Nilesh Enterprises vs Mr. Rameshkumar Totla & Ors

Present: JUSTICE N. SESHASAYEE, MEMBER (JUDICIAL) ARUN BAROKA, MEMBER (TECHNICAL)

INDEVAR PANDEY, MEMBER TECHNICAL

Company Appeal (AT) (Ins) No.2036 of 2024 with I.A. No.6090 of 2025, I.A. No.7879 of 2025

Giriraj Enterprise, ...Appellant Through its Partner Sanjaykumar J. Lakkad

Vs 1. Mr. Rameshkumar Totla, ...Respondent No.1 Liquidator of Galaxy Cotton & Textiles Pvt. Ltd.

2. Bank of Baroda ...Respondent No.2

3. State Bank of India ...Respondent No.3

(Arising out of Order dated 23.08.2024 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench) in I.A. No. 1131(AHM) of 2022 in CP (IB)/322 (AHM) 2018)

With Company Appeal (AT) (Ins) No.2037 of 2024 with I.A. No.6089 of 2025, I.A. No.7880 of 2025

Nilesh Enterprise, ...Appellant Through its Partner Jatinkumar D. Lakkad

Vs.

Rameshkumar Totla, ...Respondents Liquidator of Galaxy Cotton & Textiles Pvt. Ltd. & Ors.

1 (Arising out of Order dated 23.08.2024 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench) in I.A. No.1052(AHM) of 2022 in CP (IB)/322 (AHM) 2018)

For Appellant: Mr. Ajay Sharma, Advocate For Respondent: Mr. Bhaskar Sharma, Advocate for R-2 Mr. Ankur Mittal, Mr. Ankush Kumar, Advocates for R- 3/SBI Mr. Nitesh Shrivastava, Advocate for R-1

JUDGEMENT

Per Justice N. Seshasayee, Member (Judicial)

These appeals arise out of the common Order dated 23.08.2024 passed by the

Adjudicating Authority (NCLT), Ahmedabad in I.A. No. 1131 (AHM) of 2022 and

I.A. No. 1052 (AHM) of 2022 in CP (IB) No. 322 (AHM) of 2018 concerning Galaxy

Cotton and Textiles Pvt. Ltd. (hereinafter referred to as 'Galaxy Cotton' for

convenience). The appellants are third parties to the liquidation of Galaxy Cotton

and applicants to I.A. No. 1131 of 2022 and I.A. No. 1052 of 2022.

The Facts:

1. The broad facts which are necessary for considering the present batch of

appeals and largely undisputed are briefly stated:

a) Sometime in 2008, the corporate debtor (to be), namely M/s Galaxy

Cotton had availed a loan from the SBI against the security of the

debtor's warehouse.

2

b) The appellants herein are traders in cotton and between 04.02.2013

and 02.04.2013 Giriraj had deposited 3,300 bales of cotton, while

Nilesh had deposited 800 bales of cotton between 29.03.2013 and

05.04.2013. In all both the appellants had stocked cotton bales totaling

4,100, in the warehouse of Galaxy Cotton, which, to repeat was under

the mortgage with SBI. Of the total, 3,300 bales belonged to Giriraj, the

appellant in CA 2036, and the balance 800 belonged to Nilesh, the

appellant in C.A.2037 of 2024, with a combined total weight of 6,68,300

kg. For this purpose, they entered into a lease agreement with Galaxy

Cotton. In plain terms, while the warehouse belonged to Galaxy Cotton,

the 4,100 bales of cotton belonged to the appellants.

c) In 2013, both Giriraj and Nilesh, the appellants herein, had availed a

cash credit facility of ₹.4.90 crores from M/s Bank of Baroda (BoB for

short) on the security of the respective cotton bales that they had, and

both executed separate deeds of hypothecation of the cotton bales in

favour of BoB. And, on 06.01.2014, the appellants subleased the

warehouse to National Collateral Management Services Ltd. (NCMSL),

which is an agent of BoB.

d) While things stood thus, on 03.12.2015 BoB, with whom the cotton

bales of the appellants were hypothecated, laid O.A. 25 of 2016- Giriraj

and O.A. 24 of 2016- Nilesh before DRT, Ahmedabad, for recovery of its

dues from the appellants. While this was pending, on 01.03.2016, SBI,

with whom the warehouse was mortgaged, took possession of the same

3 under Sec.13(4) of the SARFAESI Act. The cotton bales of the

appellants were still in the warehouse. Taken aback by the turn of

events, BoB, which has created security interest over cotton bales, filed

Securitisation Application in S.A.91 of 2016 against SBI with its own

agent NCMSL in the party array before the DRT, Ahmedabad. In this

proceeding, SBI took up a plea that the goods in question were

hypothecated to it vide hypothecation agreement dated 11.10.2008.

Eventually, vide its Order dated 17.01.2017, the DRT held the plea of

SBI untenable and held that it has no right, title or interest to take

possession of goods, namely the cotton bales which the appellants had

hypothecated to BoB, and sell them and set aside the proceeding of the

SBI taking possession of the cotton bales. SBI has challenged this

Order of the DRT in Appeal No.101 of 2017 before DRAT.

e) In the appeal of the SBI, on 29.06.2017, the DRAT passed an order for

sale of the cotton bales in question. It was a consent Order with BoB

consenting to the sale of cotton bales. In terms of an affidavit which

the SBI had filed sometime in July, 2022, before the DRAT, pursuant

to the Order permitting sale of the entire 4,100 bales of cotton, on

02.02.2018, they were put to auction sale, but only 1,255 bales of

cotton weighing 1,97,425 kg, alone were in saleable condition and were

sold for Rs.1,87,55,375/-, and the remaining were found to be waste

cotton and could not be sold, and that the sale proceedings were

deposited in fixed deposit.

4

f) While things stood thus, SBI initiated proceeding in CP (IB) No. 322

(AHM) of 2018 under Sec.7 IBC against Galaxy Cotton, and this came

to be admitted on 10.10.2019. On coming to know of the same, on

19.12.2019, the appellants herein claim to have intimated the

resolution professional that the cotton bales of cotton in the warehouse

of the Galaxy Cotton belonged to them.

g) CIRP of Galaxy Cotton ended unsuccessfully, and hence on

29.08.2022, the Adjudicating Authority ordered its liquidation and the

first respondent herein came to be appointed as the liquidator. The

appellants re-asserted their title to the cotton bales vide their separate

communication dated 08.09.2022 to the liquidator, and required the

liquidator to preserve their cotton. On 19.09.2022, the liquidator would

reply that the obligation to take care of the appellants' cotton rests with

BoB and that the cotton bales are not part of the liquidation asset.

Subsequently, on 25.09.2022, they, as advised by the liquidator both

the Giriraj and Nilesh submitted their respective Form-G and made a

claim for ₹.16,33,50,000/- and ₹. 3,96,00,000/- respectively, and they

were provisionally admitted.

h) In this backdrop of continued apprehension that the cotton bales might

be treated as part of the liquidation estate, both the Giriraj and Nilesh

had respectively filed I.A No. 1131 of 2022 and I.A.1052 of 2022 before

the Adjudicating Authority, seeking a declaration that their respective

cotton bales do not form part of the liquidation estate of Galaxy cotton.

5 In addition, Giriraj in its I.A.1131 of 2022 had also sought that its 800

cotton bales be handed over (which is bit confusing though. But their

intent is evident: that the 4,100 bales of cotton should not be made part

of the liquidation asset of Galaxy)

i) During pendency of the aforesaid I.A.1052 of 2022 and I.A.1131 of

2022, on 05.10.2023, a joint inspection of the cotton stock was

conducted in the presence of the appellants and the secured creditors.

The appellant then found changes in the quality and quantity of the

stock. The issue assumed further significance when the Liquidator

issued an e-auction notice dated 29.01.2024 for a proposed sale of the

Corporate Debtor as a going concern, without expressly excluding the

disputed cotton bales of the appellants from the asset of the CD.

j) Even as this is pending, on 03.02.2024, SBI issued an e-auction notice

which inter alia included 766 bales 'in the name of Giriraj Industries.'

k) Be that as it may, on 18.06.2024, both I.A.1052 and 1131 of 2022 came

before the Adjudicating Authority, and he directed the liquidator to file

his objection, if any, to clarify if the cotton bales in question belonged

to the liquidation estate of Galaxy Cotton, "or otherwise the matter is to

be resolved between the financial creditors and stated bales should be

cleared from the premises as it appears they are not pertaining to the

corporate debtor under liquidation but of the applicants".

l) Thereafter, on 08.07.2024, the Adjudicating Authority directed SBI to

lift the cotton bales within two weeks in the presence of parties

6 including the liquidator, pursuant to which SBI had lifted the cotton

bales between 20.07.2024 and 10.08.2024 to a warehouse belonging to

a certain UV Cotton & Oil Industries Pvt. Ltd. It may be mentioned that

the warehouse to which the cotton bales were so shifted was also

subjected to a security interest created over it in favour of SBI for a loan

the bank had advanced to UV Cotton.

2. Finally, vide Order dated 23.08.2024, the Adjudicating Authority passed

the following Order:

"It is informed by the learned counsel for the financial creditor"

(which in the context is BoB) "liquidator and SBI that the orders for vacating the premises of corporate debtor has been complied and goods have been shifted out of the premises of the Corporate Debtor. The applicants confirmed and raised certain issues which are not the prayers or not to be raised or heard by this Tribunal as the matter involves third party goods kept in the premises of the Corporate Debtor for which liquidator is not to be accountable in any manner.... In view of the same, the liquidator is directed to complete the liquidation process for disposal of other assets."

This common Order passed in both the applications filed by the respective

appellants herein are now under challenge. The pointed prayer of the

appellants is to have the Order of the Adjudicating Authority now under

challenge is set aside, which implies that their cotton bales be declared

that they are not part of the liquidation-asset of the Galaxy.

7

3. It is in this back drop, few more facts which have arisen during the

pendency of these appeals required to be stated:

a) On 28.11.2024, SBI, notified e-auction of the assets of U.V cotton under

the SARFAESI Act. It included the warehouse to which the cotton bales

had been earlier shifted. See paragraph: 2(l) above.

b) On 10.12.2024, this Tribunal passed an interim Order which reads:

".. cotton bales in which the applicant claims right and have been shifted

by the state bank of India to the other place may not be auctioned till the

next date." However, this interim Order was not seen to have been

extended periodically thereafter.

c) On 16.12.2025, SBI emailed the appellants to inform inter alia that the

cotton bales were not being sold in the e-auction scheduled for

18.12.2025.

d) By 18.09.2025, the pleadings in the appeals were completed. SBI

would then inform the tribunal that inasmuch as it had sold the

warehouse of UV Cotton, it was under an obligation to empty the said

warehouse for it to be handed over the auction purchaser thereof and

required for an early hearing of the appeal. This tribunal briefly heard

the parties and directed listing of the appeals 'on 24.09.2025 as part-

heard'. By 15.10.2025, we have heard the appellants in full and

directed listing of the appeals 'on 03.11.2025 as Part Heard'.

e) In the meantime, on 17.09.2025, SBI has e-mailed to BoB for disposing

of the cotton bales in terms of the earlier Order of the DRAT, dated

8 29.06.2017 (the very Order based on which SBI had earlier sold 1255

bales of cotton). BoB consented to the same vide its e-mail dated

23.09.2025. This move of the SBI to sell the cotton bales in the

warehouse of UV cotton is challenged by the Giriraj and Nilesh in

I.A.6090 of 2025 and I.A.6089 of 2025, but of no avail, as SBI proceeded

to e-auction the cotton bales stocked in the warehouse of the UV

Cotton, and it received a solitary bid on 03.10.2025. After negotiation

with the auction purchaser the bid value was increased by an

insignificant difference and was sold. But the auction purchaser was

requested by SBI not to lift the cotton owing to the pendency of these

appeals.

f) The SBI, therefore, has moved I.A.7879 of 2025 and 7880 of 2025 to

allow it to hand over the stock of cotton to the auction purchaser and

to retain the sale proceeds of the said cotton in an interest-bearing

account as directed vide the Order of the DRAT dated 29.06.2017.

4. Both the appellants and the SBI have filed their respective replies to the

set of the applications which the other has filed. And this is largely

reflected in the arguments they made. Therefore, we choose to dispense

with the narration of the replies.

Prelude to Arguments

5. The complexion of the appeals now stands drastically changed, since the

dispute, if keenly observed, has moved away from where it has started.

9 The appellants initially had approached the Adjudicating Authority with a

prayer to exclude their respective cotton bales from the liquidation asset

of Galaxy cotton. Now, during the pendency of the appeals, when the issue

is before us, SBI has chosen to dispose of the cotton that was available

physically in the warehouse of UV Cotton, but without reference to the

Tribunal. It falls back on an earlier Order of the DRAT to sell those cotton

bales. But after disposing of the cotton it has approached us to let the

auction purchaser of the cotton to lift it as it is now under dual obligation

to, (a) to hand over vacant possession of the warehouse of the UV cotton

to its auction-purchaser, and (b) to hand over the cotton to its auction

purchaser since without removing the cotton, warehouse cannot be

handed over. These pendente lite developments happened during the

pendency of these appeals engineered a shift in position of the parties. The

cotton that was once there is now replaced by its value - not the market

value but the value its auction sale has generated when the issue revolving

around it is sub judice. This is the setting in which I.A.6090 of 2025 and

6089 of 2025 filed by the appellants, and I.A. 7879 of 2025 and I.A.7880

of 2025 filed by SBI have become significant.

6. How to deal with the sale of cotton by SBI? Do the appellants have any

right over it? What then could be the relief which the appellants deserve

in law. These issues engage us now.

10 Arguments

7. The learned counsel for SBI contended:

a) the dispute involving 4,100 bales of cotton in essence is a dispute

relating to competing security interests between SBI and Bank of

Baroda and is already pending adjudication before the DRAT in Appeal

No.101 of 2017. By challenging the sale of cotton, the appellants now

attempt to indirectly re-open an issue arising out of SARFAESI

proceedings and the pending appeal before DRAT. It is plainly

impermissible.

b) The appellants do not have any locus standi, since even according to

them they had parted with their interest in the cotton bales to bank of

Baroda.

c) The mortgage of the immovable assets of Galaxy Cotton and the

hypothecation rights it has obtained over its goods preceded the lease

of the warehouse of Galaxy in favour of the appellants and also their

sub-lease arrangements with NCMSL, the agent of bank of Baroda.

Indeed, Galaxy cotton had not only mortgaged its immovable assets in

2008 but has also hypothecated all its present and future goods and

movable assets lying therein. Consequently, the subsequent lease/sub-

lease arrangements of 06.01.2014, allegedly executed without SBI's

prior consent, could not defeat SBI's secured interest. SBI further

contended that the Corporate Debtor was contractually prohibited from

creating third-party rights in the mortgaged premises without prior

11 consent of SBI and therefore the lease and sub-lease arrangements

relied upon by the appellants were unenforceable against SBI.

d) the DRAT, by orders dated 24.04.2017 and 29.06.2017, expressly

permitted SBI to proceed with the sale of the cotton bales, and those

orders permitting sale of the cotton bales were not independently

challenged by the appellants. Pursuant thereto, 1,255 cotton bales were

sold and the sale proceeds were retained in fixed deposits in terms of

DRAT directions. The balance stock of cotton bales could not be sold

earlier owing to its poor quality.

e) the tribunals constituted under the IBC lack jurisdiction to adjudicate

disputed questions of title, charge or inter se rights over the cotton

bales, especially when those issues are pending before the DRAT. The

appellants, instead of approaching the DRAT have invoked wrong

jurisdiction under the IBC.

f) At any rate, the liquidator of Galaxy cotton has not made the disputed

cotton-bales as part of the liquidation estate. This is borne out by the

e-auction process memorandum issued by the Liquidator, which

specifically excluded disputed cotton-bales from the liquidation estate.

This has been taken note of by the Adjudicating Authority and hence

it, by order dated 08.07.2024, directed SBI to remove the goods from

the premises of the Corporate Debtor.

g) According to SBI, once the goods stood excluded from the liquidation

estate and had already been removed from the premises of the

12 Corporate Debtor, the applications filed by the appellants before the

Adjudicating Authority had rightly become infructuous.

h) the appellants themselves had filed Form-G claims before the

Liquidator, which were provisionally admitted, thereby indicating that

their claims remained disputed and unresolved.

8. The quintessential contentions of the counsel for the appellants are:

a) the 4,100 cotton bales stored in the warehouse premises of Galaxy

Cotton were the exclusive property of the appellants and never formed

part of the assets of the Corporate Debtor. While the warehouse

belonged to Galaxy Cotton, the cotton bales had been independently

financed by Bank of Baroda through separate cash credit facilities of

₹4.90 crores each and stood hypothecated exclusively in favour of BoB.

Therefore, Galaxy Cotton could not have created any valid mortgage or

hypothecation of the goods that were not in its own favour of SBI.

b) The contention of SBI that the lease and sub-lease arrangements

created by Galaxy Cotton in favour of the appellants, and appellants in

favour of NCMSL were invalid for want of SBI's consent goes, even if

there are any restrictive covenants in the deed of mortgage, they yet

cannot confer ownership of the cotton-bales of the appellants on the

SBI.

c) the present proceedings are distinct from the dispute pending before

the DRAT. While the proceedings before the DRT or DRAT concern the

competing security interests between SBI and BoB under the

13 SARFAESI Act, the present proceedings concern the treatment, custody

and preservation of third-party assets during CIRP and liquidation

proceedings under the IBC, particularly the obligations of the

Resolution Professional and Liquidator in relation thereto.

d) that despite repeated communications addressed to the Resolution

Professional and later to the Liquidator asserting ownership over the

cotton bales and requesting preservation thereof, no adequate

measures were taken to safeguard the stock. According to the

appellants, 4,100 cotton bales weighing approximately 6,68,300

kilograms were originally stored in the warehouse, whereas during joint

inspection in 2023 the available stock weighed only about 3,06,742.67

kilograms, and ultimately SBI shifted only 2,98,225 kilograms from the

premises pursuant to the order dated 08.07.2024. This, according to

the appellants, demonstrated substantial depletion and deterioration of

the stock while under the custody and control of the insolvency

administration and SBI.

e) that once the liquidator himself had accepted that the cotton bales did

not form part of the liquidation estate of Galaxy Cotton, the

Adjudicating Authority ought not to have disposed of the applications

as infructuous merely because the goods had been shifted from the

premises. According to the appellants, the substantive issues relating

to exclusion, custody, preservation and consequential reliefs remained

14 unadjudicated, and therefore the impugned order dated 23.08.2024

deserved to be set aside.

9. Reiterating its stands about the creation of security interest over 4,100

bales of cotton of the appellant, the learned counsel for Bank of Baroda

explained how SBI began dealing or interfering with the security interest

of BoB, and why BoB was constrained to initiate successfully S.A.91 of

2016 before the DRT and the challenge to it by the SBI before the DRAT

Appeal No.101 of 2017 and the order of DRAT dated 29.06.2017

permitting SBI to sell the cotton bales etc, the learned counsel submitted:

a) SBI's stand that the cotton stock that remained after the sale of 1255

bales had become waste or unsaleable is disputed. According to BoB,

all the 4,100 cotton bales were originally of similar quality and

condition and the subsequent deterioration, disappearance or depletion

of the remaining stock occurred only while the goods remained in the

possession and control of SBI after it took physical possession of the

warehouse of Galaxy on 01.03.2016. SBI is solely liable and

accountable for the missing, damaged, changed or deteriorated cotton

bales and was bound to compensate Bank of Baroda for the loss caused

due to improper handling and continued possession of the pledged

goods.

b) that the Liquidator himself had accepted that the disputed cotton bales

did not form part of the liquidation estate of Galaxy Cotton and were

excluded from the liquidation process and e-auction. Consequently,

15 SBI could not assert any right over the cotton bales as assets of the

Corporate Debtor.

c) that if the remaining cotton bales were sold pursuant to the DRAT

orders, the sale proceeds together with accrued interest ought to be

preserved and dealt with strictly in accordance with the pending

proceedings before the DRAT.

10. The learned counsel for the liquidator submitted:

a) the applications filed by the appellants before the Adjudicating

Authority were themselves not maintainable since the cotton bales were

excluded from the liquidation estate of Galaxy Cotton & Textiles Pvt.,

owing to dispute over the security interest created in terms of Section

36(4) of the IBC. It was never included in the process memorandum

dated 03.01.2024 or the e-auction conducted in relation to the assets

of the Corporate Debtor. This is also stated in the compliance affidavit

of the liquidator, dated 26.03.2024, filed before the Adjudicating

Authority.

b) once the disputed stock was removed from the premises of the

Corporate Debtor, the applications filed by the appellants have become

infructuous and the responsibility for preservation of the cotton bales

thereafter rested solely with SBI.

c) the present appeals had been initiated by related parties of the

Corporate Debtor with the object of obstructing and delaying the

liquidation proceedings. It is explainable through the shareholding

16 pattern. The Liquidator has no obligation to preserve or maintain third-

party's goods that have been hypothecated to Bank of Baroda. Any

dispute concerning quantity, quality, deterioration or entitlement to the

cotton bales were matters exclusively between the appellants, SBI and

Bank of Baroda.

d) the claims filed by the appellants even though were provisionally

admitted, the same were subsequently rejected upon verification as not

maintainable.

e) since the disputed cotton bales had already been removed from the

premises of Galaxy Cotton and never formed part of the liquidation

estate, the applications filed by the appellants had become infructuous.

f) at any rate, given the fact that there is an ongoing dispute between SBI

and BoB over the security interest over the cotton bales now pending

adjudication by the DRAT, the same cannot be agitated before the

tribunals under the IBC.

11. The appellants laboured to explain how they are related parties, but

detailing the same is quite irrelevant in the context of the appeals.

Discussion & Decision

12. It has been a long narration of facts and arguments, but to deal with the

shortest of questions: should the cotton-bales in question be excluded

from the liquidation asset of Galaxy Cotton? That was the prayer with

which both the appellants approached the Adjudicating Authority. The

17 answer to this question is even shorter: they have already been excluded

by the liquidator, and the SBI does not object to it. Therefore, there is

nothing that we need to do in these appeals.

13. The rain stops, but not the drizzling. This relates to the two applications

(I.A. 6089 of 2025 and I.A. 6090 of 2025) which the appellants have taken

out challenging the e-auction notice to sell the cotton bales which were

shifted to the warehouse of UV cotton. Indisputably this sale was

attempted and eventually carried out during the pendency of these

appeals, and was done without the SBI taking this tribunal into

confidence. As stated earlier, on 10.12.2024 this tribunal did pass an

interim Order restraining SBI from selling the cotton bales, but this order

was limited by time, and was not extended beyond 03.01.2025.

Technically, when SBI sold the cotton there was no legal embargo on it to

sell. But there is a larger rule of fairness, which we consider that SBI did

not consider it as necessary to abide.

14. We are conscious of the extent of our statutory authority to decide the title

to the cotton and the right of SBI to sell it, since there is an ongoing dispute

over the same between SBI and Bank of Baroda now pending in Appeal

No.101 of 2017 before the DRAT. But rule of fairness transcends beyond

the technicalities of law. We consider that SBI should have shown

maturity to follow the unwritten rule of fairness that forms the

undercurrent for the sustenance of our legal system. If it were otherwise,

18 what then prompted SBI to file its two applications (I.A. 7879 of 2025 and

I.A. 7880 of 2025), seeking leave of this tribunal to let the auction

purchaser of the cotton bales to lift it. After all, going by SBI's logic, neither

the liquidation issue concerning the warehouse of U.V. cotton, nor the title

to and security interest over the cotton bales seeks a solution from us.

Therefore, whether SBI seeking our order to let the auction purchaser of

cotton to lift it from the warehouse of U.V Cotton is to be construed as its

belated realisation of its need to be fair, or is SBI simply plays by its own

rule of convenience?

15. SBI's strategy very evidently is bristled with contradiction. And, SBI's

contradiction does not stop there. At one place it claims the security

interest over the cotton bales by treating the same as belonging to Galaxy

cotton, but alongside it stands by the decision of the liquidator to exclude

the cotton bales from the liquidation-asset of Galaxy Cotton. Obviously, it

enjoys playing the maze of its own contrivance. We watch the strategy of

the SBI with amusement, and do not propose to undo what has been done.

16. Another argument that we heard pertains to the quality of cotton that were

there after the initial sale of 1,255 bales of cotton by the SBI. While SBI

asserted they were of poor quality, both the appellants and the Bank of

Baroda strongly disputed it. This issue, however, may not concern us, but

we underscore that the appellants are not without remedy in law, but this

tribunal is not the forum where it could be agitated.

19

17. In fitness of things, we consider, that the appellants should have

approached the DRAT concerned where the issue regarding title to cotton

etc., is pending, but appeared to have believed that NCLAT as a one-stop-

solution centre for all its challenges. We need to inform the appellants that

our interferences with an issue is limited by the extent of our jurisdiction,

and we are least inclined to walk into a territory where even angels fear to

tread.

18. Before winding up, we feel it a need to correct a perception of SBI on the

locus standi of the appellants to assert title over the cotton bales in

question. It argued that, since the appellants have created security

interest over the cotton bales in favour of BoB, only BoB has the necessary

locus standi to pursue any remedy in relation to the cotton bales. What

SBI has overlooked is that the appellants always have their right to redeem

the hypotheca, and if they decide to redeem the same, from where will the

BoB give them possession?

Conclusion

19. Both the appeals are dismissed as the issue sought to be resolved has been

favourably considered by the liquidator himself. So far as I.A. 6089 of

2025 and 6090 of 2025, filed by the appellants are concerned inasmuch

as the cotton bales have been sold, they are directed to work out their

remedy before appropriate legal fora, and are closed. Turning to I.A. 7879

20 of 2025 and I.A. 7880 of 2025 is concerned, our jurisdiction does not travel

beyond ascertaining if the cotton bales in question should be treated as

the liquidation asset of Galaxy Cotton, and inasmuch as it has been agreed

that they have not been made part of the same, we declare our lack of

jurisdiction to deal with it. After all, SBI sold the cotton based on the

Order of DRAT, and when DRAT is in seisin of the issue, it may be

appropriate for SBI to approach the DRAT concerned. Hence I.A. 7879 of

2025 and 7880 of 2025 are closed. All other I.A.s are also closed. No costs.

[Justice N. Seshasayee] Member (Judicial)

[Arun Baroka] Member (Technical)

[Indevar Pandey] Member Technical rs/beena

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