(1) A secured creditor in the liquidation proceedings may—
- relinquish security interest to the liquidation estate and receive proceeds from the sale of assets by the liquidator in the manner specified in section 53; or
- realise security interest in the manner specified in this section.
(2) Where a secured creditor does not relinquish security interest, the amount due to such secured creditor shall be paid by the liquidator from the proceeds of the realisation of such secured assets by the secured creditor.
(3) The costs of realisation of such secured assets by the secured creditor shall be borne by the secured creditor and the amount of insolvency resolution process costs, liquidation costs and workmen's dues, for a period of twenty-four months preceding the liquidation commencement date, due from the corporate debtor shall be deducted from the amount realised from the sale of such secured assets in the manner specified by the Board.
(4) The secured creditor shall inform the liquidator of the value of the asset and the amount realised from such asset and shall tender to the liquidator any surplus funds received after the claims of the secured creditor are fully satisfied.
(5) The liquidator shall distribute the surplus funds received from the secured creditor under sub-section (4) in accordance with the order of priority under sub-section (1) of section 53.
(6) Where the enforcement of the security interest under sub-section (1) by the secured creditor yields an amount in excess of the debts due to the secured creditor, the secured creditor shall account to the liquidator for such surplus.
(7) Where the amount realised from the sale of the secured assets is not adequate to repay debts owed to the secured creditor, the unpaid debts of such secured creditor shall be paid by the liquidator in the manner specified in section 53.
(8) Where the secured creditor fails to realise the security interest, the secured creditor shall, under intimation to the liquidator, either—
- relinquish its security interest to the liquidation estate; or
- make an application to the Adjudicating Authority in such manner as may be specified.
(9) Where the Adjudicating Authority is satisfied that the secured creditor has failed to realise the security interest, it may order the secured creditor to realise the security interest in such manner as it may direct or relinquish the security interest.