# In the matter of Canara Bank vs. S. Rajendran & Ors.

> NCLAT judgment dated 2024-03-07. Citation: TCN-2024-NCLAT-00588. The Appellant, Canara Bank, filed a Company Appeal against an order dated 14.06.2023 passed…

- **Court:** NCLAT
- **Order date:** 7 Mar 2024
- **Citation:** TCN-2024-NCLAT-00588
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/canara-bank-vs-s-rajendran-ors-8e3eacdc

## Summary

### Background

The Appellant, Canara Bank, filed a Company Appeal against an order dated 14.06.2023 passed by the Adjudicating Authority/NCLT, Division Bench II, Chennai, in IA(IBC)/887(CHE)/2022 in CP(IB)/785(CHE)/2019. The NCLT had observed that non-registration of a charge would not vitiate the recovery of debt but the security interest created becomes void against the Liquidator as per Section 77(3) of the Companies Act, 2013, Section 52 of the Code, and Regulation 21 of the IBBI (Liquidation Process) Regulations, 2016. The appellant had extended credit facilities to M/s. Sree Ganesh EPC P. Ltd., for which M/s. Cape Engineers Pvt. Ltd. acted as a corporate guarantor, offering immovable property as collateral security. The corporate debtor initiated CIRP, and the appellant, Canara

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## Facts

Canara Bank extended credit facilities of Rs. 23 crores to M/s. Sree Ganesh EPC P. Ltd., with M/s. Cape Engineers Pvt. Ltd. acting as the corporate guarantor and offering its immovable property as collateral security. A Memorandum of Deposit of Title Deeds (MODTD) was executed on 07.07.2015 and registered. The borrower company, M/s. Sree Ganesh EPC P. Ltd., entered CIRP. The corporate guarantor also filed an application under Section 10 of the I&B Code. The Respondent was appointed as the Liquidator for the corporate guarantor. The Respondent determined the Appellant's voting share as 95.76% based on loan security documents. The Appellant desired to stand outside the liquidation proceedings due to differences in valuation of the secured interest. The Respondent

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## Issues and analysis

### Issue 1: Whether the Appellant, Canara Bank, can be considered a secured creditor despite the …

**Ratio:** The ratio is that the non-registration of a mortgage under Section 77 of the Companies

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**Reasoning:** The Tribunal reasoned that the rights of a mortgagee under the Transfer of Property Act,

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**Interpretation:** The interpretation is that Section 77(3) of the Companies Act, 2013, should not

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**Application:** The ratio and reasoning apply to the specific facts of this case because the

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## Parties

- **Judges:** M. Venu…; Sharad Kumar…; +1 more
- **Appellants:** Canara…
- **Respondents:** Cape Engineers…; S. RAJE…

## Timeline

- **2015-07-07 — Execution o…**: M/s. Sree Ganesh EPC P. Ltd. and M/s. Cape Engineers Pvt. Ltd. executed a Memorandum of…
- **2019-09-06 — Appointment…**: The Tribunal appointed Mr. J. Manivannan as Interim Resolution Professional, later…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 52 — Secured creditor in liquidation proceedings](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-52)

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