Authority: National Company Law Tribunal, Mumbai Bench (Court-I)

Order Date: 18 June 2026

Case Overview

The National Company Law Tribunal (NCLT) Mumbai Bench heard two interconnected applications concerning the winding up of Brijeel Foods and Beverages Private Limited. Company Application (CA) 85 MB 2026 was filed by Kotak Mahindra Bank Limited under Section 280 of the Companies Act, 2013, seeking directions to restrain the Company Liquidator, Anil Kashi Drolia, from interfering with the Bank's possession and realization of secured assets under the SARFAESI Act, 2002. Concurrently, CA 88 MB 2026 was filed by the Liquidator under Rule 11 of the NCLT Rules, 2016, seeking directions against the Bank to hand over, deliver, and surrender the company's assets in compliance with Sections 283 and 290 of the Companies Act, 2013 and related Winding Up Rules.

The dispute arose after the Tribunal initiated winding up proceedings against Brijeel Foods on 12 January 2026 and appointed the Liquidator on 2 February 2026. The Liquidator issued a notice inviting proof of debts, to which Kotak Bank submitted a claim for ₹3,58,27,771.41 on 3 March 2026, detailing its security interest valued at approximately ₹3.17 crore based on the reserve price in its last auction. The Bank had classified the company's account as a Non-Performing Asset (NPA) on 17 January 2024, issued a demand notice for ₹2,23,05,382.61 on 8 February 2024, a Section 13(2) SARFAESI notice on 15 April 2024, and a Section 13(4) possession notice on 24 July 2024. It had obtained physical possession of the secured assets through a Court Commissioner appointed by the 4th Joint Civil Judge, Senior Division & ACJM on 10 January 2025, prior to the winding up order.

The Liquidator argued that by proving its entire debt without deducting the value of the security and by participating in the first meeting of creditors on 10 March 2026 (where it voted on agenda items including the Liquidator's remuneration and advisory committee membership), the Bank was deemed to have relinquished its security under Rule 61 of the Companies (Winding Up) Rules, 2020. The Bank contended that it had never expressly relinquished its security, that its participation in the meeting was in respect of the balance due (the total debt exceeding the security value), and that the specific rules regarding voting and relinquishment (Rules 58-62) did not apply to a meeting convened under Section 287(3) of the Companies Act, which this was.

The Tribunal analyzed the statutory framework, noting that neither the Companies Act, 2013 nor the Winding Up Rules prescribe a specific form or mode for a secured creditor to relinquish its security. The Form WIN-44 (proof of debt) contains no declaration for relinquishment. The Bank had explicitly communicated its intention to realize its security outside liquidation via email on 25 March 2026. The Tribunal cited Supreme Court precedents, including Pegasus Assets Reconstruction Pvt Ltd vs Haryana Concast Ltd & Anr (2016) and A. Navinchandra Steels Pvt Ltd vs SREI Equipment Finance Ltd & Ors (2021), which affirm that a secured creditor is entitled to stand outside winding-up proceedings and enforce its security under SARFAESI without interference from the liquidator or company court.

Final Outcome

The NCLT allowed CA 85 MB 2026 filed by Kotak Mahindra Bank, directing the Liquidator not to interfere with the Bank's possession and realization of the secured assets under the SARFAESI Act, 2002. Consequently, CA 88 MB 2026 filed by the Liquidator was dismissed. The Tribunal held that the Bank had not relinquished its security interest, as there was no express election or declaration to do so, and its participation in the creditors' meeting did not trigger the deeming provision of Rule 61 because that rule was inapplicable to a meeting held under Section 287(3). The Bank remains entitled to exercise its rights as a secured creditor in accordance with law.

Topics: Secured Creditor Rights, Liquidation Process, SARFAESI Act