# In the matter of Reliance Cellulose Products Ltd. CP (IB) No. 157-7-HDB-2018

> NCLT judgment dated 2018-10-05. Citation: TCN-2018-NCLT-00656. Meliora Asset Reconstruction Company Limited filed an application to be impleaded as Respondent…

- **Court:** NCLT
- **Order date:** 5 Oct 2018
- **Citation:** TCN-2018-NCLT-00656
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/reliance-cellulose-products-ltd-cp-ib-no-157-7-hdb-2018-4a444656

## Summary

### Background

Meliora Asset Reconstruction Company Limited filed an application to be impleaded as Respondent 2 in a Corporate Insolvency Resolution Process (CIRP) initiated by a financial creditor against Reliance Cellulose Products Ltd under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. The applicant claimed that the corporate debtor owed them dues based on an assignment deed from Andhra Bank. The financial creditor opposed the application, arguing that the applicant, being a secured creditor, could participate in the CIRP without being impleaded. The corporate debtor also opposed the application, stating that the sale conducted by the applicant was illegal and under challenge before the Debt Recovery Tribunal (DRT).

## Facts

Meliora Asset Reconstruction Company Limited sought to be impleaded as Respondent 2 in CP(IB) No. 157/7/HDB/2018, a CIRP initiated under Section 7 of the IBC against Reliance Cellulose Products Ltd. Meliora claimed to be a financial creditor by virtue of an assignment deed from Andhra Bank, to whom the corporate debtor owed Rs. 52 crores, and Kotak Mahindra Bank Ltd, to whom the corporate debtor owed Rs. 25 crores. The applicant had initiated proceedings against the corporate debtor before DRT-II, and the secured property was sold. The financial creditor opposed the impleadment, arguing that Meliora, as a secured creditor, could participate in the CIRP without being impleaded. The corporate debtor opposed the impleadment, alleging that the sale conducted by Meliora was

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## Issues and analysis

### Issue 1: Whether the applicant, Meliora Asset Reconstruction Company Limited, should be impleaded as a …

**Ratio:** In proceedings initiated under Section 7 of the I&B Code, a third party is not a

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**Reasoning:** The court reasoned that the applicant, as a secured creditor, could participate in the

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**Interpretation:** The court interpreted Section 7 of the I&B Code to mean that only the

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**Application:** The court applied the ratio and reasoning to the specific facts of the case,

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## Parties

- **Judges:** Ratakonda…; Ratakonda…
- **Appellants:** Meliora Asset…
- **Respondents:** Reliance Cellulose…
- **Advocates:** Bchandrasen…; T.Nage…; +1 more

## Timeline

- **2017-03-30 — Assignmen…**: Meliora Asset Reconstruction Company Limited acquired rights from Andhra Bank via an…
- **2018-03-16 — Sale Not…**: DRT-II issued a sale notice dated…

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