# In the matter of Transstory (India) Limited I.A. No. 8 of 2020 in TCP (IB) No. 33-7-AMR-2019 in CP (IB) No. 47-7-HDB-2018

> NCLT judgment dated 2021-12-06. Citation: TCN-2021-NCLT-00261. The case involves an application filed by UCO Bank, a financial creditor, in the liquidation of…

- **Court:** NCLT
- **Order date:** 6 Dec 2021
- **Citation:** TCN-2021-NCLT-00261
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/transstory-india-limited-ia-no-8-of-2020-in-tcp-ib-no-33-7-amr-2019-in-cp-ib-no-6c0e630e

## Summary

### Background

The case involves an application filed by UCO Bank, a financial creditor, in the liquidation of M/s. Transstroy India Limited. The Tribunal had previously ordered the liquidation of the company on 18.09.2019 and appointed Mr. G.V. Narasimha Rao as the Liquidator. The Committee of Creditors (CoC) had approved the liquidation in its meeting on 07.05.2019. The Liquidator requested secured and unsecured creditors to submit proof of claims. UCO Bank submitted its claim, relinquishing its security interest in current assets and collateral security, with the condition that the sale proceeds be allotted exclusively to the bank. The Liquidator, however, declined to agree to this request, stating that the proceeds would be distributed proportionally among all financial

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## Facts

On 18.09.2019, the NCLT ordered the liquidation of M/s. Transstroy India Limited and appointed Mr. G.V. Narasimha Rao as Liquidator. The CoC had approved liquidation on 07.05.2019. The Liquidator requested creditors to submit proof of claims. UCO Bank submitted its claim, relinquishing security interest in current assets and collateral security, conditional on exclusive allotment of sale proceeds. The Liquidator declined this request on 11.11.2019, citing proportional distribution among creditors. UCO Bank filed an application seeking exclusive charge over property securities. The Liquidator accepted the facts of secured interest and relinquishment but argued for distribution as per Section 53 of IBC. Form-D was on record, containing the signature of the Applicant

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## Issues and analysis

### Issue 1: Whether UCO Bank, having relinquished its security interest, is entitled to exclusive allotment of …

**Ratio:** Section 53 of the IBC, 2016, governs the distribution of assets in liquidation,

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**Reasoning:** The Liquidator argued that the entitlement of the Applicant Bank would be in accordance

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**Interpretation:** Section 53 of the IBC mandates a specific order of priority for distributing

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**Application:** The Tribunal ordered the Liquidator to follow Section 53 of the IBC, 2016,

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## Parties

- **Judges:** TELAPROLU…
- **Appellants:** UCO B…
- **Respondents:** M/s. Transstroy…; Govindarajula…

## Timeline

- **2019-05-07 — CoC Meet…**: The Committee of Creditors (CoC) approved…
- **2019-09-18 — Liquidation…**: The Tribunal ordered the liquidation…

## 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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