7/13/22, 1:02 PM tvs motor: NCLT orders liquidator of steel cos to admit TVS Motor's claim - The Economic

VS Motor's claim - The Economic Times

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Business News › Industry › Auto › Auto News › NCLT orders liquidator of steel cos to admit TVS Motor's claim

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NCLT orders liquidator of steel cos to admit TVS

Motor's claim
By Maulik Vyas, ET Bureau Last Updated: Jul 09, 2022, 10:34 AM IST
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Synopsis

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The automaker had extended the said financial assistance at the agreed rate of annual

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12% interest. Kalisma Steel agreed to repay the money in five tranches. Also, the
promoters of Kalisma Steel had provided shares of ₹2 crore as the security deposit. An

Bajaj
email query to TVS Motors was unanswered till press time.

Shares supplied by the promoter in an

Agencies

Finance
official capacity as security for a loan
makes the lender a secured creditor
ruled the bankruptcy court in a petition

Fixed
filed by two-wheeler maker TVS Motor
NSE 1.51 % Company Ltd against the
liquidator of Mumbai-based Kalisma
TVS Motor

RELATED
Steel Ltd.

The Chennai-based two-wheeler maker

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Deposit
had approached the Mumbai bench of
Bajaj Finance
the National Company Law Tribunal
(NCLT) after the liquidator of Kalisma
Steel rejected its claim as a financial
creditor. At the time of rejection, the
liquidator also argued that the claim Book Now
was belated.

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TVS Motor Company banks on Ronin “The shares were supplied by the
premium bikes to outpace market
promoter in his official capacity to 1. Maruti's twin-pronged
strategy to protect, enhance
provide security for the loan” said the division bench of Justice PN Deshmukh market share

and a technical member Shyam Babu Gautam in its 15-page order. “The
submission of the respondent (liquidator) that the promoter pledged the
2. Jaguar Land Rover
commences deliveries of new
shares in its personal capacity is not justified.”

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7/13/22, 1:02 PM tvs motor: NCLT orders liquidator of steel cos to admit TVS Motor's claim - The Economic Times

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TVS Motors NSE 1.51 % argued that the bankrupt company’s promoter had
informed it about financial difficulties and would be able to continue its
supply as a vendor only if the auto major can support it by giving an advance
of Rs 2 crore.

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The automaker had extended the said financial assistance at the agreed rate of
annual 12% interest. Kalisma Steel agreed to repay the money in five trenches.
Also, the promoters of Kalisma Steel had provided shares of Rs 2 crore as the TOP TRENDING INDUSTRY TERMS

security deposit.

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“This judgement will definitely come to aid in matters where security other
than the normal banking system is not considered by the RP or liquidator,”
said Ashish Pyasi, Associate Partner at Dhir & Dhir Associates. “Generally, in
Most Popular News
cases where the security is provided to a creditor who is neither an NBFC nor a
bank, it becomes difficult to prove the transaction that it was a loan secured by 1. Narayana Murthy shares 9
lessons learnt as an
the borrower.”

entrepreneur from his

Infosys days

TVS Motors argued in the tribunal that at no time had the vendor denied its 2. Gautam Adani enters
telecom: Is the impact on
liability to pay back the debt amount received from the company. Also, the Bharti Airtel, Vodafone Idea
corporate debtor in its email had acknowledged the loan liability to pay back stocks temporary?

the debt in instalments proving the automaker had advanced a loan amount
to be paid back with interest.

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samples
Countering this, the liquidator argued that the company’s claim as a secured
creditor is incorrect since the underlying security is shares of the promoters 4. TCS stock: Should investors
buy or sell after Q1 results?
which are not an asset of the company and those shares are pledged by the
promoter of the Mumbai-based company in a personal capacity.

However, the tribunal rejected the liquidator's arguments and clarified that 5. Waiting time for employer-
sponsored green cards rises
TVS Motors stands in the position of a secured creditor in the liquidation of
the company and directed the liquidator to consider the claim.

Mamta Binani, a resolution professional and former president at the Institute

of Company Secretaries of India (ISCI), said advances given are being

https://economictimes.indiatimes.com/industry/auto/auto-news/nclt-orders-liquidator-of-steel-cos-to-admit-tvs-motors-claim/articleshow/92757139.… 2/5
7/13/22, 1:02 PM tvs motor: NCLT orders liquidator of steel cos to admit TVS Motor's claim - The Economic Times

considered an operational debt, which is now settled law, but this ruling
further clarifies the issue.

READ MORE NEWS ON

Tvs Motor Kalisma Steel Tvs Chennai Tvs Motors National Company Law Tribunal

Shyam Babu Gautam Nbfc Tvs Motors Tvs Motor

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