder and could not be acceded by the Respondent. 7. In reply to the same, the Applicant has filed rejoinder, wherein it has been stated that the Applicant is having exclusive charge in respect of the property to an extent of 28.41 acre at Boothakudi Village, Pudukottai District, and exclusive charge in respect of the property to an extent of 13.60 acre at Boothakudi Village, Pudukottai District and Mortgage in respect of property to an extent of 4.44 acre at Pudikotai District, Iluppur Taluk, Boothakudi Village and first pari passu charge in respect of a property to an extent of 38.52 acre at Boothakudi Village and thus, the Applicant has right to sell the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the meeting was attended by all the stakeholders excluding Indian Overseas Bank and Karur Vysya Bank (who have realized their security interest by standing outside the liquidation) and that it was decided in the said meeting by all the Members of the Bank and Institution not to hand over the possession to the Applicant for the Unit VII as sought by them for various reasons set out in the minutes and it was also suggested by the other members to direct the Applicant and related security interest holders to bring the properties for sale under their applicable laws or provisions at an earliest occasion. 10. Subsequently, when the matter came up for hearing before this Tribunal on 06.03.2019, this Tribunal has passed the following order; Counsel for the Applicant is present. The Liquidator is present. It has been submitted with one voice that the parcel of lands comprising 85 acres and 41.40 acres are to be sold together to maximize the value of the property. The Applicant has chosen to sell the same under SARFAESI Act and the parcel of lands comprising of 41.40 is to be disposed of through e-auction by the Liquidator on the same day having common condition of both the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y its share as in case it had relinquished the security interest, to the liquidator within 90 days from the Liquidation commencement date. Further sub - regulation (3) of Regulation 21A states that where a secured creditor fails to comply with sub -regulation (2), the asset, which is subject to security interest, shall become part of the Liquidation estate. 12. The Learned Counsel for the Liquidator submitted that since the Applicant as per Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 has failed to pay their share, then automatically by operation of sub - regulation (3) of Regulation 21 of IBBI (Liquidation Process) Regulations, 2016, the assets over which the Applicant is having security interest will form part of the Liquidation estate. It was further contended by the Learned Counsel for the Liquidator that the said amendment to Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 came into force on 06.01.2020 and by efflux of time, 90 days have lapsed and the Applicant has failed to pay the cost in respect of their proportionate share over which they exercise their security interest. 13. The Learned Counsel for the Liquidator further con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple in the rule of law that every statute is prospective in nature, unless it is expressed in the statute that it has retrospective operation. In relation to the IBBI (Liquidation Process) Regulations, 2016, it is seen that the said Regulation first came into force on 15.12.2016 and thereafter, it was amended on 01.04.2018, 22.10.2018, 25.07.2019, 06.01.2020, 24.04.2020 and finally on 13.11.2020. Thus, the IBBI (Liquidation Process) Regulations, 2016 have been amended for a total of 6 times since it came into existence. The IBBI vide its Circular No. IBBI/LIQ/024/2019 dated 26.08.2019, upon saddled with queries from the stakeholders with respect to the applicability of the amended regulations to the Liquidation process, has clarified that the Amended Regulations are not applicable to the Liquidation Processes, which had commenced before coming into force of the said Amended Regulations and that they are applicable only to the Liquidation processes, which commenced on or after the said Amended Regulations came into force. Thus, this circular amply clarifies the issues as to the prospective applicability of the Amended Regulations to the Liquidation process of the Corporate Debto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 23.05.2018 informed the Liquidator that as per Section 52(1) (b) of the IBC, 2016, the Applicant is initiating action under SARFAESI proceedings against the Unit VII under the provisions of Section 13(4) of the SARFAESI Act and accordingly, requested the Liquidator to arrange for immediate handing over of the aforesaid asset to the Applicant. Thus, from this letter dated 23.05.2018, it is clear that the Applicant is willing to enforce its security interest as per the provisions of the SARFAESI Act, 2002 and not as per the Regulation 37(7) of the IBBI (Liquidation Process) Regulations, 2016. 19. It is to be noted here that under Section 52(1) of the IBC, 2016, there are two routes to realise 'security interest' as mentioned in clauses (a) and (b) therein. The Applicant herein did not relinquish its 'security interest' as per Section 53 of the Code, but chose to enforce it under Section 52(1)(b) by realizing the security interest by way of SARFAESI Proceedings. At this juncture, it is to be noted that to enforce the 'security interest' under Section 52(1)(b), the Creditor must either have 'exclusive charge' or 'sole first charge', w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is to be noted here that the 2nd Respondent has filed its written submissions and the Learned Counsel for the 2nd Respondent submitted that the 41.40 acre of land that was mortgaged to the consortium is located behind the land forming part of Unit VII mortgaged to the Applicant herein and the ICICI Canada, in which the 2nd Respondent is a charge holder. It was submitted that the access to the said 41.40 acre is only through the land forming part of and appurtenant to the vacant land available in Unit VII. It was submitted that if the Applicant is handed over the possession and permitted to sell the unit VII under any law exclusively, the value of 41.40 acre of land mentioned above would reduce drastically and the 2nd Respondent would be at the mercy of the person purchasing Unit VII and would be budged to sell the 41.40 acre for a throw away price. Hence in the interest of all the stakeholders, the extent of 85 acres and 41.40 acre be sold at a single lot, either by the Applicant or by the Liquidator and the 2nd Respondent has submitted that he is ready and willing to co-operate with the Applicant or the Liquidator as the case may be. 24. Thus, in view of the reasons stated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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