2019 (3) TMI 1584 - Tri - Insolvency and Bankruptcy

Opening of a separate Bank Account - Creation of an initial Corpus of Rupees Ten Crores to be contributed by the Member of the Committee of Creditors towards CIRP cost - apprehension to provisional attachment over the assests - HELD THAT - This Bench is of the view that the provisions of the Insolvency Code overrides the other laws under section 238 of the Insolvency Code hence an independent and separate view can be taken in this case of Corporate Defaulter. It is worth to mention that M/s Geetanjali Gems Limited being a Corporate Debtor is under Insolvency Proceedings under section 7 of the Code in respect of a Petition filed by ICICI Bank vide an Order dated 8th October, 2018. It is also worth to place on record that the Corpus Fund so arranged is under the directions of NCLT, Mumbai Bench to facilitate the Insolvency Proceedings, hence the asset now so generated is in compliance of the Order of the Code, therefore, not to be attached by any other Authority under law. This is not an asset of the defaulter company hence otherwise also beyond attachment by Directorate of Enforcement. Application allowed - Matter is listed for hearing on 29.04.2019.

Summary

Issues involved:
1. Application for opening a separate bank account for CIRP purpose.
2. Conflict between Insolvency Code and other laws regarding attachment of funds.
3. Compliance of NCLT directions for Corpus Fund arrangement.

Analysis:
1. The Tribunal addressed an application by the Resolution Professional (R.P.) to open a separate bank account with ICICI Bank for the Corporate Insolvency Resolution Process (CIRP) of a company. The R.P. sought permission for this account to manage funds for the CIRP cost, as approved by the Committee of Creditors (C.O.C.).

2. The Tribunal considered a conflict where the Directorate of Enforcement had provisionally attached assets of the company under the Prevention of Money Laundering Act, 2002. The Tribunal held that the provisions of the Insolvency Code supersede other laws under section 238 of the Insolvency Code. It emphasized that assets generated for the CIRP, as per NCLT directions, are not assets of the defaulter company and are beyond attachment by other authorities.

3. The Tribunal directed the R.P. to open an account for CIRP purposes as a "No Lien Account," not under the control of any authority or bank. This account would operate as an "Escrow Account," supervised by NCLT, Mumbai Bench, and the Committee of Creditors. Withdrawals from this account would require ratification and verification by the Committee of Creditors, with final permission for withdrawal to be sought from the Adjudicating Authority. The Tribunal granted permission for the application and scheduled the matter for further hearing.

This detailed analysis covers the issues of opening a separate bank account for CIRP, the conflict with other laws regarding asset attachment, and the compliance with NCLT directions for the Corpus Fund arrangement.