# In the matter of Provogue (India) Ltd.

> NCLT judgment dated 2023-10-31. Citation: TCN-2023-NCLT-00955. The Small Industries Development Bank of India (SIDBI) filed an application under section 60(5)…

- **Court:** NCLT
- **Order date:** 31 Oct 2023
- **Citation:** TCN-2023-NCLT-00955
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/provogue-india-ltd-4258bb71

## Summary

### Background

The Small Industries Development Bank of India (SIDBI) filed an application under section 60(5) of the Insolvency and Bankruptcy Code, 2016, against the Liquidator of Provogue (India) Ltd., seeking direction to treat SIDBI as a secured creditor under Section 53(1)(b)(ii) of the Code for distribution of proceeds from the sale of liquidation assets. The liquidation order for Provogue (India) Ltd. was passed on 14.10.2019, and the Respondent was appointed as Liquidator. SIDBI's claim arose from a bill discounting facility extended to Provogue (India) Ltd. and was secured by Bills of Exchange, a residual charge on movable assets, a personal guarantee, and equity shares. SIDBI did not relinquish its security interest. The Liquidator initially included SIDBI in the

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## Facts

The Small Industries Development Bank of India (SIDBI) extended a bill discounting facility to Provogue (India) Ltd. SIDBI's claim was secured by Bills of Exchange, a residual charge on movable assets, a personal guarantee, and equity shares. The liquidation order for Provogue (India) Ltd. was passed on 2019-10-14, and a Liquidator was appointed. SIDBI submitted a claim as a secured Financial Creditor, amounting to INR 4,93,06,250.15, but chose not to relinquish its security interest in Form D. The Liquidator initially included SIDBI in the Stakeholders Consultation Committee (SCC) but later removed it. SIDBI requested to be allocated amounts on a pro-rata basis, relying on an NCLAT judgement. The Liquidator responded that SIDBI had not relinquished its security

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## Issues and analysis

### Issue 1: Whether SIDBI, having not relinquished its security interest, can claim to be treated as a secured …

**Ratio:** A secured creditor is given an option under Section 52 of the IBC to either relinquish

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**Reasoning:** The court reasoned that the scheme of the Code is clear: a secured creditor must either

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**Interpretation:** Section 52 provides two distinct options for secured creditors in liquidation

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**Application:** In this case, SIDBI chose not to relinquish its security interest. Therefore,

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## Parties

- **Judges:** Charanjeet Singh…; Smt Lakshmi…
- **Appellants:** Small Industries…
- **Respondents:** Provogue (India)…; Amit G…

## Timeline

- **2018-01-01 — CP(IB)No. 1667/I&B/MB/20…**: Application filed under section 60(5) of…
- **2019-10-14 — Liquidation…**: Liquidation order of the Corporate…

## 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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