Holding that the registration of a vehicle with the Motor Vehicle Authority under Section 51 of the Motor Vehicles Act, 1988 does not count as a registered 'charge' for a legal argument before a liquidator, the National Company Law Appellate Tribunal (NCLAT) has rejected the appeal lodged by Volkswagen Finance Pvt. Ltd. against the order of the National Company Law Tribunal (NCLT). The decision of the NCLT declined to put aside the decision of the liquidator passed against Volkswagen.
The facts of the case have been that the Corporation (under Liquidation), i.e., Shree Balaji Printopack Pvt, Ltd., on 25.11.2013, Ltd. entered into a Loan and Hypothecation Agreement for a sum of Rs. 36,00,000/-payable in 84 monthly instalments of Rs. 61.964/-each from 15.12.2013 to 15.11.2020 for the purchase of an AUDI Q3 TDI 2.0 car. Volkswagen Finance argued that it had vehicle protection according to Sections 52 and 53 of the Insolvency and Bankruptcy Code, 2016, and a petition under Rs. 21,83,819.18/-was made that was not paid by Shree Balaji Printopack, and thus a 'default' resulted in a claim.
On 3 April 2019, a liquidator had been assigned against Shree Balaji, and Volkswagen had filed a complaint on 27 July 2019 using copies of the loan agreement, the mortgage deed, the application letter, and the vehicle's registration certificate, submitting the 'charge' was properly registered with the Regional Transport Office (RTO) under the provisions of Section 51 of the Motor Vehicles Act, 1988 (M.V. Act).
NCLAT backed the NCLT decision and said that Section 77 of the Companies Act 2013, Sub-Section 3 in particular, is very plain to us. There is no uncertainty in this section reading with the clauses referred under IBC and focused on the Prabhudas Damodar vs. Manhabala Jeram Damodar (2013) 15 SCC 358. In the case, it was stated that "It is trite law that if the words of a Statute are themselves precise and unambiguous, then 25 Company Appeal (AT) (Insolvency) No. 02 of 2020 no more can be necessary than to expound those words in their natural and ordinary sense".
Furthermore, referring to Sections 77 and 78 of the Companies Act, 2013, the NCLAT claimed that there was no record of evidence to prove in the present case that Volkswagen exercised its option for the registration of the charge under Section 78 in the absence of Shree Balaji Printopack.
NCLAT also referred to the case of Kerala State Financial Enterprises Ltd. vs. Official Liquidator, High Court of Kerala, (2006) 10 SCC 709 where the under subpoena of Section 125 of the Companies Act says if charges are not reported, then the same will be invalid against the liquidator or creditors.