Whether NABARD shall get priority payment over other creditors? – National Bank for Agriculture & Rural Development (NABARD) Vs. SREI Equipment Finance Ltd. – NCLT Kolkata Bench
Hon’ble NCLT Kolkata Bench has held that:
(i) Upon conjoint reading of Section 5(8) and section 3(31), which creates a charge on the book debts of the Corporate debtor, is clear that the present case of NABARD giving a loan to the Corporate debtor is clearly a Financial debt and since the same has been secured against the book debts of the CD in favour of NABARD, it makes NABARD a Secured creditor.
(ii) RP is dutybound to treat it as a SECURED Financial Creditor for all intents and purposes of the code. There is no other special treatment to any of creditors envisaged in the code and all Secured creditors have to be treated equally as a class.
(iii) Nowhere in the code a special treatment is envisaged within a class. It is also noteworthy that NABARD had filed its claim with the Administrator in FORM C and the claim had been collated by the Administrator and the claim was admitted. The claim of NABARD was accepted as NABARD had given financial debt to SEFL and also had securities of SEFL assigned as charge. Hence, NABARD clearly falls into the category of a Secured Financial Creditor.