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Morgan Securities & Credits Pvt. Ltd. v/s Resolution Professional of Videocon Industries Ltd. & Another


Company & Directors' Information:- VIDEOCON INDUSTRIES LIMITED [Active] CIN = L99999MH1986PLC103624

Company & Directors' Information:- J. P. MORGAN INDIA PRIVATE LIMITED [Active] CIN = U67120MH1992FTC068724

Company & Directors' Information:- MORGAN INDUSTRIES LIMITED [Active] CIN = L93090TN1989PLC036273

Company & Directors' Information:- K K SECURITIES LIMITED [Active] CIN = U74899DL1994PLC060238

Company & Directors' Information:- I C P SECURITIES LIMITED [Under Process of Striking Off] CIN = U74899DL1994PLC060472

Company & Directors' Information:- S R CREDITS PRIVATE LIMITED [Active] CIN = U74899DL1991PTC044503

Company & Directors' Information:- AMP INDUSTRIES LIMITED [Active] CIN = L51909AS1985PLC002332

Company & Directors' Information:- H J SECURITIES PRIVATE LIMITED [Active] CIN = U67120MH1998PTC117076

Company & Directors' Information:- N E C C SECURITIES PRIVATE LIMITED [Active] CIN = U74899DL1991PTC044908

Company & Directors' Information:- R R CREDITS PVT LTD [Amalgamated] CIN = U51109WB1991PTC050932

Company & Directors' Information:- A N SECURITIES PRIVATE LIMITED [Active] CIN = U65999WB1997PTC084741

Company & Directors' Information:- B AND H SECURITIES PRIVATE LIMITED [Active] CIN = U74999MH1974PTC017380

Company & Directors' Information:- A G SECURITIES PRIVATE LIMITED [Strike Off] CIN = U65921DL1993PTC052453

Company & Directors' Information:- M N SECURITIES PRIVATE LIMITED [Active] CIN = U67120DL1999PTC102464

Company & Directors' Information:- V H SECURITIES LIMITED [Active] CIN = U74899DL1995PLC072918

Company & Directors' Information:- MORGAN INDIA LTD [Active] CIN = U51109WB1983PLC036027

Company & Directors' Information:- G S SECURITIES LTD [Active] CIN = U67120WB1995PLC073255

Company & Directors' Information:- R K SECURITIES PRIVATE LIMITED [Active] CIN = U74899DL1995PTC064716

Company & Directors' Information:- VIDEOCON SECURITIES LIMITED [Strike Off] CIN = U85110MH1995PLC187888

Company & Directors' Information:- S S G SECURITIES PRIVATE LIMITED [Under Process of Striking Off] CIN = U67120KL1995PTC009473

Company & Directors' Information:- L N SECURITIES PVT LTD [Active] CIN = U65993WB1992PTC057302

Company & Directors' Information:- M D SECURITIES PRIVATE LIMITED [Active] CIN = U74899DL1975PTC007928

Company & Directors' Information:- MORGAN SECURITIES AND CREDITS PRIVATE LIMITED [Active] CIN = U67120DL1996PTC077623

Company & Directors' Information:- S. D. L SECURITIES LIMITED [Active] CIN = U67120PB1995PLC016810

Company & Directors' Information:- R K D K SECURITIES LTD. [Amalgamated] CIN = L67120WB1994PLC063609

Company & Directors' Information:- A R S SECURITIES PRIVATE LIMITED [Active] CIN = U74899DL1993PTC055638

Company & Directors' Information:- D N CREDITS PRIVATE LIMITED [Strike Off] CIN = U65921UP1998PTC023765

Company & Directors' Information:- P G SECURITIES PRIVATE LIMITED [Active] CIN = U67120RJ1995PTC009985

Company & Directors' Information:- P K MORGAN (INDIA) PVT LTD [Active] CIN = U74899DL1981PTC012257

Company & Directors' Information:- S S CREDITS PVT LTD [Active] CIN = U67120CH1989PTC009348

Company & Directors' Information:- C & S SECURITIES PRIVATE LIMITED [Strike Off] CIN = U67120TN1994PTC028091

Company & Directors' Information:- G R CREDITS PRIVATE LIMITED [Strike Off] CIN = U74899DL1989PTC035291

Company & Directors' Information:- A J M SECURITIES PRIVATE LIMITED [Strike Off] CIN = U67120KL1997PTC011202

Company & Directors' Information:- A & B SECURITIES PRIVATE LIMITED [Strike Off] CIN = U65993TN1995PTC032716

Company & Directors' Information:- S V SECURITIES PRIVATE LIMITED [Under Process of Striking Off] CIN = U08032BR1995PTC006339

Company & Directors' Information:- V R B SECURITIES INDIA PRIVATE LIMITED [Active] CIN = U67120KL2008PTC021718

Company & Directors' Information:- S K B SECURITIES LIMITED [Active] CIN = U65999WB1996PLC082316

Company & Directors' Information:- J AND J SECURITIES PRIVATE LIMITED [Strike Off] CIN = U67120KL1998PTC012015

Company & Directors' Information:- A M SECURITIES PRIVATE LIMITED [Active] CIN = U67120KL1997PTC011182

Company & Directors' Information:- A B SECURITIES PVT LIMITED [Active] CIN = U67120AS1997PTC005177

Company & Directors' Information:- F M SECURITIES PRIVATE LIMITED [Strike Off] CIN = U67120KL2009PTC024302

Company & Directors' Information:- S S V SECURITIES PRIVATE LIMITED [Strike Off] CIN = U67120DL2000PTC105232

Company & Directors' Information:- K H SECURITIES PRIVATE LIMITED [Active] CIN = U67120MH2001PTC134169

Company & Directors' Information:- Y K SECURITIES PRIVATE LIMITED [Active] CIN = U74899DL1995PTC074083

Company & Directors' Information:- J N SECURITIES PRIVATE LIMITED [Active] CIN = U67120TN1999PTC043842

Company & Directors' Information:- MORGAN CREDITS PRIVATE LIMITED [Active] CIN = U67100MH1991PTC293744

Company & Directors' Information:- MORGAN CREDITS PRIVATE LIMITED [Active] CIN = U67100DL1991PTC046230

Company & Directors' Information:- MORGAN CREDITS PRIVATE LIMITED [Active] CIN = U74899DL1991PTC046230

Company & Directors' Information:- R L F SECURITIES PRIVATE LIMITED [Active] CIN = U74899DL1995PTC069597

Company & Directors' Information:- S K CREDITS PRIVATE LTD [Strike Off] CIN = U74899DL1986PTC026328

Company & Directors' Information:- CREDITS PVT LTD [Strike Off] CIN = U35941WB1958PTC024013

Company & Directors' Information:- J M L SECURITIES LIMITED [Strike Off] CIN = U67110UP2000PLC025628

Company & Directors' Information:- A P SECURITIES PRIVATE LIMITED [Active] CIN = U74899DL1995PTC065651

Company & Directors' Information:- M G SECURITIES PRIVATE LIMITED [Active] CIN = U74899DL1994PTC058074

Company & Directors' Information:- B K CREDITS PVT LTD [Strike Off] CIN = U65921CH1989PTC009568

Company & Directors' Information:- C S SECURITIES PRIVATE LIMITED [Strike Off] CIN = U67120KL1998PTC012664

Company & Directors' Information:- M M SECURITIES PRIVATE LIMITED [Strike Off] CIN = U74899DL1995PTC066511

Company & Directors' Information:- R G R C CREDITS PRIVATE LIMITED [Strike Off] CIN = U74899DL1990PTC039284

Company & Directors' Information:- A K CREDITS PRIVATE LIMITED [Strike Off] CIN = U65923DL1987PTC027860

Company & Directors' Information:- N G SECURITIES PRIVATE LIMITED [Strike Off] CIN = U74899DL1995PTC071199

Company & Directors' Information:- S V SECURITIES PRIVATE LIMITED [Strike Off] CIN = U65993DL1993PTC051885

Company & Directors' Information:- R D T SECURITIES PRIVATE LIMITED [Strike Off] CIN = U67120DL1994PTC057218

Company & Directors' Information:- M V SECURITIES PRIVATE LIMITED [Strike Off] CIN = U67120PB1996PTC018391

    Company Appeal (AT) (Insolvency) Nos. 1366 to 1368 of 2019 & 20 of 2020

    Decided On, 22 January 2020

    At, National Company Law Appellate Tribunal

    By, THE HONOURABLE MR. JUSTICE S.J. MUKHOPADHAYA
    By, CHAIRPERSON
    By, THE HONOURABLE MR. JUSTICE BANSI LAL BHAT
    By, JUDICIAL MEMBER & THE HONOURABLE MR. JUSTICE ANANT BIJAY SINGH
    By, JUDICIAL MEMBER

    For the Appellant: Krishnendu Datta, Abhishek Puri, Surbhi Gupta, Advocates. For the Respondents: Misha, Vaijayant Paliwal, Moulshree Shukla, Advocates.



Judgment Text


1. Appellant-‘Morgan Securities & Credits Pvt. Ltd.’ (financial creditor) in their respective appeals have challenged common order dated 11th November, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench whereby its Miscellaneous Application seeking release of amount of Rs. 20 crores deposited with the Registrar General of the Hon’ble High Court of Delhi upon invocation of the Bank guarantee issued by the Allahabad Bank, in favour of it, has been rejected.

2. The Adjudicating Authority held that the amount will be deposited with the resolution professional of ‘Videocon Industries Ltd.’ (corporate debtor) and observed that the said amount of Rs. 20 crores is an asset of the corporate debtor given as ‘security interest’ to ‘Morgan Securities & Credits Pvt. Ltd.’.

3. Part of the impugned order has been challenged by the resolution professional wherein the Adjudicating Authority observed that the amount of Rs. 20 crores has been given as security interest by the corporate debtor to ‘Morgan Securities & Credits Pvt. Ltd.’.

4. Before initiation of the Corporate Insolvency Resolution Process, in an arbitration proceeding arbitral award was passed by the Arbitral Tribunal on 29th April, 2013 in favour of the appellant-‘Morgan Securities & Credits Pvt. Ltd.’ against the corporate debtor.

5. Pursuant to an order passed by Honb’le High Court of Delhi on 13th November, 2013 under Section 9 of the Arbitration and Conciliation Act, 1996, in petition filed on behalf of the appellant, the corporate debtor was directed to deposit a Bank guarantee of Rs. 20 crores with the Registrar General, during the pendency of the challenge to Arbitral Award, which was so deposited.

6. Pursuant thereto, on the request of the corporate debtor, Allahabad Bank executed a deed of guarantee on 6th December, 2013 in favour of the Registrar General of the Hon’ble High Court of Delhi for a sum of Rs. 20 crores.

7. The Corporate Insolvency Resolution Process was initiated against ‘Videocon Industries Ltd.’ (corporate debtor) on 6th June, 2018. During the Corporate Insolvency Resolution Process, an application under Section 34 of the Arbitration and Conciliation Act, 1996 was filed by the corporate debtor, which was rejected and the amount of Rs. 20 crores was ordered to be retained in the account of the Registrar General of Honb’le High Court of Delhi, subject to further order as may be passed in insolvency proceedings.

8. An appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 was moved by ‘Morgan Securities & Credits Pvt. Ltd.’ only with regard to the part of the order passed by the Single Bench of the Hon’ble High Court of Delhi relating to the fixed deposit amount of Rs. 20 crore which was ordered to be retained with the Registrar General subject to the decision of insolvency proceeding. The Division Bench of the Hon’ble High Court of Delhi dismissed the said appeal under Section 37(1)(b) with following observations:

“11. To that extent, the learned Single Judge was right in concluding that as on the date of passing of the impugned order i.e. 7th February, 2019 with the insolvency proceedings having already commenced, the moratorium in terms of Section 14 of the I&B Code would be in place. How the said amount of Rs. 20 crores together with interest accrued thereon should be dealt with would, therefore, be subject to the orders passed by the NCLT in such insolvency proceedings.

12. Consequently, this Court rejects the submission on behalf of appellant that since the sum of Rs. 20 crores together with interest thereon is not the asset of the VIL, it should not be dealt with or made subject to orders of NCLT, Mumbai. The impugned order does not call for interference. The appeal is dismissed. The applications are also dismissed.”

9. The appellant-‘Morgan Securities & Credits Pvt. Ltd.’ thereafter challenged the said order dated 28th August, 2019 before the Hon’ble Supreme Court, which was dismissed by the Hon’ble Supreme Court in SLP (C) No. 21259 of 2019 with observation that any observation made will not come in the way of final adjudication of the matter by the National Company Law Tribunal.

10. Thereafter, the resolution professional moved application for release of amount of Rs. 20 crores. The appellant-‘Morgan Securities & Credits Pvt. Ltd.’ appeared and opposed it. It was submitted, as appellant submitted before this Appellate Tribunal, that the Bank guarantee dated 6th December, 2013 furnished by Allahabad Bank to secure the payment of ‘Morgan Securities & Credits Pvt. Ltd.’ and is not asset of the corporate debtor because the Allahabad Bank has issued the Bank guarantee without recourse to the corporate debtor.

11. It was further submitted on behalf of the appellant-‘Morgan Securities & Credits Pvt. Ltd.’ that the amount of Rs. 20 crores was not covered under moratorium in terms of Section 14(3) of the I&B Code.

12. Stand of the resolution professional is that the corporate debtor furnished the Bank guarantee in favour of the Registrar General of the High Court of Delhi, pursuant to order dated 13th November, 2013 passed by the Delhi High Court. The Allahabad Bank has issued the Bank guarantee at the instance of the corporate debtor and renewed it from time to time on the request of the corporate debtor. Lastly, it was renewed on the request of the corporate debtor on 2nd December, 2017 valid upto 5th December, 2018. It was further submitted that the ‘Morgan Securities & Credits Pvt. Ltd.’ has filed a claim amounting to Rs. 325 crores with the resolution professional which includes the amount as awarded. The resolution professional collated and verified the claim of the appellant and admitted an amount of Rs. 76.45 crore, which was the amount awarded by the Arbitral Tribunal in favour of the ‘Morgan Securities & Credits Pvt. Ltd.’ (financial creditor). As per the said claim, the appellant-‘Morgan Securities & Credits Pvt. Ltd.’ has joined as part of the committee of creditors with voting share of 0.13% without any objection.

13. It was further submitted that any lien or arrangement in force against the corporate debtor prior to commencement of Corporate Insolvency Resolution Process is not enforceable during the moratorium, therefore, ‘Morgan Securities & Credits Pvt. Ltd.’ cannot claim any priority or lien in the aforesaid amount of Rs. 20 crores, which is lying deposited with the Registrar General.

14. From the facts as discussed above, it is clear that the amount of Rs. 20 crores deposited by way of Bank guarantee was against the sum of Rs. 76.45 crores awarded, therefore, said amount of Rs. 20 crores, if payable to the financial creditor will be out of Rs. 76.45 crores as awarded in its favour. Even if, it is accepted that said amount of Rs. 20 crores, as deposited with the Registrar General of Delhi High Court, is meant for payment to the appellant-‘Morgan Securities & Credits Pvt. Ltd.’ against the awarded amount of Rs. 76.45 crores, in light of the decision of Hon’ble Supreme Court in Himachal Pradesh Housing & Urban Development Authority v. Ranjit Singh Rana, II (2012) SLT 674=(2012) 4 SCC 505, we hold that the Bank guarantee of Rs. 20 crores given by the Bank on behalf of the corporate debtor, relates to the claim of the appellant-‘Morgan Securities & Credits Pvt. Ltd.’ which has been taken care by the resolution professional against the claim preferred in the Corporate Insolvency Resolution Process. Such being the position, during the Corporate Insolvency Resolution Process, the amount will be deposited with the resolution professional and the appellant’s claim can be taken care by the successful resolution applicant, if a resolution plan is approved. During the liquidation stage the amount of Rs. 20 crores cannot be treated as ‘security interest’, merely because it was deposited against award amount of Rs. 76.45 crores.

15. The submission of the appellant-‘Morgan Securities & Credits Pvt. Ltd.’ that the amount of Rs. 20 crores belongs to the Allahabad Bank, cannot be accepted, as it was issued by the Bank on the request of the corporate debtor against the security interest. Further, even if it is accepted that it belongs to the Allahabad Bank, the Bank being not aggrieved, the appellant-‘Morgan Securities & Credits Pvt. Ltd.’ (financial creditor) cannot file appeal raising cause of another financial creditor (Allahabad Bank).

16. F

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or the reason aforesaid, while we uphold the finding given by the Adjudicating Authority that the amount of Rs. 20 crore is an asset of the corporate debtor, we hold that the observation that the amount was ‘a security interest in Morgan’s favour’ being against the facts and law is set aside. 17. We make it clear that aforesaid Rs. 20 crores be added in the total assets of the corporate debtor, which may be taken care by the resolution professional for finalizing the resolution plan and/or during the liquidation process, if any plan is not approved. Appeals filed by the financial creditor -‘Morgan Securities & Credits Pvt. Ltd.’ being Company Appeal (AT) (Ins.) No. 1366 of 2019, 1367 of 2019, 1368 of 2019 are dismissed. Company Appeal (AT) (Ins.) No. 20 of 2020 filed by corporate debtor-‘Videocon Industries Ltd.’ is allowed. No costs. Appeal No. 1366, 1367, 1368 of 2019 dismissed. Appeal No. 20 of 2020 allowed.
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