TMI Blog2022 (8) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence the Secured Financial Creditors is construed to have a joint charge over the Sale Proceeds as they have collectively relinquished the Security Interest as there is no discernible way to determine the specific inventory financed by them individually. It is seen from the record that the proof of Claim in Form- D is dated 24.07.2020, whereas the Order of Liquidation was passed, much prior to that on 26.06.2020 and there were no vehicles in existence as on 26.06.2020. Having regard to the fact that, the Corporate Debtor had given its unequivocal assent in the CoC Meetings with respect to sale of vehicles during the CIRP Process without any objection, and has not chosen to realize the Security Interest in accordance with Section 52 of the Code, either through the records of Information Utility or RoC and specifically keeping in view that the subject vehicles are already sold and the proceeds from the sale of the vehicles have already been distributed between the Secured Financial Creditors in proportion to their debt , and the Appellant has already received its share of the proceeds on 01.03.2021 after providing an Affidavit of undertaking dated 23.02.2021, the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e vehicles and during the Liquidation Period sold the balance vehicles. At this juncture, the Appellant Bank filed I.A. No. 3955 of 2020 seeking a direction to distribute the Sale Proceeds of the vehicles and sought to realize its Security Interest in the manner specified under Section 52 of the Code. 3. Learned Sr. Counsel for the Appellant contended that owing to the phasing out of the vehicles BS-IV compliant with effect from 01.04.2020, the CoC during its Meeting dated 08.01.2020 decided that the inventory of 57 vehicles were to be sold prior to this cutoff date. Accordingly, 57 vehicles were sold for an amount of Rs.6,91,53,381/-. After the sale of the assets was completed, a Liquidation Order was passed on 26.06.2020, subsequent to which, the Appellant has filed Form D on 24.07.2020 which clearly mentions that the Appellant had chosen not to relinquish its Security Interest . 4. Learned Sr. Counsel further submitted that the manufacturer VECVL through email dated 11.06.2019 set out the details of 12 vehicles identified on basis of the Chassis No. which were charged to the Appellant. After the Liquidation Order was passed and the Form D was submitted by the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rights conferred on him unless exercise of such right is agreed upon by the Secured Creditors representing not less than sixty per cent in value of the amount outstanding as on a record date and such action shall be binding on all the Secured Creditors. In the instant case, no other Secured Financial Creditor expect the Appellant who holds 10.69% of the total amount of the Secured Financial Debt has sought realization of its Security Interest against the Sale Proceeds . 7. Learned Counsel for the Liquidator submitted that in the third CoC Meeting held on 19.07.2019 it was decided to sell the available stock of inventory of the Corporate Debtor Company back to VECVL and at no point of time, had the Appellant raised any objection with respect to sale of assets purportedly charged to it. In the fourth and fifth CoC Meetings, the Liquidator has shared the data with respect to the number of vehicles sold details of receivables and the actual amount received by the Corporate Debtor . At this point of time also the Appellant did not convey its part of any vehicle. While so, in the sixth CoC Meeting, it was decided by 96.61% Votes to initiate the Liquidation Process, which was app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the receivables and the actual amount received by the Corporate Debtor as on 08.01.2020, for the same which is excluding GST. The members of the COC took a note of the same. 11. The Appellant had attended this Meeting but has never raised any objections. The Adjudicating Authority has approved the Liquidation of the Company vide Order dated 26.06.2020. The contention of the Learned Counsel for the Appellant that in Form D , the Appellant had clearly indicated its option not to relinquish the Security Interest of the 12 vehicles and therefore is entitled to be disbursement of money received from their sale, cannot be accepted as the Appellant submitted the list of vehicles supposedly charged to it after the initiation of Liquidation Proceedings. As per Section 52(2) of the Code, a Secured Creditor who wishes to realize its Security Interest, must identify such asset over which it enjoys the Security Interest. For better understanding of the case, the said Section 52 is being reproduced as hereunder: 52. Second creditor in liquidation proceedings.- (1) A secured creditor in the liquidation proceedings may- (a) relinquish its security interest to the liqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors, and they shall transfer such amounts to the liquidator to be included in the liquidation estate. (9) Where the proceeds of the realisation of the secured assets are not adequate to repay debts owed to the secured creditor, the unpaid debts of such secured creditor shall be paid by the liquidator in the manner specified in clause (e) of sub-section (1) of section 53. 12. We find force in the contention of the Learned Counsel for the Liquidator that in the Books of Account of the Corporate Debtor there is no clarity regarding the particulars of each vehicles and the details of its financing and at any given point of time, there would be finance facilities being utilized from different Financial Institutions and the same was being repaid when the receipts came from the actual buyer of the vehicles and hence the Secured Financial Creditors is construed to have a joint charge over the Sale Proceeds as they have collectively relinquished the Security Interest as there is no discernible way to determine the specific inventory financed by them individually. 13. Now we address to the contention of the Learned Sr. Counsel that having categorically mentioned No in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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