# In the matter of Inka Foods Private Limited IA No. 244-2022 in CP (IB) No. 396-Chd-HP-2018

> NCLT judgment dated 2023-02-07. Citation: TCN-2023-NCLT-04749. The Himachal Pradesh Financial Corporation (HPFC) filed an application under Sections 52, 53,…

- **Court:** NCLT
- **Order date:** 7 Feb 2023
- **Citation:** TCN-2023-NCLT-04749
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/inka-foods-private-limited-ia-no-244-2022-in-cp-ib-no-396-chd-hp-2018-70c327c4

## Summary

### Background

The Himachal Pradesh Financial Corporation (HPFC) filed an application under Sections 52, 53, and 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking disbursement of sale proceeds based on priority of charge. The corporate debtor created an equitable mortgage by depositing the title deed in favor of the applicant. As per a second charge agreement dated 03.05.2008, the applicant should have priority in realizing its security interest from the sale of the mortgaged property. The applicant filed a claim for Rs. 9,49,72,555/- with the Resolution Professional, who gave a voting share of only 33.2% to the applicant against 66.8% to Indian Overseas Bank. The secured assets were sold for Rs. 5,80,00,000/-. The applicant sought release of sale proceeds as per its claim.

## Facts

The Himachal Pradesh Financial Corporation (HPFC) filed an application seeking disbursement of sale proceeds based on its priority of charge as a secured creditor of Inka Foods Private Limited. HPFC claimed that Inka Foods created an equitable mortgage by depositing title deeds in its favor. A second charge agreement dated 2008 existed between HPFC, Indian Overseas Bank, and Inka Foods, allegedly granting HPFC priority in realizing its security interest. HPFC filed a claim for Rs. 9,49,72,555 with the Resolution Professional, receiving only a 33.2% voting share compared to Indian Overseas Bank's 66.8%. The corporate debtor's assets were sold for Rs. 5,80,00,000. The Committee of Creditors approved the liquidation of the corporate debtor on 27.09.2019, and the

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## Issues and analysis

### Issue 1: Whether the secured-financial creditor having first charge over the relinquished security interest …

**Ratio:** Section 53 of the Insolvency and Bankruptcy Code (IBC) governs the distribution of assets

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**Reasoning:** The court reasoned that once a secured creditor relinquishes its security interest in

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**Interpretation:** The interpretation of Section 53 and related precedents suggests that

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**Application:** In this case, HPFC relinquished its security interest. Therefore, its claim was

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## Parties

- **Judges:** Harnam Singh…; SUBRATA KUM…
- **Appellants:** HP Financial…
- **Respondents:** Inka Foods…

## Timeline

- **2008-05-03 — Second Charge…**: A second charge agreement was executed between HPFC, Indian Overseas Bank, and Inka Foods…
- **2019-09-27 — CoC Approval for…**: The Committee of Creditors approved the…

## 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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