In Volkswagen Finance Private Ltd. Vs Shree Balaji Printopack Pvt. Ltd. (NCLAT Delhi), appeal was filed against the dismissal of application by the Adjudicating Authority seeking a direction to set aside the Order of the Liquidator rejecting the ‘Claim’ of the Appellant.
The facts in brief are that the Company (under Liquidation) namely Shree Balaji Printopack Pvt. Ltd. executed a Loan and Hypothecation Agreement on 25.11.2013, for an amount of Rs. 36,00,000/- payable in 84 monthly instalments of Rs. 61,964/- each from 15.12.2013 to 15.11.2020, for the purchase of an AUDI Q3 TDI 2.0 vehicle. It was stated by the Appellant that they have security of the vehicle in terms of Sections 52 and 53 of the Insolvency and Bankruptcy Code, 2016. It was averred that a demand of Rs. 21,83,819.18/- was made which was not paid and hence there was a ‘default’ and the amount became ‘due and payable’.
The Learned Adjudicating Authority had appointed a Liquidator vide Order dated 03.04.2019 and Claims were invited from the Creditors as per the provisions of the Code. The Applicant namely, M/s. Volkswagen Finance Pvt. Ltd. filed its claim on 22.07.2019 with the copies of the Loan Agreement, the Hypothecation Deed, the Demand Letter and the Registration Certificate of the vehicle together with the invoices concerned for the consideration of the Liquidator. The Applicant had informed the Liquidator that the ‘Charge’ was duly registered by way of hypothecation registration with the Regional Transport Office (RTO) in terms of Section 51 of the Motor Vehicles Act, 1988 (M.V. Act). It is the Applicant’s case that there was no requirement of registration of ‘Charge’ with the R.O.C and that the Liquidator, without examining the Certificate issued by the Registration Authority under the ‘M.V. Act’ dismissed the Claim made by the Applicant on the ground that
i) the Applicant was not a ‘Secured Financial Creditor’ in the absence of the ‘Charge’ being registered with the Registrar of Companies (ROC) under Section 77 (1) of the Companies Act 2013 with respect to the Subject Property.
ii) that the Appellant was not a Secured Creditor entitled to realise the security interest in accordance with Section 52(1)(b) of the Code.
iii) that the Registration of Hypothecation by way of ‘Charge’ under Section 51 of Motor Vehicles Act, 1988 would stand nullified, if the ‘Charge’ was not registered under the Companies Act, 1956/2013.
The NCLAT dismissing the appeal observed that it is clear from Section 52(3)(a) of the Code that before any security interest is sought to be realised by the Secured Creditor under this Section, the Liquidator shall verify such security interest and permit the Secured Creditors to realise only such security interest, the existence of which may be proved either by the records of such security interest maintained by an ‘Information Utility’ or by such other means as may be specified by the Board and Section 52 (3) read with the aforenoted Regulation 21 stipulates that the proof of security interest is ascertained from records available with the ‘Information Utility’ as per the Code; through the Certificate of Registration of ‘Charge’ issued by the ROC under Section 77 of the Companies Act 2013/Section 125 of the Companies Act 1956, or, if there is any proof of Registration of ‘Charge’ with Central Registry of Securitization Asset Reconstruction and Security Interest of India.From the documentary evidence on record it is clear that no ‘Charge’ has been registered under the provisions of Section 77(1) of the Companies Act 2013, in relation to the Subject Property. The Liquidator has rightly referred to Regulation 21 of IBBI (Liquidation Process) Regulation, 2016 and observed that the Appellants ‘Claim’ was not supported by any evidence as prescribed under the said Regulation. It is also an admitted fact that the ‘Charge’ was not registered under Central Registry of Securitization Asset Reconstruction and Security Interest of India.
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