Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | 2016: ss. 30 Insolvency and Bankruptcy Code 52 and 53 |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Act(s) Referred | Insolvency and Bankruptcy Code, 2016 (31 of 2016) |
Case(s) Referred | Referred Case 0 |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Disposed Off |
Headnote | Insolvency and Bankruptcy Code, 2016: ss. 30, 52 and 53 – Claim of the appellant as financial creditor of the corporate debtor on basis of the pledged shares – Entitlement to – On facts, corporate debtor approached the appellants to extend a short- term loan facility to its group companies for the ultimate end use of the corporate debtor – It was an understanding that the corporate debtor would create first ranking exclusive security by way of pledging shares held by the corporate debtor – Execution of Security Trustee Agreements between the appellant no. 1 and the group companies – Thereafter, an application u/s.7 admitted against the corporate debtor and the respondent appointed as the resolution professional – Appellant no. 1 filed its claim as a secured creditor of the corporate debtor and submitted Form C claiming a principal amount, however, the same was rejected by the resolution professional – Appellants then filed application u/s. 60(5) claiming the right based on pledged shares, which was rejected by the Adjudicating Authority as well as the NCLAT – NCLAT held that the appellants not having advanced any money to the corporate debtor as a financial debt would not be coming within the purview of a financial creditor of the corporate debtor – On appeal, held:Appellant No. 1 has security interest in the pledged shares – Appellant No. 1 is to be treated as a secured creditor, but would not fall under the category of financial creditors or operational creditors – Appellant No.1 is being denied the rights u/s. 52 as well as s. 53 in respect of the pledged shares whereas, the intent of the amended s. 30(2) rw s. 31 is to protects the interests of other creditors who are outside the purview of the CoC – Viable solution is to treat the appellant no. 1 as secured creditor in terms of s. 52 rw s. 53 – Option is given to the successful resolution applicant to treat the appellant no.1 as a secured creditor, who would be entitled to retain the security interest in the pledged shares, and in terms thereof, retain the security proceeds on the sale of the said pledged shares – This option would meet the mandate of the Code and does not violate the rights given to the secured creditor –Thus, appellant no.1 would be treated as a secured creditor, and entitled to all rights and obligations as applicable to a secured creditor in terms of ss. 52 and 53 and in accordance with the pledge agreement – Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 – r. 21A. |
Judge | Hon'ble Mr. Justice M.R. Shah |
Neutral Citation | 2023 INSC 500 |
Petitioner | M/s Vistra Itcl (india) Ltd & Ors. |
Respondent | Mr. Dinkar Venkatasubramanian & Anr. |
SCR | [2023] 6 S.C.R. 806 |
Judgement Date | 2023-04-04 |
Case Number | 3606 |
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