Snehal Kamdar vs Suraksha Asset Reconstruction Ltd. and Anr. - Thus, the existence of a CoC resolution with requisite majority, is the statutory precondition for initiating liquidation under Section 33(2) of the Code. There is no such requirement under section 33(1) of the Code.

 NCLT Mumbai (2026.07.31) in  Snehal Kamdar  vs  Suraksha Asset Reconstruction Ltd. and Anr.  [(2026) ibclaw.in 2923 NCLT, IA(Liq.)/87/2024 in C.P. (IB)/987(MB)2020] held that;

• Section 33(1) provides that where the Adjudicating Authority does not receive a resolution plan before the expiry of the CIRP period or the maximum period permitted for completion of the CIRP, it shall pass an order for liquidation of the Corporate Debtor. Whereas, Section 33(2) of the Code, provides that, at any stage during the CIRP, but before the approval of a resolution plan by the Adjudicating Authority, CoC may, in exercise of its commercial wisdom, pass resolution to liquidate the Corporate Debtor by a vote of not less than 66% of the voting share. Upon such decision being communicated by the RP to the Adjudicating Authority, the Adjudicating Authority is required to pass a liquidation order in terms of Section 33(1)(b). 

• Thus, the existence of a CoC resolution with requisite majority, is the statutory precondition for initiating liquidation under Section 33(2) of the Code. There is no such requirement under section 33(1) of the Code.

Excerpts of the Order; 

# 1. The present Application has been filed under Section 33 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) read with Regulation 14(B) of IBBI (Liquidation) Regulations, 2016 and read with Rule 11 of NCLT Rules, 2016 by the Resolution Professional, Mr. Snehal Kamdar (“Applicant/Resolution Professional”) of M/s. Sapphire Land Development Private Limited (“Corporate Debtor”), seeking the following reliefs:

• “a. To pass order to liquidate the Corporate Debtor;

• b.To appoint Mr. Snehal Kamdar, having IBBI Regn No: BBI/IPA 001/ IPPOO415/ 2017 - 18/10738 as the Liquidator of the Corporate Debtor;

• c. To direct the COC members to ratify the fees incurred by the RP and the CIRP cost outstanding from the date of commencement of CIRP”

Facts as per the Application

# 2. A Petition under Section 7 of the Code was filed by Suraksha Asset Reconstruction Limited (“Respondent No.1”) against the Corporate Debtor, which was subsequently admitted by this Tribunal vide order dated 30.04.2021 thereby initiating the Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor. In terms of the said order, Mr. Ankur Kumar was appointed as the Interim Resolution Professional (“IRP”) of the Corporate Debtor. In accordance with Sections 13 and l5 of the Code, the Applicant published ‘Form A’ (Public Announcement) on 11.05.2021 in Mumbai Edition of Financial Express (English edition) and Pratahkal (Marathi edition) for the purpose of inviting claims from the Creditors of the Corporate Debtor. Further, according to the claims received, the Committee of Creditors (“CoC”) was constituted. The members of the CoC are as follows:

Sr No.	Name of CoC members	Amount admitted (in Cr)	Voting share (in percent)
1.	Suraksha Assets Reconstruction Limited	241.78	51.04%
2.	Unity Small Finance Bank Limited (PMC)	231.91	48.96%

# 3. The IRP was informed that the affairs of the Corporate Debtor were being handled by Adv. Sagar Shetty. However, despite repeated requests to Adv. Sagar Shetty and the suspended directors for the records and information of the Corporate Debtor, no cooperation was received. The CIRP of HDIL was commenced on 20.08.2019. Further, upon learning that the books of account were kept at the premises of Housing Development and Infrastructure Limited (HDIL), the IRP approached its Resolution Professional for the relevant records, but no information was furnished. The IRP also informed the Economic Offences Wing (EOW) of the commencement of the CIRP and sought details of the Corporate Debtor’s assets in its possession.

# 4. In the 2nd CoC Meeting held on 19.06.2021, the IRP apprised the CoC of the above developments, his proposed intervention before the 47th Metropolitan Magistrate Court, and the proposal to examine the sale of the yacht by Punjab and Maharashtra Co-operative Bank Ltd. as a preferential transaction.

# 5. In the 2nd CoC Meeting, Punjab and Maharashtra Co-operative Bank proposed the appointment of Mr. Snehal Kamdar as the Resolution Professional (“RP”) in place of the IRP. Accordingly, I.A. 1566 of 2021 was filed under Section 22(3)(b) of the IBC for his appointment as RP.

# 6. Pending orders on the said application, the IRP continued to discharge his duties and filed an application under Section 19(2) of the IBC against the erstwhile directors due to their continued non-cooperation.

# 7. As the CIRP period of 180 days was due to expire on 06.11.2021, the IRP informed the CoC of the need to seek a 90-day extension and requested approval for publication of Form G. However, in the 5th CoC Meeting, since the CoC did not approve publication of Form G, the IRP proposed initiation of liquidation proceedings against the Corporate Debtor.

# 8. The IRP informed the COC members that the erstwhile Punjab and Maharashtra Co-operative bank (PMC) bank has amalgamated with Unity Small Finance Bank Ltd (“Respondent No. 2”), from 25.01.2022. The IRP elaborating the status of the CIRP mentioned that after the 5thCoC meeting the CIRP period of 180 days ended on 06.11.2021, and that the CoC had not approved 90-day extension of CIRP period under Section 12(2) of the Code. Therefore, the IRP filed liquidation application bearing IA no 2857 of 2021 and thereafter, this Tribunal appointed the Applicant as RP vide order dated 01.06.2023, in I.A. 1566 of 2021.

# 9. In the 8th CoC Meeting held on 29.08.2023, the Applicant informed the CoC that he had taken charge of the records from the IRP, Mr. Ankur Kumar, on 17.06.2023. He further apprised the CoC of the assets standing in the name of the Corporate Debtor, including wetlands in Kerala requiring a survey, a yacht sold by Punjab and Maharashtra Co-operative Bank (with the panchnama and sale proceeds yet to be received), a Range Rover in the custody of the Enforcement Directorate/Economic Offences Wing, certain unidentified assets including shops in Dream Mall, and informed the CoC that extracts from the Registrar of Companies were required to ascertain the complete list of assets.

# 10. In the 9th CoC meeting held on 30.11.2023, the Applicant informed the CoC that an Application needs to be filed for extension of 90 days and exclusion of 740 days. In the said Meeting, the Applicant proposed publication of Form G in view of a prospective resolution applicant. While the Respondent no.2 supported publication of Form G, the Respondent no.1 sought liquidation. The CoC resolved to put the publication of Form G to vote and further decided that, if no prospective resolution applicant came forward within 30 days of its publication, the proposal for liquidation of the Corporate Debtor would be placed before the CoC.

# 11. In the 10th CoC Meeting held on 14.12.2023, the RP informed the CoC that the liquidation application filed by the erstwhile IRP had become infructuous due to procedural developments and changes in the status of proceedings. The Applicant states that the requisite voting threshold of 66% for publication of Form G could not be achieved, leaving liquidation as the only available course.

# 12. In the 11th CoC Meeting held on 02.01.2024, owing to the deadlock in the CIRP, the Applicant placed before the CoC three names for appointment as Liquidator. As the agenda also failed to secure the requisite approval, the RP proceeded to file a fresh application for liquidation. Also, in the 12thCoC meeting held on 01.04.2024, the Applicant put forth the earlier discussion regarding publication of Form G, extension and liquidation. The discussion regarding resolution of the Corporate Debtor was discussed at length in this meeting however the same did not receive requisite majority and hence the present application is filed for initiation of liquidation of the Corporate Debtor.

# 13. The Applicant submits that he consents to continue as Liquidator of the Corporate Debtor subject to clearance of the cost incurred by him and the CIRP cost incurred during the process, both by the COC members approximately to the tune of Rs. 25,03,196/-. Further, the Applicant’s consent form is annexed as Annexure-H with Application, to appoint him the Liquidator of the Corporate Debtor and fees be paid as per Regulation 4(2)(b) of the Insolvency and Bankruptcy Board of India (Liquidation Process), Regulation, 2016. Thus, the Applicant prays that this application for liquidation may be considered and this Tribunal may direct the CoC members to clear the CIRP costs, before liquidator is appointed.

# 14. The Applicant further submits that the present Application was listed for hearing on 24.10.2024, wherein this Tribunal directed the Applicant to implead the CoC members as Respondents in the present IA. Accordingly, the Applicant has impleaded the CoC members as Respondents in the present IA.

Submissions of Respondent No.1:

# 15. Suraksha Asset Reconstruction Limited, the Respondent No.1, submits that post initiation of CIRP, the Respondent no.1 filed its claim with the IRP and thereafter the Respondent No.1 being a Financial Creditor was admitted into the CoC of the Corporate Debtor. At present, the Respondent No.1 is a member of CoC and holds 51.04% of voting share. Whereas, Respondent No.2, is other member of the CoC holding 48.96% of voting share.

# 16. The Respondent No. 1 submits that it has actively participated in the CoC meetings and voted in favour of extending the CIRP by 90 days beyond the initial 180-day period in the e-voting conducted pursuant to the 5th CoC Meeting held on 30.10.2021. However, the resolution failed as Respondent No. 2 abstained from voting. Thus no extension has been sought from this Tribunal.

# 17. In the 9th CoC Meeting held on 30.11.2023, Respondent No. 1 voted against publication of Form G and extension/exclusion of the CIRP period, resulting in failure of the resolutions for want of the requisite majority. Consequently, in the 10th CoC Meeting held on 14.12.2023, the Applicant informed the CoC that a liquidation application was required. While Respondent No. 1 supported the resolution for filing the liquidation application, Respondent No. 2 opposed it. In the 11th CoC Meeting held on 02.01.2024, the Applicant apprised the CoC that, since the CIRP period had expired and neither publication of Form G nor extension of the CIRP had been approved, liquidation proceedings were required to be initiated. The Applicant placed quotations from three Insolvency Professionals for appointment as Liquidator and clarified that he had not offered himself for the role to ensure transparency. The CoC decided to finalise the proposed Liquidator after evaluating the candidates through presentations.

# 18. Pursuant thereto, a presentation by Mr. Gaurang Shah was conducted on 24.01.2024, and by email dated 07.02.2024, Respondent No. 1 expressed its preference for his appointment as Liquidator. At the 12th CoC Meeting held on 01.04.2024, Respondent No. 1 reiterated its support for liquidation and again voted against publication of Form G, while Respondent No. 2 voted in favour.

# 19. Respondent No. 1 submits that, once the CoC declined publication of Form G, the Applicant ought to have promptly filed the liquidation application. By email dated 17.07.2024, Respondent No. 1 expressed concern over the delay and mounting CIRP costs. Although the Applicant subsequently informed the CoC that the present application had been filed, he proposed his own appointment as Liquidator despite having earlier declined to do so, and without any CoC resolution approving his appointment. Respondent No. 1 continues to support the appointment of Mr. Gaurang Shah as Liquidator.

# 20. Respondent No. 1 supports liquidation of the Corporate Debtor but opposes prayer clauses (b) and (c). It contends that the Applicant cannot seek directions regarding payment of CIRP costs and fees in a liquidation application and, in any event, has failed to substantiate the claim of Rs. 25,03,196/- with requisite pleadings, supporting documents, invoices or CoC approvals, as required under the Code, the Regulations and the IBBI Circular dated 12.06.2018. It is further submitted that the Applicant failed to effectively discharge his duties as Resolution Professional and is, therefore, not entitled to the claimed amount. While supporting liquidation due to the absence of any viable resolution and mounting CIRP costs, Respondent No. 1 opposes the Applicant’s appointment as Liquidator in view of the IBBI recommendation dated 18.07.2023, the Applicant’s earlier refusal to offer himself for the role, and the absence of CoC approval. It accordingly supports the appointment of Mr. Gaurang Shah as Liquidator.

Submissions of Respondent No.2 :

# 21. Respondent No. 2 submits that in the 8th and 9th CoC Meetings, the Applicant apprised the CoC of the records received from the erstwhile IRP, the assets of the Corporate Debtor, including approximately 39 shops at Dream Mall, and the lack of cooperation from the Administrator of Dream Mall, upon which Respondent No. 2 suggested filing an application for non-cooperation.

# 22. Respondent No. 2 contends that the Applicant failed to discharge his statutory duty under Regulation 36A of the CIRP Regulations by not publishing Form G despite voting in favour of its publication and the existence of assets with resolution potential. It is alleged that the Applicant wrongly treated publication of Form G as subject to CoC approval, misrepresented the legal position, and prematurely pursued liquidation. Respondent No. 2 further submits that, in the 12th CoC Meeting held on 01.04.2024, the Applicant sought the CoC’s decision on publication of Form G or liquidation pursuant to the directions of this Adjudicating Authority, although publication of Form G did not require CoC approval. While Respondent No. 1 supported liquidation, Respondent No. 2 opposed the proposal.

# 23. It is further contended that the liquidation application was filed without the requisite 66% CoC approval and without any resolution approving the Applicant’s appointment as Liquidator. Accordingly, Respondent No. 2 submits that the application is contrary to the IBC and liable to be rejected.

Rejoinder by the Applicant:

# 24. In addition to the main Application, the Applicant, by Rejoinder dated 12.06.2025, submits as follows:

a. Having faced a deadlock in the CIRP for over four years and exhausted all viable avenues for resolution, the Applicant filed the present liquidation application as a measure of last resort in discharge of his statutory duties. The Applicant submits that he diligently traced and identified assets of the Corporate Debtor that had not been discovered by the erstwhile IRP, including: (i) a 12-acre land parcel in Kerala, which he personally inspected with CoC representatives on 29.09.2023; and (ii) shops at Dream Mall, which he verified through a site visit and follow-up communications. Owing to non-cooperation from the Administrator and the RP of HDIL, the CoC directed initiation of proceedings under Section 19(2) of the IBC.

b. The Applicant further submits that legal action for recovery of the Dream Mall shops could be initiated only upon confirmation of the Corporate Debtor’s ownership, which the CoC undertook to verify but has not confirmed till date. It is further submitted that, after the CoC failed to approve extension of the CIRP or publication of Form G, the Applicant proposed three independent Insolvency Professionals as Liquidator and offered his own name only after the CoC failed to reach a consensus. The Applicant contends that the IBBI communication dated 18.07.2023 is recommendatory and not mandatory, and that he duly discharged his statutory duties, disclosed all fees and expenses to the CoC, personally incurred CIRP costs, and has yet to receive payment of his fees and expenses.

Analysis & Findings

# 25. We have heard Ld. Counsels for the parties and perused the record.

# 26. It is the case of the Applicant that although resolution for publication of Form- G for Invitation for Expression of Interest and Liquidation of the Corporate Debtor was placed before CoC for approval in CoC meetings, none of the issues has been approved by CoC with requisite percent of votes necessary for the same. The deadlock between the CoC members continued upto the expiry of CIRP period i.e. on 06.11.2021, with no extension sought. Hence, the present IA is filed for initiation of Liquidation process of the Corporate Debtor.

# 27. Per contra, the Respondent No. 1, holding 51.04% voting share in the CoC, though supports the liquidation of the Corporate Debtor, however, it opposes the appointment of the Applicant as Liquidator and instead proposes the appointment of Mr. Gaurang Shah, and further it disputes the Applicant’s claim towards RP’s fees and CIRP costs amounting to Rs. 25,03,196/- as being unsubstantiated. Whereas, the Respondent No. 2, holding 48.96% voting share in the CoC, opposes the liquidation of the Corporate Debtor. It contends that the Applicant acted contrary to Regulation 36A of the IBBI (CIRP) Regulations by treating publication of Form-G as subject to CoC approval and further submits that the present liquidation application has been filed without the requisite 66% CoC approval or any resolution approving the Applicant’s appointment as Liquidator.

# 28. To deal with the contentions of Respondent No.2, it is necessary to refer Section 25(2)(h) of the Code and Regulation 36A of IBBI (CIRP) Regulations, 2016 (as amended by IBBI (CIRP) (Fourth Amendment) Regulations, 2025 w.e.f. 26.05.2025):

• “Section 25-Duties of resolution professional.

• (2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:—

• (h) invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans;”

• “Regulation 36A of IBBI (CIRP) Regulations, 2016

• 36A. Invitation for expression of interest.

• (1) The resolution professional shall publish brief particulars of the invitation for expression of interest in such form as notified by the Board through circular of the Schedule at the earliest, not later than sixtieth day from the insolvency commencement date, from interested and eligible prospective resolution applicants to submit resolution plans.”

# 29. As per Section 25(2)(h) of the Code, if the Committee of Creditors (CoC) has approved the criteria, as may be laid down by the Resolution Professional (RP), then the RP shall invite Prospective Resolution Applicants (PRAs). Thus, under Section 25(2)(h) of the Code, approval of the CoC is required for such criteria, on the basis of which the RP can invite PRAs. Further, on a bare perusal of Regulation 36A(1), it is evident that there are two obligations cast upon the RP under the said Regulation: (i) publication of the brief particulars of the invitation for Expression of Interest in the form notified by the IBBI, and (ii) such publication shall be made within 60 days from the insolvency commencement date. Thus, whereas Section 25(2)(h) mandates the invitation of Expressions of Interest in accordance with the eligibility criteria approved by the CoC, Regulation 36A(1) prescribes the procedure for such invitation. It is, therefore, evident that approval of the eligibility criteria by the CoC under Section 25(2)(h) is a prerequisite to the publication of Form G by the RP. Further, the Regulation does not override or dispense with the requirement under Section 25(2)(h), but is subservient to the said provision.

# 30. In the present case, at the 12th CoC Meeting held on 01.04.2024, the proposal for publication of Form G, along with the eligibility criteria for Prospective Resolution Applicants (PRAs), failed to secure the requisite approval, as Respondent No. 1, holding 51.04% voting share, did not vote in its favour. Accordingly, in the absence of approval of the eligibility criteria by the CoC, the Resolution Professional could not have proceeded with the publication of Form G, and therefore the related contention of the Respondent No.2 is not found to be acceptable.

# 31. It is further observed that Section 25(1) casts a duty upon the RP to preserve and protect the Corporate Debtor as a going concern while discharging the functions specified under section 25(2). In the present case, Respondent No.1 has categorically stated that the Corporate Debtor had no business operations, employees, or going concern status. In such circumstances, publication of Form-G and invitation of resolution applicants would not have materially advanced the objective of resolution.

# 32. The Respondent No.2 has contended that present liquidation application has nevertheless been filed without the requisite approval of 66% voting share of the CoC and therefore it is in violation of provision of Section 33(2) of the Code. In this regard, it is necessary to refer section 33 of the Code under which the present application is filed. Section 33 stipulates that:

• “Section 33-Initiation of liquidation.

• (1) Where the Adjudicating Authority, —

• (a) before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under section 12, as the case may be, does not receive a resolution plan under sub-section (6) of section 30; or

• (b) rejects the resolution plan under section 31 for the non-compliance of the requirements specified therein, it shall—

• (i) pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter;

• (ii) issue a public announcement stating that the corporate debtor is in liquidation; and

• (iii) require such order to be sent to the authority with which the corporate debtor is registered.

• (2) Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors approved by not less than sixty-six percent of the voting share to liquidate or dissolve the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) to liquidate (ii), (iii), (iv) and (v) of clause (b) of sub-section (1).

• Explanation- For the purposes of this sub-section, it is hereby declared that the committee of creditors may take the decision to liquidate the corporate debtor, any time after its constitution under sub-section (1) of section 21 and before the confirmation of the resolution plan, including at any time before the preparation of the information memorandum.”

# 40. Section 33(1) provides that where the Adjudicating Authority does not receive a resolution plan before the expiry of the CIRP period or the maximum period permitted for completion of the CIRP, it shall pass an order for liquidation of the Corporate Debtor. Whereas, Section 33(2) of the Code, provides that, at any stage during the CIRP, but before the approval of a resolution plan by the Adjudicating Authority, CoC may, in exercise of its commercial wisdom, pass resolution to liquidate the Corporate Debtor by a vote of not less than 66% of the voting share. Upon such decision being communicated by the RP to the Adjudicating Authority, the Adjudicating Authority is required to pass a liquidation order in terms of Section 33(1)(b). Thus, the existence of a CoC resolution with requisite majority, is the statutory precondition for initiating liquidation under Section 33(2) of the Code. There is no such requirement under section 33(1) of the Code.

# 41. Having regard to the above provisions, it is necessary to examine the facts of the case and applicability of relevant provisions for liquidation of the Corporate Debtor. In the present case, the Corporate Debtor was admitted into CIRP vide order dated 30.04.2021 and the initial period of 180 days of CIRP expired on 06.11.2021. Neither any extension of the period of CIRP was thereafter sought nor any resolution plan has been received by the Adjudicating Authority under section 30(6) of the Code. Under these facts and circumstances, provisions of section 33(1) of IBC would be applicable and not the provisions of section 33(2) of the Code as contended by the Respondent No.2. Therefore, the contentions of the Respondent No.2 regarding passing of resolution by CoC with requisite majority before filing an application for liquidation of the Corporate Debtor is not applicable in this case.

# 42. Insofar as prayer clause (b) is concerned, Respondent No. 1 has proposed Mr. Gaurang Shah to be appointed as Liquidator and it has also communicated its preference for his appointment as Liquidator vide email dated 07.02.2024.

# 43. In the present case, no resolution approving liquidation or recommending the appointment of a Liquidator has been passed by the CoC with the requisite majority. The Applicant has volunteered his own name for appointment as Liquidator, whereas Respondent No. 1, despite supporting the initiation of liquidation, has opposed the Applicant’s appointment and instead proposed another Insolvency Professional. In these circumstances, and in the absence of any valid recommendation of the CoC, this Adjudicating Authority is not inclined to appoint either the Applicant or the Insolvency Professional proposed by Respondent No. 1 as the Liquidator of the Corporate Debtor. Accordingly, prayer clause (b) seeking the appointment of the Applicant as Liquidator is rejected.

# 44. As regards prayer clause (c), Respondent No. 1 contends that the Applicant cannot seek directions for payment of the Resolution Professional’s fees and CIRP costs in an application filed for liquidation of the Corporate Debtor. Having considered the rival contentions, it is observed that the present application is primarily seeking liquidation of the Corporate Debtor, and no substantive arguments have been advanced on behalf of the Applicant with respect to the claim for CIRP costs and fees. Further, no supporting documents with CoC ratification, have been referred by the Applicant for the claim of CIRP costs and fees. Accordingly, this Adjudicating Authority is not inclined to adjudicate upon the said issue in the present proceedings. The question relating to the payment of the CIRP costs and the Resolution Professional’s fees is kept open and shall be considered independently, if and when the Applicant files an appropriate application. Accordingly, with the above direction, the prayer clause (c) stands disposed of.

# 45. In view of the aforesaid facts and circumstances, particularly considering that the CIRP commenced on 30.04.2021 and the prescribed CIRP period expired on 06.11.2021 without any extension being sought, that no resolution plan has been submitted to this Adjudicating Authority under Section 30(6) of the Code, and that the Corporate Debtor has ceased operations and is no longer a going concern, this Adjudicating Authority is of the considered view that the Corporate Debtor is liable to be liquidated under Section 33(1)(a) of the Code, and accordingly, liquidation proceedings deserve to be initiated in accordance with Chapter III of the Code. Accordingly, the Corporate Debtor is ordered to be liquidated and following consequential order is passed.

ORDER

a) The Corporate Debtor, Sapphire Land Development Private Limited is directed to be liquidated in accordance with the provisions of Chapter III of the Code and applicable regulations. Consequently, the Applicant/RP stands relieved subject to procedural/necessary compliances under Section 34(5) of the Code.

b) In view of discussion at Para No.42 and Para No.43 of this order, we deem it appropriate to appoint an Insolvency Professional from the panel of Insolvency Professionals shared by the IBBI, as Liquidator in this case. Accordingly, Mr. Manish Shah bearing Registration No. IBBI/IPA-001/IP-P00094/2017-18/10194; having address at A/502, Krishna Palace, Thakur Complex, Kandivali (East), Mumbai, Maharashtra ,400101, e-mail id: mdshah0211@gmail.com having AFA valid upto 30.06.2027, is appointed to act as the Liquidator in terms of Section 34(1) of the Code.

c) That the Liquidator shall initiate the liquidation process as envisaged under Chapter III of the Code and the Liquidation Process Regulations applicable on the date of passing of this order. He shall take control of all the assets of Corporate Debtor and also continue or institute proceedings in respect of an avoidance transactions or fraudulent or wrongful trading, if any, as per section 35(1)(l) of the Code.

d) The liquidator for conduct of the Liquidation proceedings will be entitled to the fees as per the Regulation 4 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, applicable on the date of passing of this order.

e) The Committee of Creditors constituted under section 21 shall continue to function during the liquidation process as per Regulation 8 of the IBBI (Liquidation Process) Regulations, 2016.

f) A fresh moratorium shall commence under Section 33(1)(iv) of the Code.

g) The Liquidator shall issue public announcement stating that the Corporate Debtor is in liquidation.

h) This Order shall be deemed to be a notice of discharge to the officers, employees and workmen of the Corporate Debtor, except when the business of the Corporate Debtor is continued during the liquidation process by the Liquidator.

i) The Liquidator shall submit a Preliminary Report to the Adjudicating Authority within 30 days from the liquidation commencement date as per Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016. The Liquidator shall also submit progress reports as per Regulation 15 of the Liquidation Process Regulations.

j) The Liquidator is hereby authorised to represent the Corporate Debtor before the Government Authorities, if required.

k) Registry shall furnish a copy of this Order within seven days from the passing of this Order to the following:

• a. Insolvency and Bankruptcy Board of India;

• b. Regional Director (Western Region), Ministry of Corporate Affairs;

• c. Registrar of Companies, Mumbai-I;

• d. Official Liquidator attached to Bombay High Court;

• e. Erstwhile Resolution Professional, Mr. Snehal Kamdar.

• f. Liquidator, Mr. Manish Shah.

# 46. Accordingly, the I.A(LIQ.)/87/2024 is allowed in above terms and stands disposed of.

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Akme Sarvodaya Dreamventures LLP and Ors. Vs. Megha Agrawal - A conjoint reading of section 55(6)(b) of Transfer of Property Act, 1882 and section 3(31) of the Code, a ‘statutory charge’ is created in favour of the buyer of the property of corporate debtor and such buyer is entitled to be treated as secured creditor of the corporate debtor for the amount paid by it towards purchase of the property.

  NCLT (2026.04.20)  in Akme Sarvodaya Dreamventures LLP and Ors. Vs. Megha Agrawal [(2026) ibclaw.in 1129 NCLT, Company Appeal 10/2024 in C.P. No. (IB) 3683/2018] held that;-

• The provisions of section 55(6)(b) as quoted above makes it abundantly clear that buyer of a property is entitled to charge on the property, for the purchase money paid by it in anticipation of delivery of the property. Further all provisions which apply to a simple mortgage shall also apply to a charge.

• It is plain from the above provision that, in absence of a contract to the contrary, the buyer will have a charge on the seller’s interest in the property which is subject- matter of the sale agreement in so far as the purchase money and interest on such amount are concerned, unless the buyer has improperly declined to accept delivery. The charge is available against the seller and all persons claiming under him. This charge in favour of the buyer is the converse of the seller’s charge under Section 55(4) (b). The buyer’s charge under this section is a statutory charge and differs from a contractual charge which a buyer may be entitled to claim under a separate contract. No charge is available unless the agreement is genuine.

• This charge is a statutory charge in favour of a buyer and is different from contractual charge to which the buyer may become entitled to under the terms of the contact, and in substance a converse to the charge created in favour of the seller under Section 55(4)(b). Consequently, the buyer is entitled to enforce the said charge against the property and for that purpose trace the property even in the hands of third parties

• The said statutory charge gets attracted and attaches to the property for the benefit of the buyer the moment he pays any part of the purchase money and is only lost in case of the purchaser’s own default or his improper refusal to accept delivery.

•  From, the reading of section 55(6) of Transfer of Property Act,1882 as interpreted by the Hon’ble Supreme Court in the case of Delhi Development Authority (supra), there is no iota of doubt that the buyer is entitled to have a statutory charge over the sellers interest in the property and the same principle which is applicable to mortgages shall apply to statutory charge under 55(6)(b).

• Thus, it is settled proposition of law that by virtue of provisions of section 55(6)(b) of Transfer of Property Act, 1882 buyer who has paid purchase money to the seller shall have statutory charge over the property of the seller to the extent of the purchase money paid by it.

• Plain reading of section 3(31) of the Code, security interest includes charge and same principle shall apply as mortgage. In the wake of discussion and clear law laid down by the Hon’ble Supreme Court as captured in the case of Kolkata Municipal Corporation (supra) the Appellants shall be treated as secured creditors.

• A conjoint reading of section 55(6)(b) of Transfer of Property Act, 1882 and section 3(31) of the Code, a ‘statutory charge’ is created in favour of the buyer of the property of corporate debtor and such buyer is entitled to be treated as secured creditor of the corporate debtor for the amount paid by it towards purchase of the property.

Excerpts of the order;

# 1. This appeal has been filed by Akme Sarvodaya Dream ventures LLP (‘Appellant No.1’), Hiraman Developers Private Limited (‘HDPL’/ Appellant No.2’), HDL Housing Development Company (‘Appellant No.3’) hereinafter (Collectively referred as ‘the Appellants’) under Section 42 of the Insolvency and Bankruptcy Code, 2016 (‘the Code’), seeking following reliefs: –

• a) This Tribunal may be pleased to condone the delay in filing the present appeal.

• b) This Tribunal may be pleased to allow the present Appeal under Section 42 of the Code.

• c) This Tribunal may be pleased to set aside and reverse the decision of the Liquidator dated 24.07.2023 and 04.12.2023 in so far as she has:

• i. not admitted the Appellants claim to be considered as secured creditors, only admitted their claim as unsecured creditors.

• ii. Rejected the Appellants claim for interest.

• d) This Tribunal may be pleased to allow the Appellants claim in its entirety i.e.

• i. Declare and hold the Appellants are secured financial creditors.

• ii. Declare and hold that the Appellants are entitle to admission of their claim for interest at 18% p.a. or such other rate of interest as this Tribunal deems fit.

• e) This Tribunal may be pleased to direct the Respondent, Liquidator to amend and publish an updated list of stakeholders to reflect the Appellants’ claim as a secured creditor, along with interest and take all such consequential steps including updating /reconstituting the Stakeholders’ Consultation Committee.

• f) Pending the hearing and final disposal of this Appeal, this Tribunal may be pleased to:

• i. Restrain the Liquidator from taking any steps towards the sale of the Subject Property (described in Ex. A herein).

• ii. Restrain the Liquidator from taking any material decision in the liquidation process of the Corporate Debtor.

• g) For such other reliefs as this Tribunal may deem fit in the facts and circumstances of this case.

Brief Facts

# 2. Following are the relevant facts set out in the application and required to be noticed for the adjudication of the present application.

2.1. M/s Brajesh Construction Pvt Ltd (‘Corporate Debtor’) owns piece of land described as Plot No. 1-A, situated at Revenue Village Tithardi, Tahasil Girva, District Udaipur (Rajasthan) under Khasra No. 2507 to 2509, 2510 M, 2475, 2476, 3556/2510. The total area of the said plot No. 1A is 4,22,150 sq. ft. (approx. 42,000 sq. meters) by the name of AVL Tivona City (‘Subject Property’).

2.2. The Corporate Debtor had mortgaged the subject property in favour of Dewan Housing Finance Limited (‘DHFL’). Due to default in repayment of loan by the Corporate Debtor, in 2018, DHFL initiated proceedings under the SARFAESI Act to take possession and to sell the subject property.

2.3. On 01.05.2018, the Corporate Debtor, sent a letter to DHFL seeking one-time settlement (‘OTS’) and stating that HDPL had agreed to purchase the subject property and pay Rs. 22 crores as OTS. Some of relevant excerpts from the said letter are reproduced below:

“As you are aware that real estate sector is passing through a very bad phase and we are not in the position to raise fund for completing the Project “Trivona City on our own and hence we have negotiated with a very reputed Developer M/s Hiraman Developer Private Limited,2, Dhanawat Tower, Shastri Circle, Udaipur, Rajasthan-313001 for outright purchase of the project. They have agreed to buy the project on “As is where is basis” at Rs.22.00 Crores (Rupees Twenty-Two Crores Only) and have agreed to pay the bank directly OTS amount of Rs. 22.00 Crores. To show their intention a demand draft no. 620891 of Rs. 2.00 Crores dated 01.05.2018 of Kotak Mahindra Bank, Trimurti Heights, 8-3 Bank Street, Udaipur 313004, drawn on DHFL will be handed over to your office. Further, they also enclose post-dated cheques of Kotak Mahindra Bank drawn in DHFL name as follows:

Cheques No.	Date	Amount (Rs.)
000113	14/05/2018	1,00,00,000/-
000114	15/05/2018	1,00,00,000/-
000115	16/05/2018	1,00,00,000/-

The buyer has agreed to deposit balance OTS amount of Rs. 17 crores (Rupees ‘Seventeen Crores only) on or before 14th August 2018. However, as you are aware that the Legal heirs of earlier seller has created frivolous litigation on portion of our project land, M/s Hiraman Developers Pvt. Ltd. Buyer of the project would like to settle all the disputes, legal or otherwise related to title which may take 3 months as we have to follow the due process of law for eviction of illegal encroachment on our project land. We have already filed an FIR with the police station and also taken steps for eviction. The buyer M/s Hiraman Developers are engaged in property developments for many years have completed 2000 flats in Udaipur. Therefore, they seek time of at least 3 months to pay the balance OTS – amount of Rs.17 Cr with the bank.”

2.4. DHFL acknowledged the said OTS letter of the Corporate Debtor with remarks “In principally agreeable for OTS proposal of Rs. 22 crore subject to received (sic) payment of Rs. 5 crores before 16.05.2018. OTS letter with all other terms and conditions will be issued post 16.05.2018.” Copy of the letter dated 01.05.2018 from Corporate Debtor to DHFL acknowledging OTS (and having endorsement of “in principal agreeable” by DHFL) is annexed as Exhibit B.

2.5. On 02.05.2018, HDPL handed over the Demand Draft for Rs. 2 crore to DHFL on behalf of the Corporate Debtor as part payment towards OTS, with covering letter dated 01.05.2018 and also undertook to pay the remaining OTS amount on or before 16.08.2018.

2.6. Contemporaneously, the Corporate Debtor and HDPL also entered into an Agreement dated 03.05.2018, which stated that the Corporate Debtor would sell the Subject Property to HDPL upon satisfaction of the OTS amount to DHFL. Copy of Agreement dated 03.05.2018 along with translated Copy is annexed as Exhibit D-1 and D-2 respectively.

2.7. HDPL sent a letter dated 16.05.2018 to DHFL seeking discount of Rs. 2 crores on account of disputes pending with respect to title of the Subject Property. DHFL, vide its letter dated 22.05.2018, agreed to the OTS of Rs. 21.95 crores and stated that it required receipt of Rs. 16.95 crores on or before 16.08.2018.

2.8. Subsequently, HDPL sent letter dated 04.12.2018 to DHFL informing that OTS commitment was not fulfilled due to stay order granted in favour of one Madhulika Singh pertaining to structures located at AVL Tivona City. It was further stated that now the Hon’ble High Court has vacated the stay and it had arranged for further financing of Rs. 4.5 crores from its group concerns viz. Appellant No. 1 and Appellant No. 3 and requested that the validity period of OTS be extended until 15.03.2019 along with further discount of Rs. 2.95 crores. Copy of letter dated 04.12.2018 is annexed as Exhibit H to the Company Appeal.

2.9. Thereafter, DHFL sent a letter dated 09.01.2019 addressed to the Corporate Debtor and the three appellants herein agreeing to reduce OTS amount to Rs. 19 crores and recorded that:

• i. It had received additional payment of Rs. 4.5 crores. Therefore, the total payment received was Rs. 9.5 crores.

• ii. It required the balance payment of Rs. 9.5 crores for which the Corporate Debtor as well the Purchasers i.e. all three appellants shall be liable to pay on or before 28.02.2019.

• iii. It had no objection to Appellants purchasing the Project is conditional subject to payment of balance OTS amount. Copy of letter dated 09.01.2019 is annexed as Exhibit I to the Company Appeal.

2.10. An agreement for Sale was executed on 24.01.2019 between the Corporate Debtor as Seller on one side and the three appellants as Purchasers on the other side for sale of the subject property for a total consideration of Rs. 19 crores, out of which Rs. 9.5 crore stood paid to DHFL and the balance amount was to be paid by 28.02.2019. The Copy of Sale Agreement dated 24.01.2019, along with the translated copy is annexed as Exhibit K-1 and K-2 respectively.

2.11. Thereafter DHFL issued letter dated 18.02.2019 addressed to the Corporate Debtor and the three appellants stating that the loan account of the corporate debtor was fully settled. Final settlement letter dated 18.02.2019 issued by DHFL is annexed as Exhibit L.

3. Additional Affidavit dated 26.03.2026

3.1. As the details of balance payment of Rs. 9.5 crores, as per the Sale Agreement dated 24.01.2019 could not be found, hence this Tribunal vide order dated 23.02.2026, sought clarification for the same.

3.2. Pursuant thereto, the Applicant has filed Additional Affidavit dated 26.03.2026, relevant extract of which is reproduced as under:

Quote

• 3. It is clarified that the Agreement to Sell dated 24th January 2019 was executed between the Corporate Debtor and the Appellants, recording that the Corporate Debtor would transfer the Subject Property (as defined in the Company Appeal) upon payment of the balance OTS consideration to Dewan Housing Finance Limited (“DHFL”), being the entity in whose favour the Subject Property had been mortgaged by the Corporate Debtor. Under the said arrangement, the OTS consideration was Rs. 19 crores, out of which Rs. 9.5 crores had already been paid, and the balance amount of Rs. 9.5 crores were required to be paid by the Appellants to DHFL.

• 4. Thereafter, it was agreed between the parties, including DHFL that the total OTS consideration would stand reduced from Rs. 19 crores to Rs.17.5 crores. Consequently, the balance amount payable by the Appellants to DHFL stood reduced to Rs. 8 crores. In furtherance thereof, the Appellants made the following payments to DHFL as also reflected in Exhibit J at page 54 of the Company Appeal:

Company	Date	Amount	RTGS Ref No.
Akme Sarvoday Dreamventures LLP	16.02.2019	3,50,00,000	MRGBH 19047715895
Akme Sarvoday Dreamventures LLP	18.02.2019	4,00,00,000	SBINH 19049056844
Hiraman Developers Pvt Ltd	26.02.2019	50,00,000	KBKR 19022600848239

• 5. In furtherance of the aforesaid settlement, DHFL issued a Full and Final Settlement Letter in favour of the Corporate Debtor and the Appellants in respect of the dues of the Corporate Debtor and the charge created over the Subject Property which is at Exhibit L, Page 66 of the Company Appeal.

• 6. Pursuant thereto, the Corporate Debtor and the Appellants addressed a letter dated 1st March 2019 requesting release of all title documents pertaining to the Subject Property in favour of the Appellants, which documents were subsequently released to the Appellants on 14th March 2019. A copy of the 1st March 2019 letter is at Exhibit M, Page 67 of the Company Appeal.

• Unquote

4. CIRP/Liquidation process

4.1. In the meantime, the Corporate Debtor was admitted into Corporate Insolvency Resolution Process (‘CIRP’) vide order dated 31.01.2019. As no resolution plans were received, this Tribunal ordered for liquidation of the Corporate Debtor vide order dated 10.05.2023 and appointed the Respondent as the Liquidator of the Corporate Debtor.

4.2. Pursuant thereto the Liquidator made a public announcement under Form B on 27.05.2023 calling upon the Stakeholders of the Corporate Debtor to submit their claims, Accordingly, the Appellants filed their claim before the Respondent as secured creditors.

4.3. The appellants filed their claims as per following details:

Name of Financial Creditor

Akme Sarvoday Dreamventures LLP AAM-7017

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: Rs, 11,00,00,000/- Interest: Rs,19,21,83,054/- Total Claim: 30,21,83,54/- (Amount secured by statutory charge on the property (more particularly described herein below) Xxxxx In order to settle the issue and to get a clear title of the property, we agreed to see to the litigation and work towards finding a way to settle the same. However, the High court had stayed a stay with respect to the property, which was vacated in December 2018. Accordingly, after various discussions we finally settled Shakti and Madhulika Singh. The same was informed to DHFL and accordingly the OTS amount was reduced to Rs.19 crores and thereafter to Rs.17.5 crores. An agreement dated 24.01.2019 was executed between the Corporate Debtor and the sale of property was settled at the revised settlement amount. Details of payments: Date Particular Amount (Rs) 29.11.2018 DHFL 20000000 01.12.2018 DHFL 10000000 16.02.2019 DHFL 35000000 18.02.2019 DHFL 40000000 In addition to aforesaid payments, in order to clear the liability of the company, payment is made to one of the flat buyers of the Company of Rs. 50,00,000/-.

 

Name of Financial Creditor

Hiraman Developers Pvt Ltd CIN: U45201RJ2008PTC025670

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: Rs.6,00,00,000/- Interest: Rs.13,08,21,196/- Total Claim: Rs.19,08,21,196/- (Amount secured by statutory charge on the property (more particularly described herein below) Details of payments: Date Particular Amount (Rs) 01.05.2018 DHFL 20000000 15.05.2018 DHFL 30000000 26.02.2019 DHFL 5000000 In addition to aforesaid payments, in order to clear the liability of the company, payment is made to one of the flat buyers of the Company of Rs. 50,00,000/-.

 

Name of Financial Creditor	HDL Housing DevelopmentCompany. PAN NO: AAJFH6415R
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: Rs.1,50,00,000/- Interest: Rs.2,83,90,913/- Total Claim: Rs.4,33,90,913/- (Amount secured by statutory charge on the property (more particularly described herein below)

4.4. The Liquidator conveyed to the Appellants vide email dated 24.07.2023 that the Appellants’ claims towards principal amount as unsecured creditors was admitted but the interest amount was provisionally rejected.

4.5. Aggrieved by the communication of the Liquidator, the Appellants requested the Liquidator for a hearing to explain their claims. The hearing was conducted by the Liquidator on 07.11.2023. However, the Liquidator did not admit the appellants as secured creditors nor admitted the interest claims and addressed an e-mail dated 04.12.2023 to the Appellants advising the Appellants to approach the appropriate authority.

# 5. Being aggrieved by the Liquidator’s order dated 04.12.2023 of not admitting appellants claims as secured creditors and also not admitting interest claims, the Appellants have jointly preferred the present Appeal seeking prayers as quoted in para 1 above.

# 6. Grounds of Appeal:

The Appellants had made payments on behalf of the Corporate Debtor to DHFL against sale consideration to sell the Subject Property to the Appellants. Despite completing its obligations under the Sale Agreement and making the entire sale consideration by clearing the OTS amount to DHFL, the Corporate Debtor has not transferred title in the Subject Property to the Appellants. Therefore, the Appellants are entitled to protection of Section 55(6)(b) of the Transfer of Property Act, 1882 by way of a charge on the Subject Property. The Appellants are also entitled to interest on the amount claimed.

# 7. Reply by the Liquidator:

7.1. The Respondent sent a letter dated 24.07.2023 to the Applicants informing them, that their claim had been verified as per Regulation 30 of IBBI (Liquidation Process) Regulations,2016, and on basis of proof submitted the Appellants’ claim was admitted as follows:

Party	Amount of claim admitted (Rs.)
Appellant No.1	11,00,00,000
Appellant No.2	6,00,00,000
Appellant No.3	1,50,00,000
Total	18,50,00,000

7.2. After examining the claims, the Liquidator had provisionally rejected the interest claim amount as no financial contract was made available duly supporting the claim for interest payment and no contractual loan agreement was available that adequately established the debt on account of the interest portion. Therefore, the Liquidator informed the Appellants vide email dated 24.07.2023 that the interest portion was provisionally rejected, however, further opportunity was given to the Appellants to submit supporting documents in event of non-submission of enough proof, the claim would not be admissible.

7.3. It was submitted that despite sending emails, Appellants have not submitted necessary documents to enable evaluation and processing of their claims therefore, it was not possible to admit the whole claims of the Appellants.

7.4. It is submitted that the Liquidator does not have jurisdiction to go into the prayer’s sought by the Appellants. There is no direct privity of contract/documentation to verify and admit the claim pertaining to the interest.

DISCUSSION AND FINDINGS

# 8. Heard Ld. Counsel for the parties and perused the record.

# 9. We note that vide email dated 04.12.2023, the Liquidator after giving hearing to the appellants, finally refused to admit them as secured creditors and also rejected their claim for interest. The limitation for filing the Appeal expired on 18.12.2023. But the present appeal was filed on 19.04.2024. The Appellants have prayed for condonation of delay. The Hon’ble NCLAT in the case of Canara Bank v. Commercial Tax Department, Madhya Pradesh and Anr.; (2023) ibclaw.in 342 NCLAT has held that, delay in filing the Appeal under Section 42 of the Code is condonable while exercising the power under Section 5 of the Limitation Act. Having gone through the appeal and in the interest of delay is condoned.

# 10. By way of the present Appeal, the Appellants are assailing the decision of the Liquidator, wherein the Liquidator has, though admitted their principal claims but did not consider them as secured creditors and also rejected their claim for interest.

# 11. The three Appellants before us had filed three separate claims as per details mentioned in para 4.3 above. After verification of claims, the Liquidator, vide letter dated 24.07.2023, admitted the claims of the Appellants for the principal amounts, as Unsecured Creditors and provisionally rejected the interest claims. The details of claim admitted and rejected are as follows:

(in Rs.)

Party	Amount of claim admitted	Amount of claim rejected
Appellant No.1	11,00,00,000	19,21,83,054
Appellant No.2	6,00,00,000	13,08,21,916
Appellant No.3	1,50,00,000	2,83,90,913
Total	18,50,00,000	35,13,95,883

# 12. At the request of the Appellants, the Liquidator also granted them personal hearing and finally rejected the interest claims and also continued the appellants as Unsecured creditors vide email dated 04.12.2023, which has led to filing of the present appeal under section 42 of the Code.

# 13. It is the case of the Appellants that the Corporate Debtor and the Appellants have executed a Sale Agreement dated 24.01.2019 for sale of immovable property of the corporate debtor consisting of 42,000 sq. meters of land near Udaipur, Rajasthan by the name of AVL Tivona City (‘Subject Property’) for a total consideration of Rs. 17.5 crores. The entire sale consideration was to be paid to DHFL who had security over the said property. Substantial amount of Rs.9.5 crores stood paid by 24.01.2019 when the Agreement to Sell was executed.

# 14. However, before the sale deed could be executed and registered in favour of the appellants, the Corporate Debtor was admitted into insolvency proceedings on 31.01.2019.

# 15. It is submitted that though the entire sale consideration under the Sale Agreement has been paid to DHFL, no proceedings could be initiated against the Corporate Debtor for specific performance of the sale agreement as the Corporate Debtor is under insolvency process. However, by virtue of Section 55(6)(b) of the Transfer of Property Act (‘TOPA’), the appellants are provided protection as a charge holder for the subject property and they should be treated as secured creditors.

# 16. As noticed from the additional affidavit, the Appellants made balance payment to DHFL, as per the OTS, aggregating to Rs. 8.00 crores during the period from 16.02.2019 to 26.02.2019. The appellants had already paid Rs. 9.5 crores towards purchase of the said property. Thus, a total sum of Rs. 17.5 crores was paid by the Appellants towards purchase of the subject property. It is further submitted that on payment of the entire OTS amount by the appellants, on behalf of the Corporate Debtor, DHFL has released the property documents.

# 17. The Appellants have placed reliance on the following judgments:

• i. Delhi Development Authority versus Skipper Constructions Co. and Others (2000) 10 SCC 130.

• ii. Videocon Properties Ltd versus Dr. Bhalchandra Laboratories and Others (2004) 3 SCC 711.

• iii. Kolkata Municipal Corporation versus Gajesh Labhchand Jain, Liquidator of Talwalkars Better Value Fitness Ltd. (2025 SCC Online NCLAT 1565).

# 18. The Liquidator has submitted that as per Regulation 30 of IBBI (Liquidation Process) Regulations 2016, and on the basis of proof submitted, records available with the Liquidator and other relevant documents including but not limited to books of accounts of the corporate debtor, debt could be established for the principal amount only.

# 19. As regard to the category of the Appellants as Secured Creditors the liquidator has not admitted the Appellants as Secured Creditors and advised them to approach this Tribunal for appropriate orders. The Liquidator has also rejected the claims for interest in the absence of any provision in the contract documents.

# 20. After hearing the submissions advanced by the parties, following questions emerge for determination: –

• i. Whether the Appellants can be treated as secured Creditors, in view of section 55(6)(b) of the Transfer of Property Act? If yes, to what extent?

• ii. Whether the appellants are entitled for interest?

# 21. While section 55 of the Transfer of Properties Act deals with the rights and liabilities of the buyers and sellers subsection 6 deals with the entitlement of the buyer to a charge on the properties, IBC deals with ‘security interest’. Therefore, we would proceed to examine the interplay between these provisions.

# 22. Provisions under the Transfer of Property Act, 1882:

• a) Section 55. Rights and liabilities of buyer and seller

• In the absence of contract to the contrary, the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following or such of them as are applicable to the property sold: –

• (1) The seller is bound-

• (a) to disclose to the buyer any material defect in the property or in the seller’s title thereto] of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover;

• (b) to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller’s possession or power;

• (c) to answer to the best of his information all relevant questions put to him by the buyer in respect to the property or the title thereto;

• (d) on payment or tender of the amount due in respect of the price, to execute a proper conveyance of the property when the buyer tenders it to him for execution at a proper time and place;

• (e) between the date of the contract of sale and the delivery of the property, to take as much care of the property and all documents of title relating thereto which are in his possession as an owner of ordinary prudence would take of such property and documents;

• (f) to give, on being so required, the buyer, or such person as he directs, such possession of the property as its nature admits;

• (g) to pay all public charges and rent accrued due in respect of the property up to the date of the sale, the interest on all incumbrances on such property due on such date, and, except where the property is sold subject to incumbrances, to discharge all incumbrances on the property then existing.

• (2) The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same:

• Provided that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is incumbered or whereby he is hindered from transferring it.

• The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest of the transferee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.

• (3) Where the whole of the purchase-money has been paid to the seller, he is also bound to deliver to the buyer all documents of title relating to the property which are in the seller’s possession or power:

• Provided that, (a) where the seller retains any part of the property comprised in such documents, he is entitled to retain them all, and, (b) where the whole of such property is sold to different buyers the buyers, of the lot of greatest value is entitled to such documents. But in case (a) the seller, and in case (b) the buyer, of the lot of greatest value, is bound, upon every reasonable request by the buyer, or by any of the other buyers, as the case may be, and at the cost of the person making the request, to produce the said documents and furnish such true copies thereof or extracts therefrom as he may require; and in the meantime, the seller, or the buyer of the lot of greatest value, as the case may be, shall keep the said documents safe, uncancelled and undefaced, unless prevented from so doing by fire or other inevitable accident.

• (4) The seller is entitled—

• a) to the rents and profits of the property till the ownership thereof passes to the buyer;

• b) where the ownership of the property has passed to the buyer before payment of the whole of the purchase-money, to a charge upon the property in the hands of the buyer, 1 [any transferee without consideration or any transferee with notice of the non-payment, for the amount of the purchase-money, or any part thereof remaining unpaid, and for interest on such amount or part 1 from the date on which possession has been delivered.

• (5) The buyer is bound—

• a) to disclose to the seller any fact as to the nature or extent of the seller’s interest in the property of which the buyer is aware, but of which he has reason to believe that the seller is not aware, and which materially increases the value of such interest;

• b) to pay or tender, at the time and place of completing the sale, the purchase-money to the seller or such person, as he directs: provided that, where the property is sold free from incumbrances, the buyer may retain out of the purchase-money the amount of any incumbrances on the property existing at the date of the sale, and shall pay the amount so retained to the persons entitled thereto;

• c) where the ownership of the property has passed to the buyer, to bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller;

• d) where the ownership of the property has passed to the buyer, as between himself and the seller, to pay all public charges and rent which may become payable in respect of the property, the principal moneys due on any incumbrances subject to which the property is sold, and the interest thereon afterwards accruing due.

• (6) The buyer is entitled–

• a) where the ownership of the property has passed to him, to the benefit of any improvement in or increase in value of the property and to the rents and profits thereof;

• b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him to the extent of the seller’s interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission.

• b) Section 100 of the Transfer of Property Act 1882

• Charges. —Where immoveable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge.

# 23. The provisions of section 55(6)(b) as quoted above makes it abundantly clear that buyer of a property is entitled to charge on the property, for the purchase money paid by it in anticipation of delivery of the property. Further all provisions which apply to a simple mortgage shall also apply to a charge.

# 24. Now, coming to the provisions relating to security interest under the IBC/Code.

i. Section 3(30):

• “Secured creditor” means a creditor in favour of whom security interest is created”.

ii. Section 3(31):

• “Security interest” means right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person”.

iii. Under Section 52, existence of Security interest can be proved either

• a) by the records of such security interest maintained by an information utility; or

• b) By such other means as may be specified by the Board.

iv. The Board has prescribed Regulation 21 for proving security interest.

• Regulation 21: Proving security interest

• The existence of a security interest may be proved by a secured creditor on the basis of –

• a) The records available in an information utility, if any;

• b) Certificate of registration of charge issued by the Registrar of companies; or

• c) Proof of registration of charge with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India.

# 25. As per definition of ‘security interest’ under Section 3(31) of IBC, a charge or mortgage is covered as security interest. This charge can be proved on the basis of the records prescribed under Regulation 21. Though the charge created on the property by virtue of Section 55 (6) of Transfer of Property Act 1882, the same is not covered under Regulation 21 of the Liquidation Regulations. The Liquidator has therefore, not taken cognizance of the charge of the appellants over the subject property of the Corporate Debtor as the Liquidator could not find the creation of security interest over the subject property (i) there is no record with Information Utility, (ii) there is no registration of charge with RoC, and (iii) there is no registration of charge with CERSAI to expressly create security interest.

# 26. The Hon’ble Supreme Court had occasion to deal with section 55 of Transfer of Property Act, 1882 in the case of Delhi Development Authority vs. Skipper Constructions Co.(P) Ltd and others, (2000) 10 Supreme Court Cases 130 and observed that in absence of a contract to the contrary, the buyer is entitled to have a charge over the seller’s interest in the property for the purchase money paid to the seller, unless buyer has improperly declined to accept delivery. The Hon’ble Supreme Court has held that buyer’s charge under section 56(6)(b) of TPA is a statutory charge and is enforceable not only against the seller but against all persons claiming under him. The Hon’ble Supreme Court further held that the same principle, which is applicable to mortgages, also applies to cases of statutory charge under Section 55(6)(b) of the Transfer of Property Act 1882. The relevant extract is reproduced below:

• “29. These points depend upon the effect of the provisions in sub-section (6) of Section 55 of the Transfer of Property Act. That section starts with the words: “In the absence of a contract to the contrary”, and reads thus (in so far as it is material for our purpose).

• “55 (6) (b) The buyer is entitled –

• (a) *

• (b) unless he has improperly declined to accept delivery of the property, as against the seller and all persons claiming under him, to the extent of the seller’s interest in the property, for the amount of any purchase -money property paid by the buyer in anticipation of delivery and for interest on such amount; and , when he properly declines to accept the delivery, also for the earnest (if any) and for the cost (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its recession.”

• It is plain from the above provision that, in absence of a contract to the contrary, the buyer will have a charge on the seller’s interest in the property which is subject- matter of the sale agreement in so far as the purchase money and interest on such amount are concerned, unless the buyer has improperly declined to accept delivery. The charge is available against the seller and all persons claiming under him. This charge in favour of the buyer is the converse of the seller’s charge under Section 55(4) (b). The buyer’s charge under this section is a statutory charge and differs from a contractual charge which a buyer may be entitled to claim under a separate contract. No charge is available unless the agreement is genuine.

• 30. When the property upon which the charge is created gets converted into another form, the buyer will be entitled to proceed against the substituted security. This is a general principle of law and section 73 of the Transfer of Property Act is only an example of the said principle. The above principle has been applied to enforce mortgage on substituted securities (see Barhamdeo Prasad v. Tara Chand and Surapali Munipaa vs Nookala Seshayaa Gari Subbaiah). The same principle which is applicable to mortgages applies to cases of statutory charge under Section 55(6)(b). If immovable property is charged and is converted into another property or money, then the charge will fasten on the property or money into which the subject of the agreement is converted.

• (Emphasis provided)

# 27. Following the above principle, in the case of Videocon Properties Ltd vs Dr. Bhalchandra Laboratories and others, (2004) 3 Supreme Court Cases 711, the Hon’ble Supreme Court again observed that the buyer’s charge as engrafted in Section 55(6)(b) of Transfer of Property Act is a statutory charge in favour of a buyer and is different from contractual charge. The relevant extract is given below:

• 13. The buyer’s charge engrafted in clause (b) of the sub-section (6) of Section 55 of the Transfer of Property Act would extend and ensure to the purchase money or earnest money paid before the title passes and property has been delivered by the seller to the purchaser, on the seller’s interest in the property unless the purchaser has improperly declined to accept deliver of the property or when he properly declines to accept delivery of property or when he properly declines to accept delivery-including for the interest on purchase money and cost awarded to the purchaser of a suit to compel specific performance of the contract or to obtain a decree for its recession. The principle underlying the above provision is a trite principle of justice, equity and good conscience. The charge would last until the conveyance is executed by the seller and possession is also given to the purchaser and ceases only thereafter. The charge will not be lost by merely accepting delivery of possession alone. This charge is a statutory charge in favour of a buyer and is different from contractual charge to which the buyer may become entitled to under the terms of the contact, and in substance a converse to the charge created in favour of the seller under Section 55(4)(b). Consequently, the buyer is entitled to enforce the said charge against the property and for that purpose trace the property even in the hands of third parties and even when the property is converted into another form by proceeding against the substituted security, since none claiming under the seller including a third-party purchaser can take advantage of any plea based even on want of notice of the charge. The said statutory charge gets attracted and attaches to the property for the benefit of the buyer the moment he pays any part of the purchase money and is only lost in case of the purchaser’s own default or his improper refusal to accept delivery. So far as payment of interest is concerned, the section specifically envisages payment of interest upon the purchase money/price prepaid, though not so specifically on the earnest money deposit, apparently for the reason that an amount paid as earnest money simpliciter, as mere security for due performance does not become repayable till the contract or agreement gets terminated and it is shown that the purchaser has not failed to carry out his part of the contract, and the termination was brought about not due to his fault, the claim of the purchaser for refund of earnest money deposit will not arise for being asserted. (Emphasis provided)

# 28. From, the reading of section 55(6) of Transfer of Property Act,1882 as interpreted by the Hon’ble Supreme Court in the case of Delhi Development Authority (supra), there is no iota of doubt that the buyer is entitled to have a statutory charge over the sellers interest in the property and the same principle which is applicable to mortgages shall apply to statutory charge under 55(6)(b).

# 29. In Videocon Properties (supra), the Hon’ble Supreme Court held that the statutory charge under Section 55(6)(b) gets attracted and attaches to the property for the benefit of the buyer for any part of the purchase money paid by him.

# 30. Thus, it is settled proposition of law that by virtue of provisions of section 55(6)(b) of Transfer of Property Act, 1882 buyer who has paid purchase money to the seller shall have statutory charge over the property of the seller to the extent of the purchase money paid by it.

# 31. In Greater Noida Industrial Development Authority v. Prabhjit Singh Soni in Civil Appeal No. 7590-7591 of 2023, the Hon’ble Supreme court has recognized statutory charge of Greater Noida and has held Greater Noida to be a secured Creditor by virtue of Section 13A of U.P. Industrial Development Act 1976.

# 32. In Kolkata Municipal Corporation vs Gajesh Labhchand Jain, Liquidator of Talwalkars Better Value Fitness Ltd, 2025 SCC Online NCLAT 1565, the question before the Hon’ble Appellate Tribunal was whether the Kolkata Municipal Corporation is a secured creditor by virtue of Section 232 of the Kolkata Municipal Corporation Act, 1980. After discussing various judgments of Hon’ble Supreme Court including Sales Tax officer vs Rainbow Papers, 2023 9 SCC 545, K.C. Ninan vs. Kerala State Electricity Board & Ors. (2023) 14 SCC 84 and Greater Noida Industrial Development Authority v. Prabhjit Singh Soni Company Appeal (AT) (Insolvency) No. 1042 of 2022, in para 21, the Hon’ble Appellate Tribunal has held that by virtue of Section 2(32) of the Kolkata Municipal Corporate Act, Kolkata Municipal Corporation has a statutory charge over the properties of the Corporate Debtor and is therefore a secured creditor of the corporate debtor. The relevant extract of para 21 is reproduced below:

• “21. We feel ourselves bound by the judgment of the Hon’ble Supreme Court in ‘Pashchimanchal Vidyut Vitran Nigam’ (supra), and ‘State Tax Officer’ (supra) as well as the judgment of the Hon’ble Supreme Court in ‘Greater Noida Industrial Development Authority’ (supra). In view of the law laid down by the Hon’ble Supreme Court in above cases, appellant has a statutory charge by virtue of Section 2(32) of the Kolkata Municipal Corporation Act, and the appellant is a secured creditor. Adjudicating authority committed error in rejecting the claim of the appellant as secured creditors.”

# 33. Plain reading of section 3(31) of the Code, security interest includes charge and same principle shall apply as mortgage. In the wake of discussion and clear law laid down by the Hon’ble Supreme Court as captured in the case of Kolkata Municipal Corporation (supra) the Appellants shall be treated as secured creditors.

# 34. The next consideration is to what extent Appellants be treated as Secured Creditors. It is noticed that the claim of the appellants is Rs. 18.5 crores in aggregate. However, they have paid only Rs. 17.50 crores towards purchase of the subject property supported by the “Agreement of Sale” and “Full and Final Settlement” Certificate issued by DHFL to the Corporate Debtor and the Appellants. Hence, the appellants shall be treated as secured creditors to the extent of Rs. 17.5 crores only. First Question is answered accordingly.

# 35. The next question pertains to the claims of the appellants for interest on the principal amount on the ground that since liability of the Corporate Debtor towards DHFL was paid by the appellants, they are now entitled to enter into the shoes of DHFL and have charged interest at the rate on which DHFL was charging i.e. 24%.

# 36. During the course of the hearing the appellants were asked to demonstrate the contract to show their entitlement for interest. However, it was candidly accepted that the contract document did not provide for interest. Hence, we hold that the appellants are not entitled for interest. Accordingly, question (ii) is answered in negative.

CONCLUSION

# 37. A conjoint reading of section 55(6)(b) of Transfer of Property Act, 1882 and section 3(31) of the Code, a ‘statutory charge’ is created in favour of the buyer of the property of corporate debtor and such buyer is entitled to be treated as secured creditor of the corporate debtor for the amount paid by it towards purchase of the property.

# 38. Consequently, the Liquidator shall amend and publish an updated list of stakeholders to reflect the Appellants’ claim as a secured creditor to the extent allowed here and take all such consequential steps including updating/reconstituting the Stakeholders’ Consultation Committee.

# 39. Accordingly, Company Appeal 10 of 2024 is partly allowed and stands disposed of.

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