Suraksha Asset Reconstruction Ltd. Vs Varsha Bagri (NCLAT Delhi)
Conclusion: Where secured creditor failed to pay the liquidation costs within 90 days after its intention to realize the security interest, the security interest should stand relinquished under Regulation 21A(3) of the Liquidation Regulations, 2016.
Held: Appellant sought to realise its security interest under the SARFAESI Act in the liquidation process of the corporate debtor but the possession of the assets was denied by the liquidator despite an order passed by the Adjudicating Authority by which the possession of the mortgaged assets was directed. A notice under the SARFAESI Act was issued seeking symbolic possession of the assets which was refused by the liquidator on the ground that appellant failed to pay CIRP and liquidation costs. Thereafter, the security interest of the appellant was declared relinquished under Regulation 21A(2) and (3) of the IBBI (Liquidation Process) Regulations, 2016. Appellant having already intimated intention to realize its security interest vide letter dated 10.01.2020, there was no question of relinquishment of security interest of the appellant. Appellant had right under Section 52 of the IBC to realise its security interest. Appellant having never refused to pay CIRP/Liquidation costs, there was no question of relinquishment of its security interest. It was submitted that Appellant could not proceed to realise its security interest because both the erstwhile liquidator and current liquidator never handed over possession of the mortgaged land and secured assets of the corporate debtor to the Appellant despite clear direction of the Adjudicating Authority. On the other hand, it was contended by the liquidator that appellant had not paid the amount of CIRP costs and liquidation costs in spite of e-mail sent by the liquidator on 30.01.2020, 30.06.2020, 27.10.2020 and 16.02.2023. Appellant has admitted its liability to make payment of the estimated liquidation costs but has not made any payment. It was held that liquidator did not commit any error in communicating decision dated 29.05.2023 to the Appellant that on account of non-payment of liquidation costs, security interest of the Appellant stood relinquished in terms of Regulation 21A (2) &(3) of the Liquidation Regulations. Adjudicating Authority after considering the submissions of the parties had rightly refused to grant any relief to the Appellant in IA No.1069 of 2023.
