9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (2) TMI 1887 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - stand taken by the bank that since the FDR formed part of the security credits in favour of the bank towards repayment of the banks dues, the IRP is asking for the money to be used during the CIRP which is lying with the bank in the form of security credit by the corporate debtor - can the Financial Creditor who issued the Bank Guarantee against the FDR from current account of CD adjust FDR in the claim after discharge of the BG in midst of the Moratorium? - HELD THAT - In the light of provisions Section 14 of the Insolvency and Bankruptcy Code more particularly 14(1)(c) clearly covers the same security as claimed by the bank. The financial creditor being the sole member of the COC though passing resolution by 100% for any of the agenda cannot be permitted to transgress the provisions of law. Bank is directed not to adjust the FDR in the claim after discharge of bank guarantee and transfer the said amount of FDR to lie in the bank account of corporate debtor for the purpose of continuing the CIRP - Application allowed.
Issues: Adjustment of FDR during CIRP and moratorium period
Analysis: 1. The application was filed by the Resolution Professional (RP) of a company under Corporate Insolvency Resolution Process (CIRP) seeking a decision on whether the Financial Creditor (FC) can adjust the Fixed Deposit Receipt (FDR) against a Bank Guarantee (BG) during the moratorium period. The RP requested the Tribunal to direct the FC to credit the amount of FDR to the bank account of the Corporate Debtor (CD) for the CIRP proceedings. 2. The background revealed that the CIRP against the Corporate Debtor commenced on 15th May 2018, with the RP appointed subsequently. The FC in question, Allahabad Bank, had issued FDRs against a bank guarantee for the CD. Despite realizing the money against the bank guarantee, the FC did not credit the amount of FDR to the CD's account. 3. The FC released the amount of the FDR into the CD's current account during the moratorium period and subsequently filed revised claims without adjusting the FDR amount. The RP highlighted the FC's failure to transfer the FDR amount during the moratorium, which is prohibited under Section 14 of the Insolvency and Bankruptcy Code (IBC). 4. The FC argued that the FDR was part of the security provided by the CD for various financial facilities, and as the CD's loan account was not classified as Non-Performing Asset (NPA) until the initiation of CIRP, the FDR was not adjusted towards the bank's dues initially. 5. The RP raised concerns about the FC's adjustment of the FDR during the moratorium period, citing Section 14(1)(c) of the IBC, which prohibits actions like transferring or disposing of the CD's assets during the moratorium. 6. After considering the contentions of both parties and reviewing the provisions of Section 14 of the IBC, the Tribunal held that the FC, being a member of the Committee of Creditors (COC), cannot adjust the FDR in the claim after discharging the bank guarantee during the CIRP and moratorium period. 7. Consequently, the Tribunal allowed the RP's application, directing the FC not to adjust the FDR in the claim after discharging the bank guarantee and to transfer the FDR amount to the CD's bank account to facilitate the continuation of the CIRP proceedings.
|
