Adjudicating Authority Cannot Direct Realisation Of Security Interest U/S 52(5) Of IBC In Absence Of Resistance From Corporate Debtor: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Shri Anil Raj Chellan (Technical Member) and Shri K. R. Saji Kumar (Judicial Member)has held that the Adjudicating Authority cannot direct realisation of security interest under section 52(5) of the IBC when the Secured Creditor has failed to establish any resistance from the Corporate Debtor or any connected persons in realising the security interest. In this case, the assets sought to be charged in favor of the Creditor could not even be traced, therefore the NCLT refused to allow the application seeking distribution of the sale proceeds in favor of the Applicant.