The National Company Law Tribunal reiterates the principles of secured debt satisfaction and denies multiple applications by the Liquidator of Handum Industries Limited.
In a comprehensive judgment delivered on December 3, 2025, the Hyderabad Bench of the National Company Law Tribunal (NCLT) dismissed a series of applications filed by the Liquidator of M/s Handum Industries Limited. The Liquidator, Mr. Ramachander Rao Bikumalla, sought various directions against M/s Splendid Metal Products Limited (formerly Sujana Metal Products Ltd) and other parties concerning the liquidation process under the Insolvency and Bankruptcy Code, 2016.
The primary contention revolved around the inclusion of a property in the liquidation estate, which was allegedly sold under an unregistered slump sale agreement. The Tribunal, presided over by Members Sri Rajeev Bhardwaj and Sri Sanjay Puri, ruled that the agreement was acted upon, the consideration was fully paid, and the property was reflected in the financial statements of the buyer, M/s Splendid Metal Products Limited. Consequently, the doctrine of estoppel barred the Corporate Debtor from disputing the sale, and the property could not form part of the liquidation estate.
In another significant ruling, the Tribunal emphasized the continuation of charges over assets until secured debts are fully paid. Despite the transfer of secured assets, the Tribunal held that charges remain unless the mortgage money is entirely paid, as affirmed in past legal precedents.
Additionally, the Tribunal denied the Liquidator's request for the refund of amounts recovered by the Customs Department before the insolvency commencement date. It was clarified that such recoveries were lawful, pertained to pre-CIRP violations, and are non-refundable under the IBC.
The Tribunal's decision reaffirms the principles guiding liquidation processes, emphasizing the need for comprehensive settlement of secured debts and adherence to statutory provisions concerning asset and debt management.
Bottom Line:
Directions sought by a Liquidator for the return of assets and property documents under liquidation estate were denied, emphasizing the legal principle that secured debts must be satisfied fully before extinguishment of charges over assets.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016, Transfer of Property Act, Doctrine of Estoppel, Section 36 IBC, Section 14 IBC
The judgment underscores the necessity of fulfilling secured debt obligations before seeking asset recovery or charge satisfaction and confirms the non-refundability of pre-CIRP recoveries, thereby providing clarity on the application of insolvency laws in complex asset disposition scenarios.
