HDFC Bank Ltd. Vs. Shailendra Ajmera - When the statues itself provides for deeming class the Registration under the e- Vahan Portal has to be treated covered by Regulation 21 (Sub Clause C). Appellant is held to have security interest in the vehicles and claim of the Appellant was required to be accepted as Secured Creditor.

  NCLAT (2025.11.12) in HDFC Bank Ltd. Vs. Shailendra Ajmera [Comp. App. (AT) (Ins) No. 355 of 2025] held that; 

• - When the Section 20A, sub section 2 uses the expression “shall be deemed to be registered” with the Central Registry of the Tribunal, the effect shall be deemed to be registered with the Central Registry for the Corporate Asset. 

• - When 03.05.2019 declared the date for integration and law provides deeming clause we fail to see why the Registration under the Vahan Portal cannot be accepted Registration under the SARFAESI Act 2002 and that is the clarification issued by the Government of India. 

• - When the statues itself provides for deeming class the Registration under the e- Vahan Portal has to be treated covered by Regulation 21 (Sub Clause C).

• - Appellant is held to have security interest in the vehicles and claim of the Appellant was required to be accepted as Secured Creditor.

Excerpts of the Order;

12.11.2025 Heard Learned Counsel for the Appellant as well as earned Counsel appearing for Respondent. This appeal has been filed  against an order dated 20.02.2025 passed by the Learned National Company Law Tribunal, New Delhi, Bench Court 3 by which order of C.A. No. 20/2021 filed by the HDFC Bank has been rejected. Brief facts of the case are: The CIRP against the Corporate Debtor, M/s Quality Limited commenced on 11.12.2018. Order of liquidation was passed on 11.01.2021, Appellant filed its claim in form B for total sum of Rs. 1,07,06,706/- claiming security interest in four vehicles with four loan accounts, the liquidator declined to recognise the Appellant’s claim as secured relying on the judgment of this Tribunal Volkswagen Finance Private Limited Vs. Shree Balaji Printopack Pvt. Ltd. 2020 SCC Online NCLAT 729. Challenging the decision of the liquidator C.A. IB No. 20/2021 was filed by the Appellant which came to be dismissed by the impugned order, aggrieved by the order 20.02.2025 this appeal has been filed.

# 2. Learned Counsel for the Appellant submits that the vehicles with regard to which claim was filed has been registered in the Vahan Portal e- Services which registration was made reflecting the HDFC Bank as Financer. It is submitted that the Registration in Vahan Portal has to be treated Registration under SARFAESI Act 2002 by virtue of integration of Registration system in Vahan Portal consequent to the notification issued by Central Govt. dated 03.05.2019 which was issued in exercise of power under sub- Section 2 of Section 20 of the SARFAESI Act, 03.05.2019 was fixed as date of integration system of the registration system of Central Registry with the Vahan National Register. He submits that her clarification has also been issued by Reserve Bank of India on 04.10.2019 with regard to the registration of vehicles shall be treated to be registration under SARFAESI Act and the liquidator committed error in rejecting the claim of secured creditor.

# 3. Shri. Sanjay Bhatt, Learned Counsel appearing for the Respondent Liquidator rejecting the submissions submitted that the clarification which has been relied by the Appellant dated 04.10 .2019 at best provide that Vahan Registry shall be deemed to be registered with the Central Registry with the purposes of SARFAESI Act 2002 but said Registration cannot be relied in the IBC. It is submitted that the registration was required to be made under Section 77 of the Companies Act 2013 as has been held by Adjudicating Authority. It is further submitted that the judgment of this Tribunal in Volkswagen Finance Private Limited has rightly been relied by Adjudicating Authority in rejecting the claim of Secured Creditor.

# 4. We have considered the submission of the Counsel for the parties and perused the record, from the submissions of the parties and record following facts are undisputed:-

• 1. The Registration of Security interest with regard to four vehicles for which claim was filed in form B where registered on Vahan e- Portal.

• 2. The claim was filed by the Appellant in form B Relying in Registration of Vahan e-portal of the vehicle claiming security interest

• 3. The adjudicating authority rejected the claim of the Appellant relying on the judgment of Volkswagen Finance Pvt. Ltd.

# 5. The question which has cropped for consideration in this appeal is as to whether Registration of vehicle in Vahan e-portal shall be treated to be registration within meaning of SARFAESI Act 2002. Learned Counsel for the Appellant has relied on section 52 of the IBC, which provides as follows: 

• “52. Secured creditor in liquidation proceedings.–

• (3) Before any security interest is realised by the secured creditor under this section, the liquidator shall verify such security interest and permit the secured creditor to realise only such security interest, the existence of which may 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.”

# 6. The Regulation has been relied namely Liquidation Regulation 2016 and reliance has been placed by Appellant on Regulation 21 which provides as follows:

• “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.”

# 7. The board has provided provision for proving security interest under Regulation 21 and one of the mode under sub clause (C) is the proof of Registration of charge with Central Registry and Assets Reconstruction Security India is one of the accepted board of probing the charge. The submissions advance by both the parties are divergent in so far as nature of Registration and consequence of Registration on the e-Vahan Portal is concerned.

# 8. Section 20A provides for integration of Registration System with Central Registry Section 20A is as follows: 

• 20A. (1) The Central Government may, for the purpose of providing a Central database, in consultation with State Governments or other authorities operating registration system for recording rights over any property or creation, modification or satisfaction of any security interest on such property, integrate the registration records of such registration systems with the records of Central Registry established under section 20, in such manner as may be prescribed

• Explanation.—For the purpose of this sub-section, the registration records includes records of registration under the Companies Act, 2013 (18 of 2013), the Registration Act, 1908 (16 of 1908), the Merchant Shipping Act, 1958 (44 of 1958), the Motor Vehicles Act, 1988 (59 of 1988), the Patents Act, 1970 (39 of 1970), the Designs Act, 2000 (16 of 2000) or other such records under any other law for the time being in force.

• (2) The Central Government shall after integration of records of various registration systems referred to in sub-section (1) with the Central Registry, by notification, declare the date of integration of registration systems and the date from which such integrated records shall be available; and with effect from such date, security interests over properties which are registered under any registration system referred to in sub-section (1) shall be deemed to be registered with the Central Registry for the purposes of this Act.]

# 9. Under Section 20A sub Section 2 the notification has been issued by the Central Government dated 03.05.2019 notification dated 03.05.2019 reads as follows:

• “S.O. 1695(E)- In exercise of the powers conferred by sub-section (2) of section 20A of the Securitisation and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), the Central Government hereby declare the day of 3rd May, 2019 as the date of integration of the registration system of Central Registry with the VAHAN National Register, the registration system of the Motor Vehicles Act, 1988, and the date from which such integrated records in so far as it relates to registration of vehicle shall be available.”

# 10. The above notification clearly provides that, 03.05.2019 is the integration of the Registration System of Central Registry with the Vahan National Register. The clarification issued by RBI dated 04.10.2019 has also been brought on record where clarification the Government of India provided in Item No.1 which is as follows:

Sl. No	Issues pertaining to registration of charges under SARFAESI Act, 2001	Clarification by GOI
	Registration of Vehicles on CERSAI.	As per the notification issued by DFS on 03.05.2019 about integration of the VAHAN motor vehicles registry with CERSAI, registration of charges relating to motor vehicles is to be made only on the VAHAN registry and not on the Central Registry (CERSAI). Any Vehicle registered with the VAHAN registry shall be deemed to be registered with the Central Registry for the purposes of the SARFAESI Act, 2002.

# 11. The submission Counsel for the Liquidator has been that the Registration as per the clarification issued by the Government of India is that the Registration is for the purposes of SARFAESI Act and cannot be relied in the Liquidation Proceedings.

# 12. As noted above, Regulation 21 of Sub Clause C provides proving of Security interest by Registration under the SARFAESI Act when integration of Registry under Vhan e-Portal has been provided by notification dated 03.05.2019 and is contemplated by Section 20 A, we see no reason to not accept the registration under e-Vahan Portal as a registration within the meaning of SARFAESI Act 2002. When the Section 20A, sub section 2 uses the expression “shall be deemed to be registered” with the Central Registry of the Tribunal, the effect shall be deemed to be registered with the Central Registry for the Corporate Asset. When 03.05.2019 declared the date for integration and law provides deeming clause we fail to see why the Registration under the Vahan Portal cannot be accepted Registration under the SARFAESI Act 2002 and that is the clarification issued by the Government of India. When the statues itself provides for deeming class the Registration under the e- Vahan Portal has to be treated covered by Regulation 21 (Sub Clause C). Coming to the judgment of the ‘Volkswagen Finance Private Limited’ on which reliance has been placed by the Counsel for the Respondent as well as adjudicating authority, in the said judgment, there was no claim of any registration under the SARFAESI Act which fact has been noticed in Paragraph 29 where the court has held that “It is also an admitted fact that charge was not registered under Central Registry of Asset Reconstruction and Security Interest of India Para 29 is as follows:

• “29. From the documentary evidence on record it is clear that no 'Charge' has been registered under the provisions of Section 77(1) of the Companies Act, 2013, in relation to the Subject Property. The Liquidator has rightly referred to Regulation 21 of IBBI (Liquidation Process) Regulation, 2016 and observed that the Appellants 'Claim' was not supported by any evidence as prescribed under the said Regulation. It is also an admitted fact that the 'Charge' was not registered under Central Registry of Securitization Asset Reconstruction and Security Interest of India. We are keeping the ratio of the aforenoted Judgements of the Hon'ble Supreme Court and Section 52(3) of the Code read with Regulation 21(c) of the (Liquidation Process), Regulations, 2016, in view. We are of the considered opinion that the contentions of the Learned Counsel appearing for the Appellant that Registration with Motor Vehicle Authority under Section 51 of the Motor Vehicles Act, 1988 would suffice, cannot be sustained. Section 51(1) of the MV Act, 1988 only provides for "entry" in the Certificate of Registration regarding the agreement. The Section provides how to deal with the entry. To reiterate, in the instant case, as the 'Security Interest' was neither registered with the Information Utility'; nor under Section 125 of the Companies Act, 1956/Section 77 of the Companies Act, 2013; no Application was preferred under Section 87 of the Companies Act, 2013; 'Charge' was not registered in the Securitisation Asset Reconstruction and Security Interest of India, we are of the opinion that Section 52(3) (b) of the Code and Regulation 21(b) of the (Liquidation Process), Regulation, 2016 are not complied with and the ratio laid down by the Hon'ble Apex Court in Kerala State Financial Enterprises Ltd. (Supra) and this Tribunal in India Bulls Finance Ltd. (Supra) is squarely applicable to the facts of this case. Hence, we hold that when in present matter 'Charge' was not registered as per the provisions of Section 77(1) of the Companies Act, 2013 and as envisaged under the Code, the Creditor cannot be treated as a 'Secured Creditor"

# 13. Thus, in the Volkswagen Finance Private Limited Case there was no claim for registration under SARFAESI Act hence the said judgment does not lead to any assistance in the present case with the case of the Respondent more so this Tribunal in Volkswagen Finance Private Limited was not considering the Registration under SARFAESI Act 2002, specially integration of Registry to the Vahan Portal. Counsel for the Appellant has also relied on another judgment of this Tribunal in Company Appeal Ins. 210 of 2024 in Bizloan Pvt. Ltd. Vs. Mr. Amit Chandrashekhar Poddar [Liquidator For Autocop (India) Private Limited] decided on 03.07.2025 where this Tribunal has occasion to consider the Registration under SARFAESI Act and has considered Regulation 21 and in Para 29 of the judgment followed has been laid down: 

• “29. From above, we note that the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) was set up under section  20 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002). CERSAI is a centralised online platform created by the Reserve Bank of India (RBI) to maintain records of all types of securities interests created over any type of property, including movable and immovable properties and it acts as a comprehensive database that stores details of all securitisations, reconstructions, and security interests created by banks and other financial institutions. We understand that CERSAI helps lenders to check whether a property has already been used as collateral before granting loans to borrowers, thus CERSAI helps in reducing fraudulent activities such as multiple financing, benami transactions, and others and provides transparency and efficiency in the loan processing system, making it easier for lenders to track and manage their assets.”

# 14. The above judgments do support the submissions of the Appellant. In view of the above reasons and conclusions, we are of the view that the impugned order cannot be sustained. Appellant is held to have security interest in the vehicles and claim of the Appellant was required to be accepted as Secured Creditor. We set aside the impugned order. We allow the appeal and set aside the impugned order 20.02.2025 and allow CA 20/2021 declaring the Appellant as Secured Creditor.

----------------------------------------------------

Greater Noida Industrial Development Authority Vs. Mr. Anil Mata RP - Further, in our considered view, the registration of a charge is for the purpose to prove the existence of such a charge, but where the charge is found to have been created by virtue of law, its existence cannot be denied or questioned merely because the charge is not registered.

NCLT New Delhi-2 (24.07.2023) In Greater Noida Industrial Development Authority Vs. Mr. Anil Mata RP [IA. No. 4869/ND/2022 in Company Petition No. (IB)-995(ND)/2018, (2023) ibclaw.in 377 NCLT] held that;

• Further, in our considered view, the registration of a charge is for the purpose to prove the existence of such a charge, but where the charge is found to have been created by virtue of law, its existence cannot be denied or questioned merely because the charge is not registered.

Excerpts of the Order;  

The present IA No. 4869 of 2022 has been filed by Greater Noida Industrial Development Authority (GNIDA), through its Manager (hereinafter referred to as the “Applicant”/ “Objector”) under Section 60(5) of IBC, 2016, read with Rule 11 of NCLT Rules, 2016 seeking the following reliefs: 

• “a) Reject the Resolution Plan put up for its approval in IA. No. 1489/2020; and

• b) Direct the Resolution Professional to serve a copy of application bearing IA. No. 1489/2020 for approval of Resolution Plan upon the Applicant/Objector; and

• c) Pass any such other order/direction which it may deem fit in the interest of justice.”

# 2. To put the facts succinctly, the underlying main Petition CP (IB)- 995/ND/2018 was filed by M/S VMS Equipment Pvt. Ltd. against the Corporate Debtor (CD) namely, M/s Promise Infratech Pvt. Ltd. under Section 7 of IBC, 2016, which was admitted vide Order dated 21.12.2018 of this Adjudicating Authority and the Corporate Insolvency Resolution Process (CIRP) in respect of the CD was initiated. Presently, the Corporate Debtor is represented through its Resolution Professional (RP) Sh. Anil Matta.

# 3. It is submitted that the Applicant/Objector is established under the UP Industrial Area Development Act, 1976 for performing functions as a statutory authority. It is stated by the Applicant that it had acquired the land under the  Land Acquisition Act 1894 and developed the same for the purpose of setting up an Urban and Industrial Township.

# 4. It is further stated by the Applicant that through a sealed two-bid system, it allotted Plot No.GH-06, SECTOR CHI-V, Greater Noida, vide Reservation/Acceptance Letter No. PROP/BRS-05/2010-11/443 dated 25.03.2011 and Allotment Letter No. PROP/BRS-05/2010-11/456 dated 30th March 2011 to the Consortium consisting of M/s Pratham ExpoFab Pvt. Ltd. (Lead Member), M/s PSA Impex Pvt. Ltd. (Relevant Member), M/s Earthcon Constructions Pvt. Ltd. (Relevant Member) and M/s Ajay Kumar Garg, and for the development and marketing of Group Housing Pockets/Flats/Plots. Accordingly, the applicant executed a Registered Lease Deed dated 29.11.2011 in respect of the said plot in favour of the Lessee i.e., Corporate Debtor M/s Primrose Infratech Pvt. Ltd. It is submitted by the Applicant that there is an amount payable by the Corporate Debtor i.e., M/s Primrose Infratech Pvt. Ltd. to the Applicant on account of allotment/premium, additional compensation and time extension Penalties for complete construction, etc. against the said plot of land. Therefore, the applicant demanded the said amount from the lessee/Respondent through demand notice and show cause notices. However, the Respondent failed to make payment.

# 5. It is further submitted that the applicant i.e., GNIDA has already filed the claim of Rs.55,96,80,208/- as of 04.01.2019 with the respondent Mr. Anil  Matta, RP of the Corporate Debtor.

# 6. As per the averments made in the Application, the Applicant/GNIDA has objected to the Resolution Plan on the following grounds, which were also  reiterated by the Ld. Counsel for the Applicant/GNIDA during the course of the hearing:

# 6.1 GNIDA is a secured Creditor within the meaning of Section 3(30) and 3(31) of the Insolvency and Bankruptcy Code, 2016, and Section 13A of the Uttar Pradesh Industrial Area Development Act, 1976. There is a Security Interest created by virtue of Sections 13 and 13A of the Uttar Pradesh Industrial Area Development Act, 1976, which makes the GNIDA, a Secured Creditor in terms of the Judgement of the Hon’ble Supreme Court passed in Civil Appeal No. 1661 of 2020 of the case titled “State Tax Officer (1) Vs. Rainbow Paper Ltd”.

# 6.2. The RP and the COC have erred in bifurcating the claim amount of Rs.55,96,80,208/- into Rs.25,40,03,256/- as Principal & Rs.30,56,76,952/- as interest, compensation, lease, Rent, Penalty and allocated Nil payment in the alleged Resolution Plan.

# 6.3 It is an admitted fact that the lessee/CD namely, M/s Primrose Infratech Pvt. Ltd., which is now under CIRP, has not paid the entire amount of consideration of lease premium, therefore, the leasehold right in respect of the plot in question has not been transferred to the lessee/CD namely M/s Primrose Infratech Pvt. Ltd. The impugned decision of RP and the COC violates the law laid down by the Hon'ble Supreme Court in the judgment dated 29.11.2013 in Civil Appeal No. 10753 of 2013 case titled “Andhra Pradesh Industrial Infrastructure Corporation Limited Vs. Team-Asia Lakhi Semiconductors Limited” (In Liquidation) Represented by The Official Liquidator, Hyderabad and Another, (2014)14 SCC 716.

# 6.4 The dues of a statutory authority/ government authority cannot be overlooked for the purpose of constituting the COC even if it does not fall in the category of the financial creditor. The present resolution plan ignores this obligation; therefore, it should be set aside. If the CoC, the RP, and the RA are unable to conceive and approve a Resolution Plan taking into account the dues of statutory authority/Government authority etc., then it would be a fit case where the corporate debtor should be liquidated.

# 6.5 The Adjudicating Authority may have to examine that public property (i.e., the land of GNIDA) should not be allowed to be monetized by the resolution applicant (SRA) without making a provision to pay the entire outstanding dues of the applicant/Objector and all other government dues. The dues payable to the applicant/objector constitute a charge over the land, which under the resolution plan will be transferred to the SRA without paying the dues. Even when a loan is taken by the respondent from the bank by creating a mortgage, the applicant/ objector has a first charge.

# 6.6 The Resolution Plan is completely conditional, which is impermissible in law and cannot be approved. The conditionality for the transfer of leasehold rights in the Resolution Plan is so gross that it even fixes the timeline for such an alleged transfer without following the law. The Resolution Plan completely ignores that under the Rules and Regulations set by the applicant, there is a procedure to be followed for the transfer of leasehold rights. Even otherwise, the applicant/objector is neither under any obligation to transfer the leasehold right in the Plot to the SRA nor the CoC have the competence or legal right to approve any Plan or make it binding on the applicant.

# 6.7 Under the abovesaid Lease Deed and rules, the first prerequisite for the transfer of leasehold rights is a no-dues certificate regarding premium, additional compensation, lease rentals, and other charges payable under the Lease Deed. Moreover, the transfer formalities are set out in detail including forms to be filled and transfer charges to be paid to the applicant as fixed by the applicant from time to time. In fact, the Resolution Plan pays no heed to the terms and conditions of the Lease Deed, rules, and regulations and does not even provide for the following of formalities. Therefore, the Resolution Plan is unimplementable and in violation of the terms and conditions of the Lease Deed as well as applicable rules and regulations. 

# 6.8 The Resolution Plan violates the law laid down by the Hon'ble Supreme Court’s judgment dated 15.11.2019 passed in Civil Appeal No. 6350 of 2019 titled “Municipal Corporation of Greater Mumbai (MCGM) VS. Abhilash Lal & Ors.”, the relevant excerpts of which are reproduced below:

• “33. The show cause notice in this case preceded admission of the insolvency resolution process. In view of the clear conditions stipulated in the contract, MCGM reserved all its rights and its properties could not have therefore, in any manner, been affected by the resolution plan. Equally in the opinion of this court, the adjudicating authority could not have approved the plan which implicates the assets of MCGM especially when Seven Hills had not fulfilled its obligations under the contract.

• 47. In the opinion of this court, Section 238 cannot be read as overriding the MCGM's right-indeed its public duty- to control and regulate how its properties are to be dealt with. That exists in sections 92 and 92A of the MMC Act. This court is of opinion that section 238 could be of importance when the properties and assets are of a debtor and not when a third party like the MCGM 4s involved. Therefore, in the absence of approval in terms of section 92 and 92A of the MMC Act., the adjudicating authority could  not have overridden MCGM's objections and enabled the creation of a fresh interest in respect of its properties and lands.”

# 6.9 Any stipulation in the Resolution Plan contrary to the terms and onditions of the Lease Deed or any amendment to the Lease Agreement as  sought to be made by the SRA/Resolution Plan is contrary to Regulation 37 of CIRP Regulations. The Applicant, being the Authority established by the State Government under the Uttar Pradesh Act, 1976, its approval is sine qua non for validity of the Resolution Plan in question, particularly qua the terms related to the Lease Deed as well as approvals, which admittedly has not been obtained in the present case. The Resolution Plan is also contrary to the judgment of the Hon’ble Supreme Court in “Jaypee Kensington Boulevard Apartments Welfare Assn. v. NBCC (India) Ltd.”, (2022) 1 SCC 401.

# 7. The Respondent/RP has filed its Reply and stated the following regarding “the background” of the matter -

7.1 The Resolution Plan has been approved by 80.84% votes of the CoC.

7.2 The GNIDA/Applicant filed its claim on 15.10.2019 for an amount of Rs.55,96,80,208/- under Form C, which is a claim form prescribed for a Financial Creditor.

7.3 Pursuant to the filing of the claim of the Applicant, the RP provisionally admitted the said claim in the 4th CoC meeting held on 21.10.2019.

7.4 Subsequently, the Ex-Directors of the Corporate Debtor filed an application bearing no. CA-1511/2019, impugning the claim filed by theGNIDA and consideration of the same as Financial Debt. It was directed by this Adjudicating Authority while hearing CA-1511/2019 that the decision in this regard would be taken by RP, who shall place it before the CoC. The

contents of the order dated 25.11.2019 are reproduced below:

• “CA-1511/2019 has been filed by Ex-Directors impugning the inclusion of the claim filed by the Greater Noida Authority and the same be considered as a Financial debt. The decision to this effect would be taken by the RP who shall put it forth to the COC. Despite notice of the Greater Noida Authority, no one has appeared on their behalf. Let affidavit of service be filed.”

7.5 The RP, in compliance with the aforesaid order, placed the claim of the GNIDA before the CoC in its meeting held on 17.12.2019, wherein the claim of the Applicant was changed from “financial debt” to an “operational debt”.

7.6 Further, this Adjudicating Authority vide order dated 28.02.2020, passed in CA-1511/2019, categorized the claim of the Applicant as an “operational debt”, the relevant extracts of which reads thus:

“7. Keeping in view the citations referred to, this Bench is of the opinion that the claim of the Greater Noida Authority can unequivocally be categorized as being an “operational debt”. We therefore do not find any infirmity in the decision of the Resolution Professional who has deemed it justified to amend and correct the claim of the Greater Noida Authority from one of “financial claim” to an “operational debt”. Accordingly, the CoC which has been reconstituted upon amending the aforesaid claim, consisting of home buyers as financial creditors along with other Financial Creditors, if any, would be vested with the voting rights to the exclusion of Greater Noida Authority.”

7.7 The aforesaid order was challenged before the Hon’ble NCLAT in Appeal CA(AT) (Ins) 55 of 2021, which was dismissed vide order dated 21.06.2021.

7.8 It is further stated that during the pendency of Appeal No. CA(AT)(Ins) 55 of 2021, the Applicant had filed one more application bearing no. CA No. 812/2020 challenging the declaration of the Applicant as an operational creditor, which was dismissed vide order dated 02.07.2021, on the ground that the issue raised by the Applicant has already been decided to vide order dated 28.02.2020. The relevant extracts of the order dated 02.07.2021 are reproduced below:

• “6. In the light of aforesaid order, when we consider the averments made in the present application filed by the applicant, we notice that similar facts/objections were raised by the applicant in CA/ 1511/2019. The applicant, in CA/1511/2019, had challenged the decision taken by the CoC in its 6th meeting dated 17.12.2019, by which the applicant i.e. Greater Noida Authority was declared as an Operational Creditor instead  of Financial Creditor.

• 7. We further observe that this Adjudicating Authority, after considering the submissions of the applicant as well as RP and the decisions referred by the parties, passed a detailed order dated 28.02.2020 and confirmed the decision of the RP, to treat the applicant as an Operational Creditorinstead of Financial Creditor.

• 8. RP has also informed that the applicant has also preferred an appealbefore the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No.55/2021, which is pending before the Hon'ble NCLAT.

• 9. Having considered the aforesaid facts and the order dated 28.02.2020, we are of the considered view that since the similar issue raised earlier by the applicant in CA/ 1511/2019 has already been decided by this Bench, hence, the present application is not maintainable.”

7.9 The aforesaid order dated 02.07.2021 was also challenged before the Hon’ble NCLAT in Company Appeal (AT) (Ins) No. 1014 of 2021, which too was dismissed vide order dated 10.12.2021.

# 8. The following is stated by the Respondent/RP with regard to the “merits of the Application”:

8.1 That the IBC 2016 by virtue of Section 238 is having an overriding effectover the Uttar Pradesh Industrial Area Development Act 1976.

8.2 Even if the contention of the Applicant is considered and provisions ofthe Uttar Pradesh Industrial Area Development Act 1976 (hereinafter referred to as “UPIAD”) are taken into consideration, the claim of the Applicant would still come under the ambit of an operational debt and the same is liable to be treated in terms of the provisions of the IBC 2016. The contention of the Applicant that an ‘owner’, i.e., the Applicant in the instant case, would have a charge on the property and thereby be treated as a ‘secured creditor’ is irrational. Further, the Applicant even after being aware of the fact that the Resolution Plan is pending before this Hon’ble Tribunal since 2020, has only approached this Hon’ble Tribunal in 2022.

8.3 NOIDA Authority has been declared as an Operational Creditor by the Hon’ble Supreme Court in the matter of “New Okhla Industrial Development Authority Versus Anand Sonbhadra” in Civil Appeal No. 2222 of 2021.

8.4 The treatment given to NOIDA Authority under the Resolution plan as an Operational Creditor is in line with the provisions of IBC 2016.

# 9. Earlier, the matter was heard and reserved for orders. However, vide the order dated 12.04.2023, this Adjudicating Authority had de-reserved the matter with certain directions to the parties. The relevant portion of the order dated 12.04.2023 is reproduced overleaf:

# 10. In compliance with the aforesaid directions, the GNIDA filed its affidavit on 24.05.2023 and has stated the following:

# 11. In compliance with the aforesaid directions, the RP too filed its affidavit 05.05.2023 and stated the following:

# 12. On perusal of the affidavits (ibid), it is observed that in response to query no. 1, the Applicant/GNIDA has annexed the Schedule of payment and due date commencing from 29.09.2011. However, it has made no specific averment as to when the debt of GNIDA became due and payable for the very first time. Nevertheless, the Respondent/RP has averred in its affidavit that the debt of GNIDA became due and payable for the very first time on 30.09.2015.

# 13. Further, as regards query no. 2 and 3, the Applicant has provided a Schedule of payment and due dates in the annexure without any specific averment indicating the exact amount of default towards the “lease rentals” prior to the initiation of CIRP and post-initiation of CIRP. However, the Respondent/RP, in its affidavit, has specifically stated that prior to the initiation of CIRP, the Corporate Debtor committed default of  Rs.43,61,90,319/- in payment of lease rentals to GNIDA, and after the initiation of CIRP, the default of Corporate Debtor in payment of lease rentals stood at Rs.12,34,89,889/- only. It is also noticed that in response to query no. 4, the GNIDA has not specified any property over which it has been claiming to have the creation of Security Interest. 

# 14. We heard the submissions of both parties and perused the documents, Written Submissions, and additional affidavits placed on record by the parties. It is evident from the order dated 21.06.2021 passed in the matter of “Greater Noida Industrial Development Authority Vs. Promod Agrawal & Ors.” in CA (AT) (Ins.) No. 55/2021 and order dated 10.12.2021 in the matter of “Greater Noida Industrial Development Authority v. CA Anil Matta” in CA (AT) (Ins.) No. 1014/2021 that the GNIDA has been confirmed as an Operational Creditor.

# 15. However, through the present IA as well as during the hearing and written submissions, the Applicant/GNIDA has claimed to be a “Secured Operational Creditor”, which has not been tested so far by this Adjudicating Authority. Therefore, we would like to examine “Whether Greater Noida Industrial Development Authority (GNIDA) is a Secured Creditor in terms of Section 3(30) of IBC 2016.

# 16. It is contended by the Applicant/GNIDA that by virtue of Section 13 read with Section 13A, of the Uttar Pradesh Industrial Area Development (UPIAD) Act 1976, security interest was created in favour of the Applicant, which makes the Applicant a “Secured Creditor” in terms of Section 3(30) of IBC, 2016. We would like to examine this contention and accordingly, we refer to Sections 13 and 13A of the Uttar Pradesh Industrial Area Development Act, 1976, which read thus:

# 17. On perusal of the above, it is observed Sections 13 and 13-A of the UPIAD Act 1976 deal with the “Imposition of penalty and mode of recovery of arrears”. From the bare perusal of Section 13, it transpires that in order to trigger the provision of this Section, there has to be a default committed by the Transferee in respect of any of the following:

• (i) payment of any consideration money or installment thereof, or

• (ii) any other amount due on account of the transfer of any site or building by the Authority, or

• (iii) any rent due to the Authority in respect of any lease.

Section 13 also triggers, when the default with respect to the following is committed by any Transferee or Occupier in respect of the payment of any fee or tax levied under this Act. Further, the Chief Executive Officer may direct in addition to the amount of arrears, a further sum not exceeding that amount shall be recovered from the transferee or occupier, as the case may be, by way of penalty.

# 18. In the instant case, the Respondent/RP vide its affidavit dated 05.05.2023 has admitted that the Corporate Debtor had committed a default in payment of lease rentals prior to the commencement of CIRP. Hence, the same qualifies to be a default in terms of Section 13 of the UPIAD Act 1976. Further, it is observed that in terms of Section 13-A of the UPIAD Act 1976, any amount payable to the Authority under Section 13 will constitute a “Charge” over the property.

# 19. At this stage, we refer to the definition of “Secured Creditor” as provided under Section 3(30) of IBC 2016:

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

• (Emphasis Supplied)

# 20. Further, the term “Security interest” is defined under Section 3(31) of IBC 2016, which reads thus:

• “(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: (Emphasis Supplied)

# 21. Thus, it is clear that the term “security interest” as defined in IBC, includes “charge”. In view of the above, it won’t be wrong to say that the Creditor in whose favour the “charge” is created is considered “a Secured Creditor”.

# 22. At this juncture, we refer to the Judgement dated 06.09.2022 of the Hon’ble Supreme Court of India passed in the matter of “State Tax Officer (1) Vs. Rainbow Papers Limited” in Civil Appeal No. 1661 of 2020, wherein the following was held:

• “30. The learned Solicitor General rightly argued that in view of the statutory charge in terms of Section 48 of the GVAT Act, the claim of the Tax Department of the State, squarely falls within the definition of “Security Interest” under Section 3(31) of the IBC and the State becomes a secured creditor under Section 3(30) of the Code.

• ..

• 57. As observed above, the State is a secured creditor under the GVAT Act. Section 3(30) of the IBC defines secured creditor to mean a creditor in favour of whom security interest is credited. Such security interest could be created by operation of law. The definition of secured creditor in the IBC does not exclude any Government or Governmental Authority.” (Emphasis Supplied)

# 23. In view of the judgment of the Hon’ble Supreme Court (supra), a security interest can be created by operation of law, and undisputedly,  the Greater Noida Industrial Development Authority (GNIDA) is a Government Authority and the aforesaid observation would be squarely applicable to the facts of the case. Accordingly, in our considered view the Greater Noida Industrial Development Authority (GNIDA) is “a secured creditor” in terms of Section 3(30) of IBC 2016.

# 24. However, it is contended by the RP that provisions of Section 13 and Section 13A are inconsistent with IBC 2016 and the “charge”, in the instant case, has not been registered in terms of Section 77 of the Companies Act, 2013. Therefore, before reaching any conclusion at this stage, we would also like to examine “Whether provisions of Section 13 and Section 13A of Uttar Pradesh Industrial Area Development Act, 1976 are inconsistent with the provisions of IBC, 2016 by virtue of Section 238 of IBC, 2016.”

# 25. It is a matter of fact that CIRP in the instant case commenced on 21.12.2018 and the Moratorium under Section 14(1) came into force from 21.12.2018 only. As per provision under Section 14(1)(a), no proceedings can be initiated against the Corporate Debtor “in any court of law, tribunal, arbitration panel or other authority”. The contents of Section 14(1)(a) read thus:

XXXXX

From the above, it is clear that the Moratorium provisions are applicable to an “Authority” and the GNIDA is undisputedly an Authority. Hence, it emerges that due to the Moratorium under Section 14(1) commenced on 21.12.2018, all the recovery proceedings initiated post-21.12.2018 including security interest, if any, created by virtue of those proceedings are void.

# 26. However, in the instant case, as we have noted earlier in paragraph 13 the Corporate Debtor had committed a default of Rs. 43,61,90,319/-, even prior to the initiation of the Moratorium. Therefore, the provisions of Sections 13 and 13A of the Uttar Pradesh Industrial Area Development Act 1976 had been triggered prior to the initiation of the Moratorium. Hence, we are of the considered view that the “charge” of GNIDA in the instant case has been created by virtue of law i.e., in terms of Sections 13 and 13A of the Uttar Pradesh Industrial Area Development Act 1976 well before the Moratorium period and Section 14 (1) of IBC 2016 will not create an escape route for the Corporate Debtor to get an exemption from the charge created by virtue of law under Section 13A of the Uttar Pradesh Industrial Area Development Act, 1976. Since, in the instant case, the security interest of GNIDA was created by virtue of the operation of law prior to the commencement of CIRP/Moratorium, we see no inconsistency between the provision of Sections 13 and 13A of the Uttar Pradesh Industrial Area Development Act, 1976 and IBC 2016, hence the provisions of Section 238 of IBC, 2016 do not get attracted to.

# 27. It is further contended by the RP that the charge has not been registered in terms of Sections 77 and 78 of the Companies Act 2013. The Ld. Counsel for the RP further relied upon the judgment dated 18.12.2019 of Hon’ble NCLAT passed in the matter of “Indiabulls Housing Finance Ltd. vs. Mr. Samir Kumar Bhattacharya & Ors.” in Company Appeal (AT) (Ins.) No. 830/2019, wherein the following was held:

• “9. It is thus clear that the CoC had made it clear that in absence of Charge being registered, the Appellant could not be treated as Secured Financial Creditor. Although the transaction is stated to be of 2012, it is clear that the Charge was not got registered either by the Corporate Debtor or the Appellant till now on 03.10.2019 which is after the Resolution Plan was approved on 04.07.2019. Section 77 of the Companies Act, 2013 required the Charge to be registered and the Appellant had an option to resort to even Section 78 of Companies Act, 2013, if there were any grievances. Not having done so, when CIRP started trying to rely on the equitable mortgage without a charge created, we do not find there was any error in the CoC meetings which in its wisdom did not recognize creation of security. The transaction did not even reflect in the Books of Account of the Corporate Debtor. Appellant should be happy that it has been at least treated as Financial Creditor. Appellant took no actions since 2012 and till late stage of CIRP. Charge registered after Resolution Plan is approved cannot be considered.”    (Emphasis Supplied)

# 28. From the Judgement (supra), it transpires that the security interest in “Indiabulls Housing Finance Ltd. vs. Mr. Samir Kumar Bhattacharya & Ors.” was not created by virtue of law, and therefore, the findings of the aforesaid judgment are not applicable to the facts of the present case. Further, in our considered view, the registration of a charge is for the purpose to prove the existence of such a charge, but where the charge is found to have been created by virtue of law, its existence cannot be denied or questioned merely because the charge is not registered.

# 29. In the sequel to the aforesaid discussion, we conclude that – 

• (a) the Greater Noida Industrial Development Authority (GNIDA) is “a secured creditor” in terms of Section 3(30) of IBC 2016;

• (b) the “charge” of GNIDA in the instant case has been created by virtue of law i.e., in terms of Sections 13 and 13A of the Uttar Pradesh Industrial Area Development (UPIAD) Act 1976 well before the Moratorium period and Section 14 (1) of IBC 2016 will not create an escape route for the Corporate Debtor to get an exemption from the charge created by virtue of law under Section 13A of the UPIAD Act, 1976;

• (c) there is no inconsistency between the provision of Sections 13 and 13A of the UPIAD Act, 1976 and IBC 2016, hence the provisions of Section 238 of IBC, 2016 do not get attracted to.

# 30. In view of the aforesaid discussion and findings, the Applicant herein shall be treated as “Secured Operational Creditor”.

# 31. Nevertheless, we do not espouse at what priority and in what position the Applicant would be placed under the Waterfall Mechanism. 

# 32. The Application is disposed of accordingly.

---------------------------------------------