Case Note & Summary
The appeal was filed by Brihanmumbai Electricity Supply and Transport Undertaking (BEST) against an order of the Adjudicating Authority (NCLT Mumbai Bench-II) dated 25.10.2024, which upheld the Liquidator's decision to treat BEST as an unsecured financial creditor and admit only Rs. 30 Cr. out of its total claim of Rs. 156.23 Cr. The Corporate Debtor, Spark Green Energy (Satara) Ltd., was admitted into CIRP and later liquidation on 28.07.2023. BEST submitted a claim in Form-D as a secured financial creditor for Rs. 156.23 Cr., comprising a principal deposit of Rs. 30 Cr. and interest of Rs. 126.23 Cr. The Liquidator classified BEST as an unsecured financial creditor and admitted only the principal amount. BEST appealed to NCLT, which dismissed the appeal. Aggrieved, BEST appealed to NCLAT. The NCLAT examined the Investment Agreement dated 23.12.2008 and Energy Purchase Agreement dated 01.10.2009, which provided for an interest-free deposit of Rs. 30 Cr. to be retained until the fifth operational year. The court noted that the deposit was interest-free, and no interest accrued. BEST argued that interest became payable due to default, but the court found no contractual provision for interest. Regarding secured status, BEST claimed a charge over assets, but no registration of charge under Section 77 of the Companies Act, 2013 was produced. The court held that the Liquidator correctly rejected the interest claim and treated BEST as an unsecured financial creditor. The appeal was dismissed.
Headnote
A) Insolvency and Bankruptcy Code - Financial Debt - Interest Claim - Section 5(8) IBC - The Appellant claimed interest on an interest-free deposit under an Investment Agreement. The court held that since the deposit was interest-free, no interest accrued, and the claim for interest was not admissible as financial debt. (Paras 2-10) B) Insolvency and Bankruptcy Code - Secured Creditor - Security Interest - Section 3(30) IBC - The Appellant claimed to be a secured creditor based on a charge over assets. The court found no registration of charge under the Companies Act, 2013, and thus the Appellant was correctly treated as an unsecured financial creditor. (Paras 11-15) C) Insolvency and Bankruptcy Code - Liquidation - Adjudication of Claims - Section 53 IBC - The Liquidator admitted only the principal amount of Rs. 30 Cr. as an unsecured financial creditor. The court upheld this decision, noting that the Appellant failed to provide evidence of security interest or entitlement to interest. (Paras 16-20)
Issue of Consideration
Whether the Appellant is a secured financial creditor and whether the interest component of Rs. 126.23 Cr. is admissible as part of the claim in liquidation.
Final Decision
The appeal is dismissed. The impugned order of the Adjudicating Authority is upheld. The Liquidator's decision to treat the Appellant as an unsecured financial creditor and admit only Rs. 30 Cr. is affirmed.
Law Points
- Financial debt
- secured creditor
- unsecured creditor
- interest claim
- liquidation
- IBC
- Section 5(8)
- Section 53
- Form D
- investment agreement
- energy purchase agreement
