Case Law Details
IDBI Bank Ltd Vs Silver Stallion Ltd (NCLAT Delhi)
In this case, the Financial Creditor appealed against a blanket concession order passed by the Adjudicating Authority in a liquidation proceeding of a Corporate Debtor (CD). The CD had loans of approximately Rs. 428 Crores from the appellant and was liquidated, with its assets sold to a Successful Auction Purchaser as a going concern. The appellant received around Rs. 7 Crores against its claims. The Auction Purchaser had sought 21 concessions, including a critical one requiring the CD’s accounts to be regularized and classified as “standard.” The appellant argued that it had discharged its charge over secured assets and issued a No-Dues Certificate, asserting that the reclassification could affect its rights to pursue the Personal Guarantors. The Tribunal held that the purchaser’s interest was limited to obtaining an encumbrance-free title and could not interfere with the creditor’s rights. Consequently, the appeal was allowed, and the Adjudicating Authority’s order granting the specific concession for account standardization was set aside.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
This appeal is preferred by the Financial Creditor who has approached this Tribunal having felt aggrieved by a blanket concession order passed by the Adjudicating Authority in an application filed by the Successful Auction Purchaser in a liquidation proceeding in I.A. No. 4424 of 2024.
2. The facts fall within the very narrow campus. The CD to whom the appellant has advanced loans to the tune of about Rs. 428 Crores, has gone in for liquidation pursuant to the orders of the Adjudicating Authority. The assets of the CD were brought to auction at the instance of the respondent herein, and was sold to the auction purchaser as a going concern & the appellant was paid around Rs. 7 Crores as against its claims.
3. It is in these circumstances the Successful Auction Purchaser had approached the Adjudicating Authority, seeking a list of 21 concessions, out of which concession sought in S No. 17 is critical and it runs as follows;
“…. All accounts of the Corporate Debtor shall stand regularized and -heir asset classifications shall be “standard”.
4. The Learned counsel for the appellant submitted that the appellant has discharged its charge over the secured-assets and also has issued the NOC dated 19.04.2025. However, the fact of the order passed by the Adjudicating Authority requires de-classification of the account of the CD from NPA to standard amount, it will affect the appellant’s right to proceed against the Personal Guarantors of the CD inasmuch as no dues certificate has already been issued by the appellant, it is very much evident that the appellant is not going to proceed against the asset which the respondent has purchased. The learned counsel did make a statement to that affect.
5. This Tribunal finds merit in the submissions. The respondent, the Successful Auction Purchaser of the assets of the CD can only concern itself with securing an encumbrance free title to the asset it has purchased. Therefore, any re-classification of the loans in the accounts of the appellant cannot extend to the extent of interfering with the appellant’s right to proceed against the personal guarantor. To a pointed query from the bench, the learned counsel submitted that there is no practice of partial standardisation of accounts.
6. In view of the appellant’s stands that it would not proceed against the asset sold in auction to the respondent, the respondent cannot concern itself with the standardisation of loan in the books of the appellant. In the result. The appeal is allowed and the order of the Adjudicating Authority granting concession vis-à-vis item 17 extracted in para 3 above is set aside.
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