DBS Bank India Ltd. Vs. Kuldeep Verma, Liquidator of Eastern Gases Ltd. - When a claim is filed in Form D where interest and principal have been included up to the date of liquidation commencement date, claimants cannot be allowed to claim any further amount in addition to the amount which they have claimed in their Form D.

 NCLAT (PB) New Delhi (06.02.2023) In DBS Bank India Ltd. Vs. Kuldeep Verma, Liquidator of Eastern Gases Ltd.  [Company Appeal (AT) (Insolvency) No. No. 1048 of 2022] held that

• When a claim is filed in Form D where interest and principal have been included up to the date of liquidation commencement date, claimants cannot be allowed to claim any further amount in addition to the amount which they have claimed in their Form D. 

• Permitting any claimant to increase his claim on any ground or reason will not be in accordance with the liquidation scheme as contemplated by the Liquidation Process, Regulations. 

• The amount of interest which was retained by the Appellant claiming to be interest in addition to the claim as filed by it in Form D till the date of realization of receipt of the sale, cannot be permitted to be retained by the Appellant

Excerpts of the order;

1. This Appeal has been filed challenging the Order dated 14.07.2022 passed by the National Company Law Tribunal, Kolkata Bench, Kolkata (hereinafter referred to as “The Adjudicating Authority”) in I.A. No. 883 of 2021 filed by the Liquidator which Application has been allowed by the Adjudicating Authority directing the Appellant to make the payment of 1.84 Crores to the liquidation estate along with interest at the rate of 6%.

# 2. Brief facts of the case necessary to be noted for deciding this Appeal are:-

(i) The ‘Corporate Insolvency Resolution Process’ against the Corporate Debtor-Eastern Gases Limited commenced on 08.11.2017.

(ii) The Appellant had sanctioned overdraft facility, short term loan and long term loan to the Corporate Debtor. An order of liquidation was passed by the Adjudicating Authority on 21.08.2018. Public Announcement was made by the Liquidator in Form-B on 26.08.2018. The Appellant on 18.09.2018 filed his claim in Form-D containing the total claim of the Appellant, of principal along with interest of different facilities extended to the Corporate Debtor.

(iii) The Appellant informed the Liquidator on 08.04.2019 about its decision to realize its security interest as per Section 52 (i)(b) of the Code in respect of long term loan by remaining outside the liquidation process to realize its debts. Liquidator agreed to hand over possession of assets to the Appellant. Appellant informed the Liquidator that realization of security interest would happen at a rate of Rs. 14.44 Crore. The liquidator informed the Appellant that no person has approached the liquidator willing to buy the assets at price higher than the price intimated by the Appellant. Sale of the assets took place on 22.10.2020. Sale proceeds were received by the Appellant. Appellant informed the completion of sale process. Liquidator enquired about the calculation of the amount realized from the sale of the exclusively charged assets. In meeting of the Stakeholders Committee held on 13.09.2021, Appellant informed that it is entitled to retain the interest amount till the date of distribution to recover its debt and not only the amount at the time of filing of the claim in Form-D. Liquidator filed I.A. No. 883 of 2021 seeking following directions:

• “i. Necessary direction upon the Respondent to pay a sum of Rs. 1.84 crores to the Liquidation estate on account of the excess realized moneys as per Section 52(7) of the Code;

• ii. Necessary direction of interest @12% should be paid by the respondent on the withheld amount of Rs. 1.84 crores from 1st April, 2021 till the date of payment of this amount by the Respondent to the Liquidator Estate.”

(iv) The Adjudicating Authority after hearing both the parties had allowed the I.A. No. 883 of 2021. Following order has been passed in paragraph 9:

• “For the foregoing reasons, we allow this IA and direct the respondent bank to pay an amount of Rs. 1.84 crores to the liquidation estate along with interest @6% on this amount from 1st of April, 2021, till the date of its actual payment by the respondent to the liquidation estate. IA 883/KB/2021 is disposed of and CP No. 482/KB/2017 is listed for progress report on 29 August, 2022.”

# 3. Mr. Krishnendu Datta, Learned Sr. Counsel for the Appellant contends that under Section 52 of the Code, the secured creditor is entitled to realize its security interest. It is submitted that under Section 52(7) where the enforcement of the security interest under sub-section (4) yields an amount by way of proceeds which is in excess of the debts due to the secured creditor, the secured creditor is to account to the liquidator for such surplus. It is submitted that expression used in the sub-section is ‘debt’ hence the appellant could realize the entire amount with interest up to date and not only the claim which was submitted on the liquidation commencement date. It is submitted that expression ‘debt’ and ‘claim’ has been separately defined in Section 3 of the Code. The Appellant was entitled to also charge the interest in addition to the amount which was claimed in the Form D till date of actual realization was made by the Appellant. It is submitted that as per terms of contract between the Appellant and the Corporate Debtor, Appellant could have charged the interest up to date of realization of the amount and the Adjudicating Authority erred in issuing direction to return the amount of interest retained by the Appellant.

# 4. Learned Counsel for the Liquidator refuting the submissions of Learned Counsel for the Appellant submits that Appellant is only entitled for the amount as was claimed in Form D on the Liquidation Commencement Date. Appellant can not claim any amount above the amount as was claimed in Form D. Appellant can not claim entitlement of any interest as per the term of contract subsequent to filing of the claim in Form D till the date the amount was realized by the Appellant. The Adjudicating Authority has rightly after considering the relevant provisions has issued direction to make the payment of the amount illegally retained by the Appellant.

# 5. We have considered the submissions of Learned Counsel for the parties and have perused the record.

# 6. Only question to be answered in this Appeal is as to whether the secured creditor’s claim has to be confined to the amount of principal and interest as claimed in Form D filed by the secured creditor or secured creditor in addition to the amount claimed in Form D can also claim further amount in the facts of the present case.

# 7. The Liquidation Commencement Date in the present case is 21st August, 2018 in pursuance of which Liquidator made a public announcement on 26th August, 2018 and the Appellant filed its claim in Form D on 18.09.2018.

# 8. The claim which was filed in Form-D by the Appellant has been annexed as Annexure A/5 to the Appeal. Column No. 4 of the Form D deals with total amount of claim. It is useful to extract Column No. 4 of the FormD which is to the following effect:

1.	Name of Financial Creditor	DBS Bank India Ltd.
4.	Total Amount of Claim including any interest. As at the Liquidation Commencement Date and Details of Nature of Claim (Whether Term Loan, Secured, Unsecured)	Facility	Principal	Interest	Total (In INR)
		Overdraft	10,500,136	2,612,893	13,113,029
		Short Term Loan	70,000,000	13,700,822	83,700,822
		Long Term Loan	64,210,000	13,138,285	77,348,285
		Total	14,710,136	29452001	174,162,136

# 9. As noted above, the secured interest was created by the Appellant with respect to long term loan, for long term loan the Appellant in its claim has claimed principal amount of Rs. 6,42,10,000/- on which the interest amount of Rs. 1,31,38,285/- was claimed totaling to Rs. 7,73,48,285/-.

# 10. The amount which was realized from the sale of the secured assets according to the appellant himself is amount of Rs. 14.44 crores. The question to be answered in this Appeal is as to whether in addition to the interest which was claimed in the Form D by the Appellant whether he is also entitled to claim interest till the date when sale proceeds were received by the Appellant.

# 11. We need to examine the scheme of IBC and the Liquidation Process, Regulations 2016 in above respect. Section 52 of the Code permits secured creditors to realize its security interest. Section 52(1), 52(4), 52(7) and 52(8) are as follows:

“52. (1) A secured creditor in the liquidation proceedings may—

(a) relinquish its security interest to the liquidation estate and receive proceeds from the sale of assets by the liquidator in the manner specified in section 53; or

(b) realise its security interest in the manner specified in this section.

………..

(4) A secured creditor may enforce, realise, settle, compromise or deal with the secured assets in accordance with such law as applicable to the security interest being realised and to the secured creditor and apply the proceeds to recover the debts due to it.

……….

(6) The Adjudicating Authority, on the receipt of an application from a secured creditor under sub-section

(5) may pass such order as may be necessary to permit a secured creditor to realise security interest in accordance with law for the time being in force.

(7) Where the enforcement of the security interest under sub-section (4) yields an amount by way of proceeds which is in excess of the debts due to the secured creditor, the secured creditor shall—

(a) account to the liquidator for such surplus; and

(b) tender to the liquidator any surplus funds received from the enforcement of such secured assets.

(8) The amount of insolvency resolution process costs, due from secured creditors who realise their security interests in the manner provided in this section, shall be deducted from the proceeds of any realisation by such secured creditors, and they shall transfer such amounts to the liquidator to be included in the liquidation estate.”

# 12. Learned Counsel for the Appellant has also referred to definition of ‘claim’ under Section 3(6) and ‘debt’ under Section 3(11) which are to the following effect:

• “(6) “claim” means—

• (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;

• (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured;

• (11) “debt” means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt;”

# 13. We may also notice that under Section 53 the secured creditors are entitled to distribution in accordance with the debt owed to a secured creditor.

# 14. Liquidation Process Regulations provides for procedure and manner in which Liquidation Process begins claim are received and distribution of the amount take place to various stakeholders. Regulation 12 provides for public announcement by the Liquidator calling upon the stakeholders to submit their claims or update their claims submitted during the Corporate Insolvency Resolution Process. Regulation 16 deals with submission of claims. Regulation 16 is as follows:

• “16. Submission of claim. (1) A person, who claims to be a stakeholder, shall submit its claim, or update its claim submitted during the corporate insolvency resolution process, including interest, if any, on or before the last date mentioned in the public announcement.

• (2) A person shall prove its claim for debt or dues to him, including interest, if any, as on the liquidation commencement date.”

# 15. Regulation 16(2) requires to prove his claim as on the Liquidation Commencement Date. Claims by the Financial Creditor has to be filed in Form D as per Regulation 18. Regulation 18 is as follows:

“18. Claims by financial creditors.

(1) A person claiming to be a financial creditor of the corporate debtor shall submit proof of claim to the liquidator in electronic means in Form D of Schedule II.

(2) The existence of debt due to the financial creditor may be proved on the basis of-

(a) the records available in an information utility, if any; or

(b) other relevant documents which adequately establish the debt, including any or all of the following-

(i) a financial contract supported by financial statements as evidence of the debt;

(ii) a record evidencing that the amounts committed by the financial creditor to the corporate debtor under a facility has been drawn by the corporate debtor;

(iii) financial statements showing that the debt has not been repaid; and

(iv) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any.”

# 16. Form D which is statutory form for proof of claim by Financial Creditor. Item No. 3 of Form D provides as follows:

3.

TOTAL AMOUNT OF CLAIM, INCLUDING ANY INTEREST, AS AT THE LIQUIDATION COMMENCEMENT DATE AND DETAILS OF NATURE OF CLAIM (WHETHER TERM LOAN, SECURED, UNSECURED)

PRINCIPAL: INTEREST: TOTAL CLAIM:

# 17. Form D also clearly mentions that total amount of claim including an interest, “As At The Liquidation Commencement Date”. The Liquidation Regulation thus clearly contemplated the claim which also includes the interest “As At The Liquidation Commencement Date”. Liquidation commencement date is a defined term in Section 5(17) to following effect:

• “(17) “liquidation commencement date” means the date on which proceedings for liquidation commence in accordance with section 33 or section 59, as the case may be;”

# 18. In the present case, Liquidation Commencement Date is a date when the Adjudicating Authority passed the Order of Liquidation. Thus claim has to be with reference to the liquidation commencement date. The statute pegs the claim on a particular date for a purpose and object. When a claim is filed in Form D where interest and principal have been included up to the date of liquidation commencement date, claimants cannot be allowed to claim any further amount in addition to the amount which they have claimed in their Form D.

# 19. The submission of Mr. Datta that the expression ‘claim’ and ‘debt’ are not the same and since he has debt on the corporate debtor for realization of which debt, Appellant is entitled to receive interest till the date when sale proceeds are received, cannot be accepted. The IBC contains particular statutory scheme under which Liquidation Process has to be undertaken. The claim of all stakeholders are claims invited by the Liquidator as per the Liquidation Regulation and after receipt of the claims, further steps have to be taken in accordance with the claims received. Permitting any claimant to increase his claim on any ground or reason will not be in accordance with the liquidation scheme as contemplated by the Liquidation Process, Regulations.

# 20. We have noticed above that statutory scheme provides submission of claim on a liquidation commencement date which is a fixed connotation. When a statute provides for liquidation commencement date as a date up to which claims can be filed and proved, no claim thereafter can be entertained by the Liquidator. The amount of interest which was retained by the Appellant claiming to be interest in addition to the claim as filed by it in Form D till the date of realization of receipt of the sale, cannot be permitted to be retained by the Appellant and the Adjudicating Authority has rightly passed the order allowing application filed by the Liquidator to hand over the additional amount to the Liquidator. Learned Counsel for the Appellant submits that out of Rs. 1.84 Crores, amount of Rs. 20 Lakhs have already been paid.

# 21. In view of the foregoing discussions, we do not find any error in the order passed by the Adjudicating Authority allowing an Application filed by the Liquidator. There is no merit in the Appeal, the Appeal is dismissed.

 .

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Kuldeep Verma, the Liquidator of Eastern Gases Limited Vs. DBS Bank Limited, - Secured creditor while realizing its security interest can not charge Interest after the Liquidation Commencement Date.

NCLT Kolkata (14.07.2022) in Kuldeep Verma, the Liquidator of Eastern Gases Limited  Vs. DBS Bank Limited, [I.A. No. 883 of 2021 In C.P (IB) No. 482 of 2017] held that

• Thus, plea of respondent neither does the Code regulate nor does the Code provide or delegate powers and/or authority to the liquidator to restrain or restrict the Creditor from charging interest for the period after filing of Form D and actually enforcing its security interest and realizing its debt due is in-correct, contrary to provisions/regulations of the Code, indicated above and the same is, therefore, rejected. 

Excerpts of the order;

# 1. The court convened through hybrid mode. 

 

# 2. The instant application has been filed under Section 52(7) and Section 65(5) of Insolvency and Bankruptcy Code, 2016 seeking for the following reliefs; 

• i. Necessary direction upon the Respondent to pay a sum of Rs. 1.84 crores to the Liquidation estate on account of the excess realized moneys as per Section 52(7) of the Code; 

• ii. Necessary direction of interest @12% should be paid by the respondent on the withheld amount of Rs. 1.84 crores from 1st April, 2021 till the date of payment of this amount by the Respondent to the Liquidation Estate. 

 

# 3. The contentions of applicant are summarized hereinbelow; 

i. Since there was no Resolution Plan at the end of CIRP period, the liquidation of Corporate Debtor was directed vide order dated 21st of August, 2018 and the applicant was appointed as liquidator. 

 

ii. The applicant caused public announcement in Form- B on 26th of August, 2018 through newspapers. 

 

iii. The respondent herein filed its claims with the applicant in Form- D on 18th of September, 2018. 

 

iv. As per Form- D, on the date of commencement of liquidation date, respondent submitted a claim of Rs. 17.4162/-. Details of which are mentioned in paragraph 7 of this application. 

v. In Form- D respondent stated that for long term loan, the respondent had exclusive charge over the fixed assets of the company situated at Bangalore and Hyderabad (land and building and plant and machinery) and pari passu charge along with other lenders for the over draft and short-term loan facilities sanctioned by the Respondent to the Corporate Debtor. 

 

vi. The liquidator admitted a claim of Rs. 17,41,62,136/- of the respondent, being Rs. 7,73,48,285/- for the Long-Term Loan, Rs. 8,37,00,822/- for Short Term Loan and Rs. 1,31,13,029/- for over draft term loan. It was agreed to handover possession of the above referred properties to the respondent so that it could realize the same in accordance with Section 52(1) (b) of the Code read with Regulation 37 of Liquidation Regulations. A copy of e-mail dated 23rd of June, 2019 is annexed as Annexure- F with this application. 

 

vii. Respondent vide its letter dated 31st of July, 2020 informed the liquidator that they were intending to realize its secured interest at a reduced rate of Rs. 14.44 crores due to intervening circumstances (Covid-19 lockdown). 

 

viii. The buyer had negotiated and reduced the price from 15.25 Crores. The liquidator thereafter vide its e-mail dated 24th of August, 2020 confirmed the respondent that there was no purchaser who is willing to purchase the secured assets at a greater price than the price offered by respondent in the above referred letter. This e-mail dated 31st of July, 2020 in annexed as Annexure –H with this application. 

 

ix. Thereafter possession of Bangalore factory and the Hyderabad factory was transferred by liquidator to respondent around 28th of January, 2021 and 4th of November, 2020 respectively. The liquidator states that though the liquidation was confirmed in June, 2019 the respondent took possession on the above referred dates due to Covid19 reasons and shortage of manpower. In the interim period, the liquidator took care of the aforesaid assets on behalf of the respondent and the respondent reimbursed the liquidator costs and other charges in this context to the liquidator. 

 

x. Subsequently, the plants at Bangalore and Hyderabad were sold by the respondent in March, 2021 and December, 2020 respectively for a consideration of Rs. 6.65 crores and 7.79 crores respectively aggregating to Rs. 14.40 Crores. 

 

xi. Since the amount realized by the respondent for its long term loan facilities was in excess to that of entire claim, the DBS made payment of excess amounts to the liquidator in a phased manner from March, 2021 till 30thJuly, 2021 as per scheduled mentioned at page 18 of this application. 

 

xii. The Stakeholders committee meeting was held on 10th of February, 2021. The respondent represented that sale proceeds of Rs. 14.40 crores of the 2 exclusive properties, the respondent will not only appropriate its long-term loan dues (inclusive of interest and charges) not till the liquidation commencement date but also interest and other charges till the sale and realization of assets by the respondent. 

 

xiii. The liquidator contested by stating the date has been crystallized on the liquidation commencement date on the basis of claims lodged by them.The proceeds are distributed on the basis of dues as on liquidation commencement date and not on the date of distribution. 

 

xiv. The applicant sought calculations of the amounts realized from the sale by the respondent and the amount paid/due to the liquidation Estate as per Section 52 of the Code. (Annexure-J with this application). 

 

xv. Respondent through its e-mail dated 11th of August, 2021 gave its detailed calculation. In the e-mail dated 11th of August, 2021 it transpires that the respondent is holding a sum of Rs. 20 lacs as future contingent liabilities and has not transferred the same to the liquidation Estate.  Respondent insisted they will charge interest till the date of the sale and there is no prohibition in the Code as such. 

 

xvi. The total amount of interest charged by the respondent for the period of liquidation commencement date till sale of assets is Rs. 1.64 Crores. 

xvii. Respondent has further withheld an amount of Rs. 20 Lacs as the future contingency funds and the same is without any basis. 

 

xviii. The respondent is required to pay an amount of Rs. 1.85 crores to the liquidator on account of the excess realized money along with 12% interest from the respondent. 

 

# 4. The contentions/submissions of the respondent are summarized hereinafter: 

i. The respondent in accordance with Section 52 on the Insolvency and Bankruptcy Code, 2016 applied to the liquidator to realize its security with respect to the long-term loan facility and accordingly the Secured Creditor proceeded to realize its security in accordance with such provision. 

 

ii. Reference is made to Section 52 of Insolvency and Bankruptcy Code, 2016 while stating from a perusal of the said Section it is apparent that the Secured Creditor is entitled to realize its security interest and apply the proceeds to recover the debts due to it and tender to the liquidator any surplus funds which is in excess of the debts due. The Provision nowhere talks about the claim filed by the Secured Creditor with the liquidator but specifically provides for realization towards “debts due to it,” The term “debt” has been defined in Section 3(11) of the Code as follows: “debts means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt” Furthermore “financial debt” has been defined under Section 5(8) which inter alia reads as follows: 

• “financial debt” means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includesa. Money borrowed against the payment of interest; 

• b. Any amount raised by acceptance under any acceptance credit facility or its dematerialised equivalent; 

• c. Any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; 

• d. The amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; 

• e. Receivables sold or discounted other than any receivables sold on non-recourse basis; 

• f. Any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing.

 

iii. The calculation of interest is part and parcel of the definition of debts as stated hereinabove, as such the Secured Creditor is at full liberty to charge interest while recovering its dues under Section 52 and there can be no contrary interpretation of the same. Moreover, Section 35 of the Code, enumerates the Powers and Duties of the Liquidator. Sub-Clause (j) of the provision reads as follows: 

• “(j) to invite and settle claims of creditors and claimants and distribute proceeds in accordance with the provisions of the Code”. 

 

iv. Reliance is also placed on Regulation 37 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation 2016 and it has been argued that it is undisputed that the procedure is laid down in the said  Regulation has been duly followed by the Respondent in realizing its security interest and that there are no lacunae in the same. It is stated that there is nothing either in the Code or in the Regulation which states that the Secured Creditor is not entitled to recover its interest as accrued from the date of liquidation while realizing its security interest. Further, the Code neither provides for or empowers the liquidator to restrain a secured financial creditor from charging interest from the date of its filing its claim on the liquidation commencement date till such time the secured asset is sold by such financial creditor outside the liquidation estate in due adherence and compliance with the law.

 

v. In course of the proceedings, the Respondent Bank has also brought on record various security and loan documents executed between the parties i.e. the Respondent Band and the Corporate Debtor, viz. the sanction letter, Term Loan Agreement, Demand Promissory Note as well as Deed of Hypothecation. The Respondent Bank, in course of its submissions has further highlighted and established before this Tribunal that the right of the bank, being a secured Financial Creditor, is envisaged in terms of the contracts executed by and between the parties, which are valid and enforceable. Neither does the Code regulate nor does the Code provide or delegate powers and/or authority to the liquidator to restrain or restrict the Creditor from charging interest for the period after filing of Form D and actually enforcing its security interest and realizing its debt due in accordance with law. It has been established that the Respondent Bank, under civil laws, are governed by the contractual obligations and is otherwise entitled to charge pre-suit interest, pendente lite interest as well as post-suit interest till such date the debts due and payable are repaid in their entirety unless specifically restricted by the Code or its Regulations laid down thereunder.

 

vi. Reliance is placed on the judgment of the Hon’ble Supreme Court of India in C.K. Saskan vs. Dhanlakshmi Bank Limited [(2009) 11 SCC 60] [Paragraph Nos. 12 to 15] where the Hon’ble Supreme Court of India had held that interest can be awarded in terms of an agreement or statutory provisions as well as by reason of usage, trade having the force of law or an equitable consideration and had further awarded interest pendente lite and future interest which it found, just proper and reasonable. 

 

vii. Regulation 21A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 is not applicable in the present case as this Regulation was brought subsequent to Liquidation proceedings initiated in the present case on 21st of August, 2018.  

 

viii. It is also contended on behalf of the respondent the difference in amounts between form C and D is by way of interest that accrued in the meantime. The rate has been charged at the contractual rate of interest. The filing of a claim before the liquidator in form D does not preclude or prevent or stand in the way of respondent for claiming further interest.The claim in Form D was filed on 18th of September, 2018 together with up-to-date interest. The sale of secured assets of respondent took place on 22nd of October, 2020 in respect to the properties and the sale proceeds were received on 22nd of October, 2020 and 14th of January, 2021 respectively. The respondent during the interregnum period was entitled to continue charge interest charges and costs which the respondent has done in the present case. The interest charged by the respondent is period from date of filing form D till the date of realization of money by respondent. The Form D does not restrict in any manner or relation the future claims of the respondent on account of interest cost and charges. 

 

ix. The above contentions referred in paragraphs have been raised by respondent in its reply affidavit in paragraphs I, J, K and paragraph 8. 

 

x. In paragraph 10 of reply affidavit respondent has denied that the date has been crystallized on the liquidation commencement date and no other or future claim on account of interest was recoverable by the respondent. 

 

# 5. We have heard the Ld. Counsel for the parties and perused the application on the record produced before us along with the pleadings.We find that:

a. The issue that arises out the respective contentions of the parties as referred hereinafter is to see whether the plea of respondent, “neither does the Code regulate nor does the Code provide or delegate powers and/or authority to the liquidator to restrain or restrict the Creditor from charging interest for the period after filing of Form D and actually enforcing its security interest and realizing its debt due” is correct or not. 

 

b. According to the applicant as contended in paragraph 18, it could only be till the commencement of liquidation whereas as per the respondent which could raise its claims in the form of interest etc. till actual realization. 

 

c. For analysing submission on behalf of the Bank and to decide the issue in hand, it is relevant to refer to Chapter IV Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation 2016 reproduced hereinafter; 

• CHAPTER IV. 

• 12. Public announcement by liquidator—

• (1) The liquidator shall make a public announcement in Form B of Schedule II within five days from his appointment. 

• (2) The public announcement shall- (a) Call upon stakeholders to submit their claims or update their claims submitted during the Corporate Insolvency Resolution Process, as on the liquidation commencement date; and (b) Provide the last date for submissions or updation of claims, which shall be thirty days from the liquidation commencement date.

 

# 6. We also notice, on the date of commencement of liquidation in present case on 21-08-2018, position of this part of Regulation prior to the substitution ( On 27-07-2019) stood as hereinbelow. 

• “(2) The public announcement shall— Call upon stakeholders to submit their claims as on the liquidation commencement date; and Provide the last date for submission of claim, which shall be thirty days from the liquidation commencement date.” (Emphasis supplied). 

 

# 7. Therefore, a plain reading of even the previous regulation, prior to 25-07- 2019,makes clear that it is the date of commencement of liquidation and 30 days thereafter which is time limit and stage for submission of the claims by stakeholders. Admittedly, respondent submitted his claims in form D. Now we see from Form D (Proof of claims of Financial Creditors) or Form C (Proof of claim of operation creditor except workmen and employees), part of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, there is column 3 which prescribes 

• ‘Total amount of Claim. Including Interest as at the Liquidation Commencement Date and details of nature of claim (Whether Term Loan, Secured Unsecured)” 

 

# 8. From the above we conclude that: 

a. All claims including interest have to be raised in Form C or D as applicable. 

 

b. Further for raising any such claims by stakeholders, Regulation 12 Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, prescribes outer limit of thirty days from the date of commencement of Liquidation. This is further evident from Form B wherein the claims are invited by the Liquidator wherein time for submission of these claims is thirty days.

 

c. Thus, plea of respondent neither does the Code regulate nor does the Code provide or delegate powers and/or authority to the liquidator to restrain or restrict the Creditor from charging interest for the period after filing of Form D and actually enforcing its security interest and realizing its debt due is in-correct, contrary to provisions/regulations of the Code, indicated above and the same is, therefore, rejected. 

 

d. There are various stages of process of liquidation under the Regulations apart from inviting claims and for which time lines have been prescribed with a view to achieve objective of the Code. 

 

# 9. For the foregoing reasons, we allow this IA and direct the respondent bank to pay an amount of Rs. 1.84 crores to the liquidation estate along with interest @ 6% on this amount from 1st of April, 2021, till the date of its actual payment by the respondent to the liquidation estate. IA 883/KB/2021 is disposed of and CP No.482/KB/2017 is listed for progress report on 29 August, 2022. 

 

# 10. Certified copy of this order may be issued, if applied for, upon compliance of all requisite formalities. 

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