# In the matter of Manali Sugars Ltd. IA-224-2022 in C.P.(IB)-35-BB-2021

> NCLT judgment dated 2022-10-18. Citation: TCN-2022-NCLT-00704. The case involves an application filed by IFCI Ltd., a financial creditor, under Section 60(5)…

- **Court:** NCLT
- **Order date:** 18 Oct 2022
- **Citation:** TCN-2022-NCLT-00704
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/manali-sugars-ltd-ia-224-2022-in-cpib-35-bb-2021-6fc62219

## Summary

### Background

The case involves an application filed by IFCI Ltd., a financial creditor, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016. IFCI Ltd. is aggrieved by the Resolution Professional's (RP) decision to classify Respondents 2 to 5 as Secured Financial Creditors instead of Unsecured Financial Creditors. IFCI Ltd. had provided a secured loan to the Corporate Debtor, Manali Sugars Ltd., and claims a pari-pasu first charge on the Corporate Debtor's assets. The Corporate Debtor defaulted in repayment, leading IFCI Ltd. to issue a Loan Recall Notice and file an application before the Debts Recovery Tribunal. The Corporate Debtor was admitted into CIRP, and a CoC was formed. During a CoC meeting, concerns were raised about the validity of subsequent charges created

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## Facts

IFCI Ltd. provided a secured loan of Rs.7,24,86,000/- to Manali Sugars Ltd. (Corporate Debtor) under a Sanction Letter dated 2012-08-14, creating a pari-pasu first charge on fixed and movable assets. A Deed of Hypothecation was executed on 2013-08-12 in favor of IFCI Ltd. The loan was disbursed on 2013-08-12. Clause 5(ix) of the Tripartite Agreement dated 2013-03-15 stipulated that the Borrower could not dispose of assets without prior written approval. The Corporate Debtor defaulted in repayment, leading IFCI Ltd. to issue a Loan Recall Notice on 2019-02-14 and file an application before the Debts Recovery Tribunal-2 on 2019-06-18. The Corporate Debtor was admitted into CIRP on 2021-03-22. During a CoC meeting on 2021-09-17, concerns were raised about the validity of

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## Issues and analysis

### Issue 1: Whether the Resolution Professional (RP) was correct in categorizing Respondents 2 to 5 as Secured …

**Ratio:** The legal principle is that a prior charge holder has priority over subsequent charge

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**Reasoning:** The court reasoned that IFCI Ltd.'s claim was valid because the agreement creating their

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**Interpretation:** This issue involves the interpretation of the Insolvency and Bankruptcy Code,

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**Application:** The court applied the principle by recognizing IFCI Ltd.'s prior charge and

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## Parties

- **Judges:** KISHORE VEMULAPALL…; Satya Ranjan…
- **Appellants:** IFCI…
- **Respondents:** Manali Suga…; Kondisetty Kumar…
- **Advocates:** Sreen…; Anant Mer…

## Timeline

- **2012-08-14 — Sanction…**: IFCI Ltd. issued a Sanction Letter for a…
- **2013-03-15 — Tripartite Ag…**: Tripartite Agreement was dated, Clause 5(ix) stipulated Borrower could not dispose of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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