2019 (11) TMI 1441 - AT - Insolvency and Bankruptcy

Ongoing CIRP Process - Appellant in pursuance to the Arbitral Award, proceeded to repossess two trucks belonging to the Corporate Debtor and sold one on 15th March, 2019 and another on 8th April, 2019 - Appellant is submitting that the Appellant did not have knowledge of the initiation of CIRP process and so the fault cannot be found with the Appellant - HELD THAT - There are no substance in the arguments of the learned Counsel for the Appellant. Once Section 7 Application was admitted, from commencement date, moratorium got activated and any action of the present nature violating moratorium could not be upheld. In the circumstances, there are no substance in the Appeal. Appeal dismissed.

Summary

Issues:
Corporate Insolvency Resolution Process (CIRP) initiation and moratorium violation.

Analysis:
The judgment by the National Company Law Appellate Tribunal, New Delhi, involved a case where the Appellant, unaware of the CIRP initiation, repossessed and sold trucks belonging to the Corporate Debtor after an Arbitral Award. The Adjudicating Authority directed the Appellant to deposit a specified amount before participating further. The Appellant argued lack of knowledge about the CIRP initiation and the potential loss if required to deposit the truck values already sold. However, the Tribunal found no merit in the Appellant's arguments, emphasizing that once the CIRP process began, the moratorium was in effect, rendering any actions violating it invalid.

The Appellant's plea for more time to deposit the money was declined, and the Appeal was rejected. Nonetheless, the Tribunal allowed the Appellant to lodge its claim against the Corporate Debtor if the money was deposited with the Resolution Professional within 15 days from the judgment date. The judgment underscores the importance of adhering to moratorium regulations during the CIRP and the consequences of actions taken in violation of such provisions.