Matter: Bennet Property Holdings Company Ltd. v. The Liquidator, Biodiversity Conservation (India) Pvt. Ltd.
Order dated: 02 February 2022
Summary:
Biodiversity Conservation (India) Pvt. Ltd. was undergoing liquidation process as per the Code. Bennet Property Holdings Company Ltd. (Bennet Property) submitted its claim to the liquidator which was admitted. The liquidator issued directions to Bennet Property to remit its share of the liquidation costs.
Bennet Property contended that the liquidator treated it as a secured financial creditor under the Code. Accordingly, under the Code, (i) a secured financial creditor is only required to pay liquidation costs from the date of admission of its claim during liquidation and not the entire CIRP costs and (ii) the liquidation cost is required to be paid in proportion to the amount recovered and not in proportion to the admitted claim. Further, Bennet Property requested the liquidator to share information/ documents. However, the liquidator refused to share the same.
The liquidator contended that the provisions of the Code relied on by Bennet Property are not applicable. Therefore, it is liable to pay costs as determined by the liquidator. Further, regarding the request for information/documents, it was contended that since Bennet Property chose to realise its security interest, it is not entitled to the information/documents.
The NCLT observed that averments of Bennet Property are not supported by any provision of the Code or a precedent with respect to requirement of (i) liquidation costs being paid only from the date of admission of claims or (ii) liquidation costs being paid in proportion to the amount recovered. With respect to the information/document requests, the NCLT noted that even though Bennet Property has chosen to realise its security interest outside the liquidation process, it is entitled to the same information/document as any other stakeholder. Therefore, the NCLT directed the liquidator to furnish information/documents on par with any other
stakeholder.
