Gondwana Engineers Limited vs Mr. Bijay Murmuria Authorised ...

Arising out of Impugned Order dated 30.06.2026 passed by the National Company Law Tribunal, Ahmedabad Bench in IA No. 440(AHM)2025 in CP (IB) no. 59 of 2019.

IN THE MATTER OF: Gondwana Engineers Limited Through its Director, Mr. Rakshit Doshi, Add: 82, Abhyankar Nagar, Park Road, Nagpur, Maharashtra, India, PIN- 440010 Appellant

VERSUS

Mr. Bijay Murmuria Having Registration No: IBBI/IPE-0020 /IPA-1 /2022-23 / 50023 Registered address with IBBI: 1 8B, Middleton Street, 6A Geetanjali Apartments, Kolkata, West Bengal, India Respondent No.1

Areion Finserve Private Limited Having its registered office at: BGF - 1 Dilkhush Industrial Complex, GT Karnal Road, Azadpur, New Delhi- 110033 Respondent No.2

IDBI Bank Limited Ahmedabad Branch, Opp. Municipal Staff Quarters Near Lal Bungalow, C.G. Road, Ahmedabad - 380009 Respondent No.3

Bank of Baroda (Earlier known as Dena Bank)

Page 1 of 46 Having its office at: 2nd Floor, Dena Laxmi Building, 188-A, Ashram Road, Navrangpura, Ahmedabad- Respondent No.4 380009

Bank of Maharashtra Ashram Road Branch, Embassy Market, Near Dinesh Hall, 2 Ahmedabad - 380009 Respondent No.5

Mr. Ashit Dhirajlal Doshi 103 / A, 10th Floor, Tirthbhoomi, B/h Law College Ellis bridge, Ahmedabad-380006 Respondent No.6

Mr. Rakshit Dhirajlal Doshi 103 / A, 10th Floor, Tirthbhoomi, B/h Law College Ellis bridge, Ahmedabad-380006 Respondent No.7

Raj Radhe Finance Ltd. Tilak Raj Complex, 105-106, Panchavati Society, Ambawadi, Ahmedabad- 380006 Respondent No.8

Present: For Appellant Mr. Ashutosh Kumar, Mr. Manish Kumar Choudhary, Ms. Srishti Choudhary & Ms. Shefali Choudhary, Advocates For Respondents Mr. Kunal Vaishnav & Mr. Yuvraj Thakore, Advocates for Liquidator

JUDGEMENT

( 21.08.2026)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal is filed by the Appellant i.e., Gondwana Engineers

Limited through its Director Mr. Rakshit Doshi, under Section 61 of the

Insolvency and Bankruptcy Code, 2016, ("Code") arising out of Impugned Order Page 2 of 46 dated 30.06.2026 passed by the National Company Law Tribunal, Ahmedabad

Bench ("Adjudicating Authority") in IA No.440(AHM)2025, in CP (IB) No. 59

of 2019.

Mr. Bijay Murmuria, who is the authorized Insolvency Professional of

Sumedha Management Solutions Private Limited; Liquidator of Doshion Private

Limited (Corporate Debtor), is the Respondent No.1 herein.

Areion Finserve Private Limited, is the Respondent No.2 herein.

IDBI Bank Limited is the Respondent No.3 herein.

Bank of Baroda is the Respondent No.4 herein.

Bank of Maharashtra is the Respondent No.5 herein.

Mr. Ashit Dhirajlal Doshi, who was the erstwhile director of the Corporate

Debtor and are presently directors of Appellant, is the Respondent No.6 herein.

Mr. Rakshit Dhirajlal Doshi, who is the erstwhile director of the Corporate

Debtor and are presently directors of Appellant, is the Respondent No.7 herein.

Raj Radhe Finance Ltd. is the Respondent No.8 herein.

2. The Appellant submitted that the controversy involved in the present

Appeal concerns the property bearing House No. 9, Sigma Corporate Park,

Bodakdev, Ahmedabad (hereinafter referred to as the "Sigma-9 Property"), which

has remained continuously mortgaged in favour of Bank of Maharashtra and its

lawful assignees. The Appellant submitted that the Adjudicating Authority has

erroneously treated the said property as forming part of the liquidation estate by

Page 3 of 46 virtually extinguishing a valid and subsisting registered mortgage without any

authority under the Code.

3. The Appellant submitted that the factual background clearly demonstrates

that the Appellant has maintained banking relations with Bank of Maharashtra for

more than three decades. The Appellant approached Bank of Maharashtra as early

as the year 1993 seeking various credit facilities, including working capital limits

and bank guarantees. The said facilities were initially sanctioned on 18.11.1993

and were thereafter periodically renewed, enhanced and extended from time to

time till the year 2015. The Appellant submitted that the long-standing banker-

customer relationship between the parties forms the foundation of the subsequent

restructuring and security arrangements, all of which have been completely

overlooked by the Adjudicating Authority.

4. The Appellant further submitted that the Corporate Debtor, Doshion

Private Limited, acquired the Sigma-9 Property through a registered Sale Deed

dated 30.12.2009 from Mr. Ilesha P. Shah for a consideration of ₹3.56 Crores.

Immediately thereafter, Bank of Maharashtra sanctioned a term loan of ₹3.20

Crores to the Corporate Debtor on 06.01.2010/07.01.2010 against an equitable

mortgage created over the Sigma-9 Property. The corresponding charge was duly

registered with the Registrar of Companies in accordance with the Companies

Act, 2013. Thus, Bank of Maharashtra became the first secured creditor holding

a valid and enforceable mortgage over the subject property.

Page 4 of 46

5. The Appellant submitted that thereafter Respondent No.3, IDBI Bank

Limited, sanctioned credit facilities aggregating ₹75 Crores in favour of the

Corporate Debtor, while Respondent No.4, Dena Bank (now Bank of Baroda),

sanctioned additional facilities amounting to ₹65 Crores. Since Bank of

Maharashtra already held the first mortgage over the Sigma-9 Property, the

consortium banks sought permission for creation of a second pari passu charge.

Consequently, Bank of Maharashtra issued a No Objection Certificate dated

10.09.2012 permitting creation of a second pari passu charge over the property in

favour of IDBI Bank and Dena Bank.

6. The Appellant submitted that pursuant to the aforesaid No Objection

Certificate, a Memorandum recording extension of the equitable mortgage came

to be executed on 16.01.2013. The Appellant contended that this very transaction

clearly establishes that Bank of Maharashtra continued to retain the first mortgage

while merely consenting to the creation of a subordinate security interest in

favour of the consortium lenders. At no point of time was Bank of Maharashtra

divested of its existing security rights.

7. The Appellant further submitted that during the year 2014 the consortium

lenders undertook a comprehensive restructuring of their respective credit

facilities. Dena Bank, by sanction letter dated 12.09.2014, restructured and

revised its financial assistance aggregating ₹87.77 Crores under fresh contractual

terms and conditions. Similarly, IDBI Bank, by sanction letter dated 20.08.2014,

sanctioned revised facilities aggregating ₹93.48 Crores under an altogether new

Page 5 of 46 set of contractual arrangements. The Appellant submitted that these restructuring

exercises fundamentally altered the earlier lending arrangements and necessarily

required fresh perfection of security interests in accordance with law.

8. The Appellant submitted that recognizing this legal position, the Corporate

Debtor itself addressed a communication dated 29.09.2014 to Bank of

Maharashtra requesting issuance of a fresh No Objection Certificate for

continuation of the second pari passu charge over the Sigma-9 Property. Fresh

loan agreements and security documents were thereafter executed between the

consortium lenders and the Corporate Debtor, and corresponding charges were

registered with the Registrar of Companies. However, the Appellant contended

that despite restructuring of the consortium facilities, the mandatory steps

necessary for continuation of the second pari passu charge were never completed.

9. The Appellant further submitted that a Joint Lenders' Meeting was

convened on 10.03.2015 to expedite extension of the second charge over the

Sigma-9 Property. Shortly thereafter, Bank of Maharashtra independently

restructured the Appellant's own facilities on 17.03.2015 and accepted the Sigma-

9 Property as additional security for securing the Appellant's exposure

aggregating ₹95.41 Crores. The Appellant submitted that this restructuring

formed part of one composite commercial transaction and cannot be artificially

segregated into independent transactions as has been erroneously done by the

Adjudicating Authority.

Page 6 of 46

10. The Appellant submitted that Respondent Nos.6 and 7, namely Mr. Ashit

Dhirajlal Doshi and Mr. Rakshit Dhirajlal Doshi, were admittedly the erstwhile

Directors of the Corporate Debtor and presently continue as Directors of the

Appellant Company. Owing to the common management of both entities, the

Corporate Debtor agreed to secure the liabilities of the Appellant by creating

security over the Sigma-9 Property.

11. The Appellant further submitted that on 20.03.2015, Bank of Maharashtra

issued a No Due Certificate in respect of the earlier facility granted to the

Corporate Debtor. However, on the very same day, and as part of one integrated

restructuring transaction, the Sigma-9 Property was simultaneously mortgaged

afresh in favour of Bank of Maharashtra, Pune as security for the facilities

extended to the Appellant, with the Corporate Debtor acting as guarantor. The

corresponding charge was duly registered with the Registrar of Companies,

thereby creating a fresh registered mortgage in favour of Bank of Maharashtra.

12. The Appellant submitted that the Adjudicating Authority gravely erred in

treating the discharge of the earlier facility as an independent event resulting in

extinction of Bank of Maharashtra's priority. It was contended that the discharge

of the earlier facility and execution of the fresh mortgage constituted one

indivisible commercial restructuring transaction. The mortgage created on

20.03.2015 did not arise after an interruption of security but formed part of a

continuous chain of secured transactions ensuring uninterrupted security in

favour of Bank of Maharashtra.

Page 7 of 46

13. The Appellant further submitted that immediately thereafter, by internal

communication dated 06.04.2015, Bank of Maharashtra, Pune expressly

instructed its Ahmedabad Branch not to cede any second charge over the Sigma-

9 Property without obtaining prior approval from the competent authority. The

Appellant contended that this contemporaneous internal correspondence assumes

considerable significance since it unequivocally establishes that no fresh second

pari passu charge was ever approved after restructuring of the consortium

facilities. It was specifically submitted that no fresh Memorandum recording

extension of equitable mortgage or tripartite agreement was ever executed after

March 2015 in favour of the consortium banks.

The Appellant submitted that this contemporaneous documentary evidence

demolishes the very foundation upon which the impugned order proceeds. The

Adjudicating Authority completely overlooked these documents despite their

direct bearing on the controversy and instead proceeded on the erroneous

assumption that the consortium lenders continued to enjoy an enforceable second

pari passu charge notwithstanding the admitted restructuring of the lending

arrangements. The Appellant therefore submitted that the entire factual

foundation adopted by the Adjudicating Authority stands vitiated by non-

consideration of material evidence, resulting in findings which are contrary to the

documentary record and settled principles governing mortgages, restructuring of

secured debts and registration of charges.

Page 8 of 46

14. The Appellant further submitted that despite the fact that the second pari

passu charge was never perfected after the restructuring of the consortium

facilities, Respondent No. 4, Bank of Baroda (formerly Dena Bank), instituted

Original Application No. 282 of 2017 before the Debts Recovery Tribunal,

Ahmedabad on 08.05.2017 under the provisions of the Recovery of Debts and

Bankruptcy Act, 1993, seeking recovery of its dues by asserting an alleged second

pari passu charge over the Sigma-9 Property. The Appellant contended that

although the proceedings directly concerned the security interest over the subject

property, the Appellant was never impleaded as a party to the said proceedings

despite being the beneficiary of the registered mortgage created on 20.03.2015.

Consequently, the Appellant was deprived of any opportunity to place the

complete factual and legal position before the Debts Recovery Tribunal.

15. The Appellant submitted that during the pendency of the recovery

proceedings, Respondent No. 4 also invoked the provisions of Section 13(4) of

the SARFAESI Act, 2002 and initiated measures for taking symbolic possession

of the Sigma-9 Property. The said action was challenged before the Debts

Recovery Tribunal in Securitisation Application No. 154 of 2017. By order dated

17.10.2018, the Debts Recovery Tribunal observed that there was no dispute

regarding the creation of a second charge in favour of the Respondent Bank over

the subject property. The Appellant submitted that the said observation was

rendered solely on the basis of the material placed by the consortium banks and

without consideration of the subsequent restructuring documents, the internal

Page 9 of 46 communications of Bank of Maharashtra or the absence of any fresh tripartite

agreement after restructuring. It was further submitted that the Appellant was not

a party to those proceedings and, therefore, such observations cannot bind the

Appellant or determine its proprietary rights.

16. The Appellant further submitted that the Debts Recovery Tribunal,

Ahmedabad, by its subsequent order dated 08.11.2019 in O.A. No. 282 of 2017,

proceeded to hold that upon liquidation of the earlier loan advanced by Bank of

Maharashtra, the consortium lenders automatically stepped into the shoes of the

first charge holder and that any subsequent mortgage created in favour of Bank

of Maharashtra would remain subordinate to the rights of the consortium banks.

The Appellant submitted that the aforesaid findings were rendered on an

erroneous factual premise and on account of suppression of material facts. The

Debt Recovery Tribunal failed to appreciate that the earlier facility granted by

Bank of Maharashtra was discharged simultaneously with the execution of a fresh

registered mortgage dated 20.03.2015, forming part of one composite

restructuring transaction. The Appellant contended that the Debts Recovery

Tribunal also failed to consider that Bank of Maharashtra itself had expressly

declined to cede any fresh second charge after restructuring and that no

Memorandum recording extension of equitable mortgage was ever executed in

favour of the consortium banks after March 2015.

17. The Appellant further submitted that being seriously prejudiced by the

aforesaid order, although not a party to the original proceedings, it filed Review

Page 10 of 46 Application No. 1 of 2020 before the Debts Recovery Tribunal seeking review of

the order dated 08.11.2019. The Appellant submitted that the said Review

Application continues to remain pending adjudication. Accordingly, the findings

contained in the order dated 08.11.2019 have not attained finality, particularly qua

the Appellant, and therefore could not have been treated by the Adjudicating

Authority as conclusive or binding while deciding the applications under the

Code.

18. The Appellant submitted that while the aforesaid proceedings were

pending, Respondent No. 3 initiated proceedings under Section 7 of the Code,

against the Corporate Debtor. Pursuant thereto, the Corporate Debtor was

admitted into the Corporate Insolvency Resolution Process (CIRP) by order dated

31.08.2021. The Appellant submitted that the initiation of CIRP did not, in any

manner, alter or extinguish the existing proprietary rights of secured creditors

over the Sigma-9 Property, nor did it affect the validity of the registered mortgage

created in favour of Bank of Maharashtra.

19. The Appellant further submitted that Bank of Maharashtra independently

instituted Original Application No. 348 of 2021 before the Debts Recovery

Tribunal, Nagpur seeking recovery of an amount of ₹67,35,15,663.64 from the

Appellant. The Corporate Debtor, together with Respondent Nos. 6 and 7, namely

Mr. Ashit Dhirajlal Doshi and Mr. Rakshit Dhirajlal Doshi, were also arrayed as

parties in the said proceedings. The Appellant submitted that the said Original

Application remains pending adjudication and constitutes an independent

Page 11 of 46 proceeding concerning enforcement of the security created in favour of Bank of

Maharashtra.

20. The Appellant further submitted that with the objective of resolving its

liabilities towards Bank of Maharashtra under a One-Time Settlement (OTS), it

approached Respondent No. 2, Aerion Finserve Private Limited, seeking financial

assistance for part funding of the settlement amount. Pursuant thereto,

Respondent No. 2 issued a sanction letter dated 14.09.2023 sanctioning financial

assistance of Rs.7 Crores to the Appellant for facilitating payment of the OTS

amount aggregating approximately Rs.25 Crores, including delayed payment

interest.

21. The Appellant submitted that shortly thereafter, by order dated 03.10.2023

passed in I.A. No. 769 of 2021, the Adjudicating Authority directed liquidation

of the Corporate Debtor. Consequent upon the liquidation order, a public

announcement in Form B came to be published on 11.10.2023 inviting claims

from creditors and other stakeholders. The Appellant submitted that

commencement of liquidation proceedings did not enlarge the liquidation estate

nor did it confer jurisdiction upon the Liquidator to invalidate pre-existing

registered mortgages or adjudicate competing proprietary rights amongst secured

creditors.

22. The Appellant further submitted that on 17.10.2023, Respondent No. 2

duly registered its charge over the Sigma-9 Property with the Central Registry of

Securitisation Asset Reconstruction and Security Interest of India (CERSAI) for

Page 12 of 46 the secured amount of Rs.95.41 Crores. The Appellant submitted that such

registration further affirmed the continued existence and validity of the security

interest originally held by Bank of Maharashtra.

23. The Appellant submitted that thereafter, Bank of Maharashtra and

Respondent No. 2 executed a Registered Assignment Deed dated 27.10.2023,

which was duly registered on 30.11.2023, whereby Bank of Maharashtra assigned

all its rights, title, interest and security in favour of Aerion Finserve Private

Limited. Consequent upon the said assignment, the Appellant filed Form CHG-1

before the Registrar of Companies on 06.12.2023 seeking registration of

modification of charge, and the Registrar of Companies thereafter issued the

Certificate of Registration of Modification of Charge dated 15.02.2024. The

Appellant submitted that these statutory registrations conclusively establish that

the mortgage created in favour of Bank of Maharashtra remained subsisting and

that the entire security interest stood lawfully assigned to Aerion Finserve without

any interruption.

24. The Appellant further submitted that Respondent No. 2 lodged its claim

before the Liquidator on 06.07.2024 asserting its rights as the assignee of Bank

of Maharashtra. However, the said claim came to be rejected by the Liquidator

through email dated 15.07.2024. Aggrieved by the rejection, Respondent No. 2

addressed a detailed representation dated 16.08.2024, which was forwarded to the

Liquidator on 26.08.2024. The Liquidator thereafter issued a reply dated

07.09.2024 maintaining rejection of the claim.

Page 13 of 46

25. The Appellant submitted that the rejection of Respondent No. 2's claim

merely affected participation in the liquidation process and could never result in

extinguishment of the underlying mortgage or the proprietary rights attached

thereto. It was contended that the existence of a valid mortgage is entirely distinct

from admission or rejection of a claim in liquidation proceedings, and the

Adjudicating Authority failed to appreciate this settled legal distinction.

26. The Appellant further submitted that the Liquidator initially preferred I.A.

No. 275 of 2025 before the Adjudicating Authority challenging the assignment in

favour of Aerion Finserve. However, the said application was withdrawn with

liberty to file a fresh application. Subsequently, Respondent No. 2 assigned the

debt together with the corresponding security interest to Raj Radhe Finance

Limited by Assignment Agreement dated 02.05.2025. The Appellant submitted

that upon execution of the said Assignment Agreement, Raj Radhe Finance

Limited stepped into the shoes of the original secured creditor and became

entitled to every proprietary, contractual and statutory right earlier vested in Bank

of Maharashtra and thereafter in Aerion Finserve.

27. The Appellant submitted that the assignment transactions neither created

any fresh mortgage nor altered the nature of the existing security interest. They

merely transferred the rights of the original secured creditor to its lawful assignee

in accordance with settled principles governing assignment of debts and

actionable claims. Consequently, the validity and priority of the mortgage

continued unaffected notwithstanding the subsequent assignments.

Page 14 of 46

28. The Appellant submitted that after withdrawal of I.A. No. 275 of 2025, the

Respondent No. 1/Liquidator instituted amended I.A. No. 440 of 2025 under

Section 60(5) of the Code, read with Rule 11 of the National Company Law

Tribunal Rules, 2016. Through the said application, the Liquidator sought

declarations that the Assignment Deed dated 27.10.2023 executed between Bank

of Maharashtra and Aerion Finserve Private Limited, insofar as it related to the

Sigma-9 Property, was illegal and liable to be quashed. The Liquidator further

sought a declaration that the Sigma-9 Property formed part of the liquidation

estate of the Corporate Debtor and also challenged the subsequent Assignment

Agreement dated 02.05.2025 executed in favour of Raj Radhe Finance Limited.

The Appellant submitted that the reliefs sought by the Liquidator unmistakably

demonstrate that the dispute pertained to proprietary rights, competing

mortgages, validity of assignments and inter se priority amongst secured

creditors, none of which arise out of the insolvency resolution or liquidation

process contemplated under the Code.

29. The Appellant further submitted that upon receipt of notice, it filed a

detailed Reply Affidavit controverting each of the allegations made by the

Liquidator. The Appellant specifically pleaded that the application itself was not

maintainable under Section 60(5) of the Code, as the questions sought to be

adjudicated involved complex issues of title, validity of registered mortgages,

contractual obligations, registration of charges under the Companies Act, 2013 Page 15 of 46 interpretation of restructuring documents and competing proprietary rights

between secured creditors.

30. The Appellant submitted that Raj Radhe Finance Limited, being the lawful

assignee of the debt and security interest originally created in favour of Bank of

Maharashtra, also instituted I.A. No. 1137 of 2025 under Sections 42 and 60(5)(c)

of the Code. Through the said application, it sought admission of its claim in the

liquidation proceedings, permission to realise the secured asset outside

liquidation in accordance with Section 52 of the Code, exclusion of the Sigma-9

Property from the liquidation estate, condonation of delay in preferring the

proceedings and other consequential reliefs. The Appellant submitted that the

very institution of I.A. No. 1137 of 2025 demonstrated the existence of bona fide

competing proprietary claims over the subject property, thereby reinforcing that

the controversy could not have been adjudicated in summary proceedings.

31. The Appellant further submitted that the Liquidator thereafter preferred

I.A. No. 525 of 2026 seeking amendment of I.A. No. 440 of 2025 by

incorporating an additional prayer directing Raj Radhe Finance Limited to hand

over the original title deeds relating to the Sigma-9 Property. The Appellant

contended that this amendment further enlarged the scope of the proceedings by

seeking reliefs directly affecting ownership documents and proprietary interests,

matters which lie completely outside the statutory powers conferred upon the

Liquidator under Sections 35 and 36 of the Code.

Page 16 of 46

32. The Appellant further submitted that the jurisdiction conferred under

Section 60(5) of the Code is intended to facilitate effective conduct of the

insolvency resolution and liquidation process. It is neither intended nor designed

to substitute the jurisdiction of civil courts or other competent fora in matters

involving adjudication of title or competing proprietary claims.

33. The Appellant contended that the Adjudicating Authority also failed to

appreciate that the Liquidator merely functions as a statutory custodian of the

assets of the Corporate Debtor. Under Sections 35 and 36 of the Code, the

Liquidator is obligated to preserve, protect and realise the liquidation estate in

accordance with law. However, these statutory powers do not authorize the

Liquidator to question the validity of registered mortgages, challenge assignment

deeds or seek declarations concerning proprietary rights belonging to independent

secured creditors. The Liquidator neither represents one secured creditor against

another nor can he litigate disputes concerning mortgage priority in the absence

of any independent cause of action vested in him.

34. The Appellant submitted that the Adjudicating Authority further exceeded

its jurisdiction by recording findings entirely beyond the pleadings contained in

I.A. No. 440 of 2025. While the application principally challenged the assignment

deeds, the Adjudicating Authority proceeded to determine the legal validity of the

mortgage dated 20.03.2015, declare the priority between Bank of Maharashtra,

IDBI Bank and Bank of Baroda, and record findings regarding the continuing

effect of the order dated 08.11.2019 passed by the Debts Recovery Tribunal.

Page 17 of 46 These issues neither arose from the pleadings nor constituted the reliefs sought

before the Adjudicating Authority. It is well settled that no court or tribunal can

travel beyond the pleadings and grant declarations which have neither been

prayed for nor put in issue between the parties.

35. The Appellant further submitted that by declaring the mortgage dated

20.03.2015 to be subordinate to the alleged charge of the consortium lenders, the

Adjudicating Authority has effectively adjudicated vested proprietary rights over

the Sigma-9 Property. Such adjudication directly affects valuable property rights

and contractual interests of secured creditors. The Code nowhere authorises the

Adjudicating Authority to extinguish or dilute existing mortgages while

exercising jurisdiction under Section 60(5) of the Code.

36. The Appellant submitted that the impugned order is vitiated by its complete

failure to consider the mandatory provisions governing registration of charges

under the Companies Act, 2013. It was contended that Sections 77 and 79 of the

Companies Act, 2013 recognise the legal sanctity of registered charges and

prescribe the statutory mechanism governing their creation, modification and

registration. Once the charge in favour of Bank of Maharashtra and its subsequent

modification stood duly registered with the Registrar of Companies, the same

could not be ignored or declared subordinate merely on assumptions regarding

the earlier lending arrangements. Equally, if the consortium lenders claimed

continuation of a second pari passu charge after restructuring of their facilities, it

was incumbent upon them to demonstrate compliance with the statutory

Page 18 of 46 requirements governing creation and registration of such charge. The Appellant

submitted that the absence of any fresh registration or supporting security

documentation after restructuring clearly demonstrates that no enforceable

second pari passu charge survived in favour of the consortium lenders.

37. The Appellant further submitted that the Adjudicating Authority failed to

appreciate the settled legal principle governing assignment of debts and

securities. Upon execution of the Registered Assignment Deed dated 27.10.2023

by Bank of Maharashtra in favour of Aerion Finserve Private Limited, every

proprietary, contractual and statutory right attached to the mortgage stood

lawfully assigned. Subsequently, upon execution of the Assignment Agreement

dated 02.05.2025 in favour of Raj Radhe Finance Limited, the assignee acquired

all the rights, title and interest previously vested in the assignor. The Appellant

submitted that an assignee merely steps into the shoes of the assignor and

succeeds to the same rights without any diminution or impairment thereof.

Consequently, the security interest originally created in favour of Bank of

Maharashtra continued to subsist notwithstanding the subsequent assignments,

and the Adjudicating Authority erred in holding otherwise.

38. Concluding the arguments, the Appellant requested this Appellate Tribunal

to set aside the Impugned Order and allow the present appeal.

39. Per contra, the Respondent No.1, the contesting Respondent, denied all the

averments made by the Appellant as misleading and baseless.

Page 19 of 46

40. The Respondent No. 1 stated that the Adjudicating Authority held that the

security interest claimed through Bank of Maharashtra had become subordinate

and had ultimately lapsed into the liquidation estate by operation of Regulation

21A (3) of the IBBI (Liquidation Process) Regulations, 2016, and consequently

directed the handover of the original title deeds to the Liquidator. The Respondent

No. 1 contended that the present Appeal is merely a proxy litigation, has become

academic in nature, and is otherwise devoid of any merit.

41. The Respondent No. 1 submitted that Sigma-9 is admittedly the property

of the Corporate Debtor. It was stated that Bank of Maharashtra originally held

the first charge over the said property in respect of the Loan Against Property

extended to the Corporate Debtor, whereas IDBI Bank and Dena Bank (now Bank

of Baroda) held a second pari passu charge pursuant to the No Objection

Certificate issued by Bank of Maharashtra. The Respondent No. 1 contended that

upon issuance of the No Due Certificate by Bank of Maharashtra after full

repayment of the Loan Against Property, the first charge stood extinguished,

resulting in the consortium's second charge automatically becoming the first

charge over Sigma-9. It was further submitted that this position had already been

conclusively determined by the Debt Recovery Tribunal, Ahmedabad in OA No.

282 of 2017, and the said order continues to operate without any stay. The

Respondent No. 1 further stated that on the very same day a fresh simple

mortgage was created over Sigma-9 to secure the independent credit facilities

granted to the Appellant, Gondwana Engineers Limited, with the Corporate

Page 20 of 46 Debtor merely acting as guarantor. Consequently, such fresh mortgage could

never inherit the priority attached to the earlier discharged security.

42. The Respondent No. 1 submitted that Bank of Maharashtra subsequently

assigned its debt in favour of Areion Finserve, which in turn assigned the same

to Raj Radhe Finance Limited. However, neither Bank of Maharashtra nor its

assignees lodged their claim before the Liquidator within the prescribed time nor

exercised the statutory option available under Section 52 of the Code, read with

Regulation 21A. The Respondent No. 1 contended that Areion Finserve filed its

claim only on 06.07.2024, approximately 240 days after commencement of

liquidation, and the said claim was rightly rejected. It was further stated that IA

No. 231 of 2025, IA No. 341 of 2025 and IA No. 1137 of 2025, challenging such

rejection, were all dismissed and have remained unchallenged, thereby attaining

finality. The Respondent No. 1 further submitted that liquidation commenced on

03.10.2023, the last date for submission of claims was 08.11.2023, and the

statutory thirty-day period prescribed under Regulation 21A(1) also expired

without any intimation from the secured creditor regarding its intention to realise

the secured asset outside liquidation.

43. The Respondent No. 1 submitted that the present Appeal is not

maintainable as it has been instituted by a party which is not an aggrieved person.

It was contended that the Appellant, being merely the borrower, is neither the

owner of Sigma-9 nor the holder of the assigned security interest, and therefore

suffers no legal prejudice by the impugned order. The Respondent No. 1 stated

Page 21 of 46 that if any party could claim to be aggrieved by the finding that the security

interest had lapsed into the liquidation estate, it was Raj Radhe Finance Limited,

which has consciously chosen not to challenge either the dismissal of IA No. 1137

of 2025 or the impugned order. The Respondent No. 1 further contended that

Sigma-9 would in any event remain part of the liquidation estate because it is an

asset owned by the Corporate Debtor under Section 36(3) of the Code, and by

virtue of Regulation 21A (3) the security interest automatically stood absorbed

into the liquidation estate owing to the secured creditor's failure to comply with

the mandatory statutory timelines. It was further submitted that since the rejection

of the claim has attained finality, the Appellant cannot seek partial interference

with an integrated common order in order to obtain indirect relief.

44. The Respondent No. 1 submitted that the consortium banks continue to

enjoy the first charge over Sigma-9, whereas the subsequent mortgage created in

favour of Bank of Maharashtra ranks only as a subordinate security. It was

contended that the priority of mortgages is governed by Section 48 of the Transfer

of Property Act, 1882, and not merely by the chronology of registration. Reliance

was placed upon the judgment of the Hon'ble Supreme Court in ICICI Bank Ltd.

v. SIDCO Leathers Ltd., (2006) 10 SCC 452, to contend that once the first charge

of Bank of Maharashtra stood discharged, the consortium's earlier second charge

automatically ascended to first priority. The Respondent No. 1 further stated that

the Appellant's theory of a continuous or composite mortgage is wholly

untenable, as the sanction letter issued by Bank of Maharashtra itself required

Page 22 of 46 closure of the Corporate Debtor's Loan Against Property before creation of the

fresh mortgage. Accordingly, the discharge of the earlier mortgage and the

creation of the subsequent mortgage were distinct transactions, and a fresh

mortgage securing the debt of a different borrower could not inherit the priority

attached to the discharged security. The Respondent No. 1 also contended that

the DRT's finding recognising the consortium as the first charge holder remains

operative and binding since it has never been stayed, and the pendency of a review

petition filed by the Appellant cannot dilute or eclipse the binding effect of that

adjudication. It was further submitted that the Adjudicating Authority

independently arrived at the very same conclusion on the basis of the

documentary evidence available on record.

45. The Respondent No. 1 submitted that the security interest claimed by the

Appellant's assignees stood extinguished and merged into the liquidation estate

by operation of law. It was contended that neither Bank of Maharashtra nor its

assignees exercised the statutory option under Section 52 within the mandatory

thirty-day period prescribed by Regulation 21A, and consequently the deeming

fiction under Regulation 21A(3) automatically came into operation. The

Respondent No. 1 stated that no avoidance proceedings under the Code were

either necessary or initiated because the Adjudicating Authority did not invalidate

the mortgage; rather, the security interest lapsed solely due to non-compliance

with the mandatory statutory procedure. It was further contended that an assignee

acquires the assigned rights subject to all existing legal disabilities, and reliance

Page 23 of 46 was placed upon the judgments of the Hon'ble Supreme Court in ICICI Bank Ltd.

v. APS Star Industries Ltd., (2010) 10 SCC 1, as well as Swiss Ribbons Pvt. Ltd.

v. Union of India, (2019) 4 SCC 17, to emphasise that liquidation proceedings

are required to be completed within strict timelines. The Respondent No. 1 further

stated that registration of the charge with the Registrar of Companies or CERSAI

merely evidences the existence of the charge and cannot override the mandatory

statutory obligations imposed by the Code and the Liquidation Regulations.

46. The Respondent No. 1 submitted that the present Appeal is nothing but an

abuse of the judicial process and constitutes yet another attempt by the suspended

management of the Corporate Debtor, acting through related entities, to obstruct

the liquidation proceedings. It was contended that the erstwhile directors of the

Corporate Debtor, who are also the present directors of Gondwana Engineers

Limited, and their control over the connected entities already stands recognised

in judicial proceedings. The Respondent No. 1 stated that the Hon'ble Gujarat

High Court, in its judgment dated 13.10.2025, specifically observed that the

suspended management exercises control over the petitioners, while an earlier

appeal filed by Gondwana Engineers Limited had also been dismissed by this

Appellate Tribunal. It was further submitted that immediately after the order

directing the tenants to vacate the Corporate Debtor's premises, the suspended

management induced the assignee to lodge an extremely belated claim with the

object of excluding Sigma-9 from the liquidation estate. The Respondent No. 1

contended that the present Appeal, filed by the borrower instead of the alleged

Page 24 of 46 secured creditor and immediately before the proposed auction, forms part of a

continuous strategy to frustrate liquidation and defeat the object of value

maximisation under the Code.

47. The Respondent No. 1 further submitted that the letter dated 26.06.2024

clearly demonstrates that the suspended management, who are simultaneously the

directors of Gondwana Engineers Limited, addressed correspondence to the

assignor only five days after the judgment dated 21.06.2024 passed in IA Nos. 63

of 2022 and 94 of 2022, whereby the tenants had been directed to vacate and hand

over possession of the Corporate Debtor's properties. The Respondent No. 1

stated that Respondent Nos. 6 and 7 are the erstwhile directors of the Corporate

Debtor as well as the present directors of Gondwana Engineers Limited, and that

Gondwana Engineers Limited had itself been directed to vacate Sigma-9 by order

dated 21.06.2024. It was therefore contended that the present Appeal is merely a

continuation of the deliberate obstruction caused by the suspended management

through its alter ego with the sole object of delaying liquidation and preventing

the successful realisation of the assets of the Corporate Debtor.

48. Concluding arguments, the Respondent No.1 requested this Appellate

Tribunal to dismiss the present Appeal.

Page 25 of 46

Findings

49. At the outset, we note that the core controversy concerns the inter se

priority of competing charges over an immovable property i.e. the Sigma-9

Property , owned by the Corporate Debtor, as between (a) a second pari-passu

equitable mortgage created in 2012-13 in favour of IDBI Bank Limited

("Respondent No. 3") and Dena Bank, now Bank of Baroda ("Respondent No.

4"/"BOB"), and (b) a Simple Mortgage Deed dated 20.03.2015 executed by the

Corporate Debtor as guarantor-mortgagor in favour of Bank of Maharashtra

("Respondent No. 5"/"BOM") to secure independent credit facilities extended by

BOM to the Appellant a security interest subsequently assigned by BOM, first to

Areion Finserve Private Limited ("Respondent No. 2") and thereafter to Raj

Radhe Finance Limited ("Respondent No. 8"). The Adjudicating Authority has

held that the Sigma-9 Property forms part of the liquidation estate of the

Corporate Debtor, and that the mortgage traceable to BOM ranks subordinate to

the charge of IDBI Bank and BOB. Aggrieved thereby, the Appellant has

preferred the present appeal.

50. The facts, as borne out from the paper-book and the impugned order

(including the chronology recorded by the Adjudicating Authority at paragraph

31.4 thereof), may be briefly noticed as under:

Page 26 of 46

Date Event

30.12.2009 Doshion Private Limited ("the Corporate Debtor") purchased House No. 9, Sigma Corporate, behind Rajpath Club, Bodakdev, Ahmedabad ("the Sigma-9 Property").

07.01.2010 Bank of Maharashtra ("BOM") sanctioned a Loan Against Property facility of Rs. 3.20 crore to the Corporate Debtor and obtained an equitable mortgage over the Sigma-9 Property, thereby becoming its first charge-holder.

10.09.2012 BOM issued a No Objection Certificate permitting creation of a second pari-passu charge over the Sigma-9 Property in favour of IDBI Bank Limited and Dena Bank (now Bank of Baroda, "BOB"), who had separately sanctioned facilities aggregating approximately Rs. 140 crore to the Corporate Debtor.

16.01.2013 A Memorandum recording extension of equitable mortgage was executed, whereby IDBI Bank and Dena Bank acquired a second pari-passu charge over the Sigma-9 Property, subordinate to the first charge of BOM.

20.08.2014 IDBI Bank and Dena Bank respectively restructured their credit &12.09.201 facilities (to Rs. 93.48 crore and Rs. 87.77 crore), continuing to 4 record the Sigma-9 Property as collateral security.

11.03.2015 A Joint Lenders' Meeting was held between BOM and the IDBI-

Dena Bank consortium concerning extension of the second charge.

20.03.2015 BOM issued a No Due Certificate closing the Corporate Debtor's 2010 Loan Against Property account; on the very same day, Gondwana Engineers Limited ("the Appellant") executed a fresh, independent Simple Mortgage Deed in favour of BOM over the Sigma-9 Property, securing the Appellant's own separate credit facilities, with the Corporate Debtor furnishing the property as guarantor-mortgagor.

Page 27 of 46

Date Event

06.04.2015 BOM, Pune Branch informed BOM, Ahmedabad Branch that no second charge on the Sigma-9 Property was to be ceded without approval of the competent authority.

08.05.2017 Bank of Baroda instituted O.A. No. 282 of 2017 before the Debts Recovery Tribunal, Ahmedabad ("DRT").

17.10.2018 The DRT, in S.A. No. 154/2017, upheld Bank of Baroda's symbolic possession under Section 13(4) of the SARFAESI Act, 2002, recording that a second charge in its favour over the Sigma- 9 Property was not in dispute.

08.11.2019 The DRT, Ahmedabad, in O.A. No. 282 of 2017, held that IDBI Bank and Dena Bank (BOB) became first charge-holders over the Sigma-9 Property upon discharge of BOM's facility, and that any subsequent loan by BOM would rank subordinate thereto.

2020 The Appellant filed Review Application No. 1 of 2020 against the DRT order dated 08.11.2019; no order staying that order has been placed on record at any stage.

31.08.2021 The Corporate Debtor was admitted into CIRP in C.P.(IB) No. 59 of 2019.

03.10.2023 The Corporate Debtor was ordered to be liquidated; Mr. Bijay Murmuria, Authorised Insolvency Professional of Sumedha Management Solutions Private Limited, was appointed Liquidator ("the Liquidator"/"Respondent No. 1"). Public announcement under Regulation 12 followed on 11.10.2023, fixing 08.11.2023 as the last date for submission of claims and 08.12.2023 for verification.

27.10.2023( BOM executed an Assignment Agreement in favour of Areion regd. Finserve Private Limited ("Respondent No. 2"), assigning its debt 30.11.2023) and security interest, including over the Sigma-9 Property. No claim was lodged by BOM in the liquidation, and no intimation under Section 52 read with Regulation 21A(1) was given by

Page 28 of 46 Date Event

BOM or Areion Finserve within thirty days of the liquidation commencement date.

21.06.2024 The Adjudicating Authority, in I.A. Nos. 63 of 2022 and 94 of 2022, directed handing over of possession of the Corporate Debtor's properties to the Liquidator.

06.07.2024 Areion Finserve filed Form-D before the Liquidator asserting rights over the Sigma-9 Property -- nearly nine months after the liquidation commencement date and well beyond the prescribed timeline.

15.07.2024 The Liquidator rejected Areion Finserve's claim for delay and

-07.09.2024 non-compliance with Regulation 21A; reconsideration was sought and reiteratively declined.

24.01.2025 Areion Finserve's I.A. Nos. 231 and 341 of 2025 (condonation of

-08.07.2025 delay; challenge to rejection) were, after being filed, ultimately dismissed for non-prosecution on 08.07.2025; no order setting aside or staying that dismissal is on record.

12.03.2025 The Liquidator filed (amended) I.A. No. 440(AHM)2025 under Section 60(5) of the Code seeking declarations concerning the Sigma-9 Property and the assignment deeds.

02.05.2025 Areion Finserve assigned its rights to Raj Radhe Finance Limited ("Respondent No. 8").

22.09.2025 Raj Radhe Finance Limited filed I.A. No. 1137(AHM)2025 under Section 42 read with Section 60(5)(c) of the Code, challenging rejection of the claim originally filed by Areion Finserve.

01.04.2026 The Liquidator filed I.A. No. 525(AHM)2026 seeking amendment of I.A. No. 440 of 2025 for a consequential direction for handover of the original title deeds of the Sigma-9 Property.

Page 29 of 46

Date Event

30.06.2026 The Adjudicating Authority passed the impugned Common Order disposing of I.A. Nos. 440(AHM)2025, 1137(AHM)2025 and 525(AHM)2026.

17.06.2026 The Liquidator issued a notice (with corrigendum) for auction of

the Corporate Debtor's properties, including the Sigma-9 Property, fixed for 20.07.2026.

16.07.2026 The present appeal, together with applications for ad-interim stay of the impugned order and of the proposed auction, came to be filed.

51. The Adjudicating Authority framed four issues for determination, namely:

(i) whether IDBI Bank and BOB acquired first charge over the Sigma-9 Property

upon discharge of BOM's earlier dues, and the nature and effect of the mortgage

subsequently created by the Appellant in favour of BOM; (ii) whether the

assignment of debt by BOM to Areion Finserve, and thereafter to Raj Radhe

Finance, conferred any rights on the assignees and required adjudication of the

validity of those assignments; (iii) whether BOM and its assignees failed to

exercise the option to realise their security interest within the period prescribed

under Section 52 of the Code read with Regulation 21A of the IBBI (Liquidation

Process) Regulations, 2016, and whether rejection of Areion Finserve's claim

warranted interference under Section 42 of the Code; and (iv) whether the Sigma-

9 Property forms part of the liquidation estate and the Liquidator is entitled to its

custody and control, including the original title deeds. On Issue (i), the

Page 30 of 46 Adjudicating Authority held that upon BOM's No Due Certificate dated

20.03.2015 discharging its 2010 facility, the second pari-passu charge already

vested in IDBI Bank and BOB with effect from 16.01.2013 automatically

assumed the position of first charge, and that the Simple Mortgage Deed dated

20.03.2015 in favour of BOM, though validly created, ranked subordinate thereto.

On Issue (ii), it declined to adjudicate upon or invalidate the assignment deeds,

holding that the assignees merely stepped into the shoes of BOM and could

acquire no greater right. On Issue (iii), it held that BOM and its assignees failed

to intimate their election to realise security outside liquidation within thirty days

as required by Regulation 21A(1), that the claim filed by Areion Finserve on

06.07.2024 was hopelessly delayed, and that rejection of that claim called for no

interference under Section 42. On Issue (iv), it held that the Sigma-9 Property

forms part of the liquidation estate under Section 36 of the Code and that the

Liquidator is entitled to custody and control thereof, including the original title

deeds, under Section 35.

52. In consequence, the Adjudicating Authority (a) partly allowed I.A. No.

440(AHM)2025, declaring the Sigma-9 Property to be part of the liquidation

estate and holding that the security interest of Respondent Nos. 2 and 8 (Areion

Finserve and Raj Radhe Finance), being subordinate and having lapsed into the

liquidation estate under Regulation 21A(3), would not obstruct the Liquidator,

while declining to quash the assignment deeds themselves; (b) dismissed I.A. No.

1137(AHM)2025 filed by Raj Radhe Finance Limited; and (c) allowed I.A. No.

Page 31 of 46 525(AHM)2026, directing BOM, Areion Finserve, Raj Radhe Finance, or any

person in possession of the original title deeds of the Sigma-9 Property to hand

them over to the Liquidator within two weeks, failing which coercive steps under

Sections 35(1)(n) and 70 of the Code were left open.

53. Having heard the matter and perused the paper-book, including the

impugned order in its entirety, the said grounds resolve themselves into the

following six Issues, which alone require determination and are dealt with issue-

wise below:

ISSUE NO. (1) Whether I.A. No. 440(AHM)2025 involved adjudication of

matters beyond the jurisdiction of the Adjudicating Authority under Section 60(5)

of the Code.

ISSUE NO. (2) Whether the Adjudicating Authority erred in holding that the

second pari-passu charge of IDBI Bank and BOB ranks in priority over the

Simple Mortgage Deed dated 20.03.2015 in favour of BOM

ISSUE NO. (3) Whether the absence of registration of the IDBI Bank/BOB

charge with the Registrar of Companies ("ROC")/CERSAI, and the alleged non-

consideration of Sections 77 and 79 of the Companies Act, 2013, renders the

impugned order perverse or per incuriam.

ISSUE NO. (4) Whether the pendency of Review Application No. 1 of 2020

against the DRT order dated 08.11.2019 detracts from the impugned order.

ISSUE NO. (5) Whether the impugned order suffers from internal inconsistency

in simultaneously including the Sigma-9 Property in the liquidation estate and

Page 32 of 46 declining to set aside the assignment deeds dated 27.10.2023 and dated

02.05.2025.

ISSUE NO. (6) Whether the dismissal of I.A. No. 1137(AHM)2025 and the

directions in I.A. No. 525(AHM)2026 call for interference by this Appellate

Tribunal.

Issue wise discussion

ISSUE NO.(1) Whether I.A. No. 440(AHM)2025 involved adjudication of

matters beyond the jurisdiction of the Adjudicating Authority under Section

60(5) of the Code.

54. The Appellant urged that I.A. No. 440(AHM)2025 was, in essence, an

attempt to obtain declarations regarding proprietary rights, mortgage priority and

inter se rights of secured creditors -- matters said to be governed by the Transfer

of Property Act, 1882 and general mortgage law, and therefore not amenable to

the summary jurisdiction conferred by Section 60(5) of the Code.

55. This contention does not survive a plain reading of the statute. Section

60(5)(c) of the Code confers upon the Adjudicating Authority jurisdiction to

entertain "any question of priorities or any question of law or facts, arising out of

or in relation to the insolvency resolution or liquidation proceedings of the

corporate debtor." The deliberate use of the word "priorities" forecloses the very

contention now advanced: a dispute as to the inter se priority of charges over an

asset of the Corporate Debtor, arising in the course of its liquidation, is a paradigm

Page 33 of 46 instance of the jurisdiction the provision was designed to confer, not a matter

excluded from it.

56. Nor can the determination be characterised as collateral to liquidation.

Unless the Adjudicating Authority determines whether, and subject to what

encumbrance, the Sigma-9 Property forms part of the liquidation estate, the

Liquidator cannot discharge the statutory duties cast upon him under Sections 35

and 36 of the Code to take custody, verify and realise the assets of the estate. The

question "does this asset belong to the estate, and free of what claims" is not

incidental to liquidation; it is foundational to it.

57. We also take into consideration that the Appellant's own reply dated

18.07.2025 before the Adjudicating Authority (recorded at paragraphs 8.1 to 8.13

of the impugned order) did not question the Adjudicating Authority's jurisdiction

to decide priority at all; on the contrary, it squarely invited a decision on merits

that the charge of IDBI Bank and BOB was never perfected for want of

registration and could not prevail over the mortgage traceable to BOM. Having

invited an adjudication on the very question of priority and having failed on

merits, it is not open to the Appellant to contend for the first time before this

Appellate Tribunal that the forum it invoked lacked jurisdiction to decide what it

was asked to decide.

58. On the issue that the Adjudicating Authority travelled beyond the

pleadings, we note that the reliefs sought in I.A. No. 440(AHM)2025 (extracted

at paragraph 2 of the impugned order) expressly sought declarations as to the

Page 34 of 46 character of the Sigma-9 Property and the legality of the charges created by the

assignment deeds qua that property. Determination of the underlying priority of

mortgages was a necessary and inseverable incident of granting or refusing those

very declarations; it cannot be said that relief was granted beyond the prayers.

Issue No. 1 is accordingly answered against the Appellant.

Issue No. (2) Whether the Adjudicating Authority erred in holding that the second

pari-passu charge of IDBI Bank and BOB ranks in priority over the Simple Mortgage

Deed dated 20.03.2015 in favour of BOM?

59. The undisputed sequence is this: BOM acquired a first equitable mortgage

on 07.01.2010; IDBI Bank and Dena Bank (BOB) acquired a second pari-passu

charge with effect from 16.01.2013, pursuant to BOM's own No Objection

Certificate dated 10.09.2012; and on 20.03.2015, BOM discharged the very

facility that constituted its first charge (by issuing a No Due Certificate) while,

on the same day, the Appellant executed an entirely fresh and independent Simple

Mortgage Deed over the same property in favour of BOM, securing the

Appellant's own, unrelated credit facilities, with the Corporate Debtor furnishing

the property merely as guarantor-mortgagor.

60. On this sequence, the finding that the second pari-passu charge of IDBI

Bank and BOB automatically assumed the position of first charge upon discharge

of BOM's 2010 facility is unexceptionable and follows from elementary

mortgage law: when a prior encumbrance is discharged, a subsisting subsequent

encumbrance moves up in priority, there being no fresh, intervening right of a

Page 35 of 46 stranger created in between. The 2015 Simple Mortgage Deed, on the correct

finding of the Adjudicating Authority, was not a renewal or continuation of the

discharged 2010 mortgage but a new and independent transaction securing a

different borrower (the Appellant) and different facilities; neither the sanction

letter nor the mortgage deed reserved to BOM a continuation of its erstwhile first-

ranking priority notwithstanding the intervening, already-vested rights of IDBI

Bank and BOB.

61. In the absence of such a stipulation, Section 48 of the Transfer of Property

Act, 1882 applies in its ordinary terms: successive rights created over the same

immovable property rank in the order of their creation, and each later-created

right is, absent special contract, subject to rights previously created. We are of

considered view that this priority of a first-created charge under Section 48 of the

Transfer of Property Act, 1882 is not displaced by provisions of company law

governing distribution among secured creditors, and continues to bind unless the

earlier charge-holder has itself relinquished its security.

62. The "composite transaction" argument of the Appellant is that discharge of

the 2010 facility and creation of the 2015 mortgage formed one indivisible

restructuring, such that BOM's priority ought to be treated as unbroken, does not

withstand scrutiny of the parties and facilities involved. The 2010 facility was a

Loan Against Property extended to the Corporate Debtor; the 2015 facility was

an altogether different credit exposure extended to the Appellant, with the

Corporate Debtor merely a guarantor. A restructuring that is "composite" only in

Page 36 of 46 the loose commercial sense of involving affiliated customers of the same bank

does not, without more, operate in law to preserve a priority that depends on

continuity of the very right, not continuity of the banking relationship. Indeed,

BOM's own letter dated 19.03.2015 required that the 2010 facility "be closed

before implementation" of the fresh sanction -- contemplating sequential closure

and fresh creation, not seamless continuation. The composite-transaction

argument does not, therefore, assist the Appellant.

63. The Appellant's reliance on BOM Pune's internal communication dated

06.04.2015 to BOM Ahmedabad, asserting that no second charge was to be ceded

without approval of competent authority was correctly held immaterial, since that

communication post-dates, and could not retrospectively unwind, rights that had

already vested in IDBI Bank and BOB with effect from 16.01.2013. A bank's

unilateral, internal and subsequent communication to its own branch cannot

extinguish or subordinate rights that third parties had already validly and

irrevocably acquired.

64. Another Ground of the Appellant insofar as it relies on an alleged

"modification of charge for the subject property by BOM, Ahmedabad on

12.07.2011," stands on a different footing altogether: this assertion appears for

the first time in the Appeal. It finds no mention in the Appellant's own reply dated

18.07.2025 before the Adjudicating Authority, no place in the chronology

recorded at paragraph 31.4 of the impugned order, and no corresponding

Annexure is traceable in the present paper-book. A plea of fact neither pleaded

Page 37 of 46 nor proved below, unsupported by any document on the record of this appeal,

cannot be permitted to be raised for the first time in appeal, more so where, if

true, it concerns a document that would have been squarely within the possession

of the Appellant or BOM and readily producible before the Adjudicating

Authority. This limb of Ground is rejected.

65. On the issue that an assignee acquires every proprietary and contractual

right of the assignor, and that assignment cannot diminish the rights attached to

the assigned security does not, on examination, assist the Appellant; if anything,

it confirms the correctness of the impugned order. The principle that an assignee

steps into the shoes of, and can claim no greater right then, the assignor is

precisely what the Adjudicating Authority applied at paragraphs holding that

Areion Finserve and, in turn, Raj Radhe Finance, could acquire no more than the

subordinate charge that BOM itself held.

Thus, Issue No 2 goes against the Appellant.

Issue No. 3: Whether the absence of registration of the IDBI Bank/BOB

charge with the Registrar of Companies ("ROC")/CERSAI, and the alleged

non-consideration of Sections 77 and 79 of the Companies Act, 2013, renders

the impugned order perverse or per incuriam?

66. The Appellant argued that in the absence of registration of the IDBI

Bank/BOB charge with the ROC or CERSAI, that charge could never be

perfected and cannot prevail over the mortgage traceable to BOM (which was

Page 38 of 46 itself registered with CERSAI on 17.10.2023 and with the ROC by Form CHG-1

dated 06.12.2023, culminating in a certificate of registration of modification of

charge dated 15.02.2024), and that the impugned order, by not adverting to

Sections 77 and 79 of the Companies Act, 2013, is perverse.

67. We find that this conflates two distinct legal consequences. Registration of

a charge under Section 77 of the Companies Act, 2013 operates as constructive

notice to persons dealing with the company and, under sub-section (3) thereof,

renders an unregistered charge liable to be disregarded by the liquidator and by

other creditors of the company. It is not, however, the mode of creation of the

charge; the charge here was created by the underlying contract, the equitable

mortgage effected through the NOC dated 10.09.2012 and the Memorandum

dated 16.01.2013 and continues to bind the immediate parties to that transaction

and those claiming through them with notice of it, regardless of registration.

Sections 77 and 79 of the Companies Act, 2013 exist to protect the liquidator and

other creditors dealing with the company without notice of an unregistered

charge; they were not enacted to confer, upon a subsequent chargee who

otherwise had notice (actual or constructive) of an earlier charge, a priority it

could not otherwise claim.

68. We observe that it is the Liquidator, the very party for whose protection

Section 77(3) exists , who does not invoke non-registration to defeat the priority

of IDBI Bank and BOB; to the contrary, the Liquidator treated their charge as the

first charge, consistent with which IDBI Bank and BOB duly lodged their claims

Page 39 of 46 and relinquished their security to the liquidation estate under Section 52 of the

Code . It is only the Appellant, a stranger to the IDBI Bank/BOB charge, aligned

with the subsequent mortgagee, who seeks to invoke Section 77(3) for a purpose

the provision was not designed to serve, namely to elevate its own subsequently

created and, on facts, subordinate mortgage. Independently, as urged by

Respondent No. 8 before the Adjudicating Authority, if the true grievance was the

correctness or completeness of the entries on the register of charges maintained

by the ROC, the remedy lay in an application for rectification of the register of

charges under Section 87 of the Companies Act, 2013, and not in resisting, in

summary liquidation proceedings under Section 60(5) of the Code, a declaration

necessary for administration of the liquidation estate. This finding on this issue is

affirmed.

69. The allied contention that the impugned order is rendered per incuriam for

not expressly citing Sections 77 and 79 of the Companies Act, 2013 is equally

misconceived. An order is not per incuriam merely because it does not advert, in

terms, to a statutory provision that, on a correct application of law as discussed

above, would not in any event have altered the outcome.

In totality the No. 3 is accordingly answered against the Appellant.

Issue No. 4: Whether the pendency of Review Application No. 1 of 2020

against the DRT order dated 08.11.2019 detracts from the impugned order.

Page 40 of 46

70. The Appellant argued that the Adjudicating Authority erred in treating the

DRT's order dated 08.11.2019 as conclusive, without regard to the pendency of

Review Application No. 1 of 2020 filed by the Appellant against that order.

71. It is not disputed and nothing in the Appeal suggests otherwise that no order

staying the operation of the DRT order dated 08.11.2019 has been obtained in the

Review Application at any point since 2020. It is well settled that mere pendency

of a review, revision or appeal does not, without an order of stay, suspend the

operation or binding effect of the order under challenge; the order continues to

bind the parties until set aside or stayed. The Adjudicating Authority was,

therefore, correct to proceed on the footing that the findings in the order dated

08.11.2019 continued to hold the field.

72. In any event, the finding on priority does not rest solely, or even principally,

on the DRT's order; it independently follows from the documentary chronology

the NOC dated 10.09.2012, the Memorandum dated 16.01.2013, the No Due

Certificate dated 20.03.2015 and the contemporaneous Simple Mortgage Deed

read with Section 48 of the Transfer of Property Act, 1882, as discussed under

Issue No. 2 above. The DRT order was relied upon only as independent

corroboration and not as the foundation of the finding. The pendency of the

review therefore furnishes no ground to disturb the impugned order.

Issue No. 4 is accordingly answered against the Appellant.

Page 41 of 46 Issue No. 5: Whether the impugned order suffers from internal inconsistency

in simultaneously including the Sigma-9 Property in the liquidation estate

and declining to set aside the assignment deeds dated 27.10.2023 and dated

02.05.2025?

73. It is the case of the Appellant that the impugned order is self-contradictory

in simultaneously (a) declaring the Sigma-9 Property part of the liquidation estate

and permitting the Liquidator to take custody under Section 35 of the Code, and

(b) declining to set aside the Assignment Agreements dated 27.10.2023 and

02.05.2025, which are said to remain subsisting and valid; and that unless the

impugned order is set aside, the charges created by those assignment deeds would

be rendered infructuous.

74. On examination, no such inconsistency exists. The impugned order does

two analytically distinct things: first, it declines to invalidate the Assignment

Agreements dated 27.10.2023 and 02.05.2025 as transactions inter se between

BOM, Areion Finserve and Raj Radhe Finance and second, it separately holds

that the security interest which those assignments purported to carry , being, on

Issue No 2 above, a mortgage subordinate to the first charge of IDBI Bank and

BOB, and, on the findings on Issue (iii) of the impugned order, never realised or

even intimated for realisation within the thirty-day window prescribed by

Regulation 21A(1) of the IBBI (Liquidation Process) Regulations, 2016 -- stood

Page 42 of 46 deemed, by operation of the proviso to Regulation 21A(1) read with Regulation

21A(3), to have lapsed into the liquidation estate .

75. We observe that these findings can co-exist without any conflict. An

assignment may be a perfectly valid transaction as between assignor and assignee,

transferring whatever the assignor held, while what was transferred (here, a

subordinate charge that its holders never elected, in time, to realise outside

liquidation) is, independently and by force of Regulation 21A, treated as part of

the estate. The assignees are not left without a valid transaction for that reason;

what they are left without is a security interest enforceable outside liquidation.

That is a statutory consequence of Regulation 21A, not an inconsistency internal

to the impugned order.

76. The security assigned under the two deeds was always subordinate and

always liable to lapse for want of timely election under Section 52 of the Code.

The impugned order does no more than record the legal consequence that

necessarily follows from those antecedent findings.

Issue No. 5 is accordingly answered against the Appellant.

Issue No. 6: Whether the dismissal of I.A. No. 1137(AHM)2025 and the

directions in I.A. No. 525(AHM)2026 call for interference by this Appellate

Tribunal?

77. It remains to consider whether the dismissal of I.A. No. 1137(AHM)2025

and the directions in I.A. No. 525(AHM)2026 call for interference, on the Ground

Page 43 of 46 that rejection of a claim does not extinguish a mortgage and that no prejudice was

caused to the liquidation process by the delay in question.

78. We need to appreciate that IA No. 1137(AHM)2025 was preferred by Raj

Radhe Finance Limited, as assignee of Areion Finserve, challenging the

Liquidator's rejection of Areion Finserve's claim under Section 42 of the Code.

Raj Radhe Finance, as assignee, could acquire no better title to press that claim

than Areion Finserve itself possessed. The delay and non-compliance with

Regulation 21A that justified rejection of Areion Finserve's claim equally infects

the claim as pressed by its assignee. The dismissal of I.A. No. 1137(AHM)2025

calls for no interference, and, in any event, it is Respondent No. 8 who is directly

bound by that dismissal; the Appellant does not, beyond what is already covered

under Issue No 1 to 5 above, make out any independent ground of challenge to

this part of the impugned order.

79. on the issue that rejection of a claim does not extinguish a mortgage, and

that no prejudice was caused to the liquidation process by the delay, misconceives

the basis of the finding. While rejection of a proof of claim does not, of itself and

for all purposes, extinguish an underlying mortgage as a matter of general

property law, the operative consequence here is not extinguishment of the

mortgage in the abstract but the statutorily deemed consequence, under

Regulation 21A(3) of the IBBI (Liquidation Process) Regulations, 2016, of

failure to exercise the Section 52 option within the time prescribed. That

consequence -- the secured asset being brought into, and treated as part of, the

Page 44 of 46 liquidation estate follows by operation of the Regulation itself, and does not

depend on demonstrated prejudice to the liquidation process, in the same manner

that limitation bars a remedy irrespective of individualised prejudice.

80. The direction in I.A. No. 525(AHM)2026 for handing over of the original

title deeds of the Sigma-9 Property to the Liquidator is the necessary corollary of

the finding, affirmed above, that the property forms part of the liquidation estate

and that the Liquidator is obliged, under Section 35(1)(b), (d) and (n) of the Code,

to take custody and control of the assets and records of the Corporate Debtor.

Custody of an immovable asset without custody of its title documents would

render that statutory duty illusory. This direction, too, calls for no interference.

The Issue No. 6 is accordingly answered against the Appellant.

Conclusion

81. For the reasons recorded above, none of the grounds urged on behalf of the

Appellant whether going to the jurisdiction of the Adjudicating Authority, to the

priority of mortgages, to the effect of non-registration of charges under the

Companies Act, 2013, to the pendency of the DRT review, or to the internal

consistency of the impugned order is found to have merit. In the result, the

impugned Order doesn't warrant any interference from this Appellate Tribunal.

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82. The appeal fails and accordingly, dismissed. No order as to cost. Pending

IA, if any stand closed.

[Justice Mohammad Faiz Alam Khan] Member (Judicial)

[Naresh Salecha] Member (Technical) Sim

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