2020 (1) TMI 1548 - Tri - Insolvency and Bankruptcy

Preferential payment to one of the allottees - Rejection of request made by the applicant on the ground there is no recourse under law to repay this money during the CIRP period - whether the IRP or the RP, as the case may be is entitled to refund the money to any of the allottees during the CIRP period? - HELD THAT - Once CIRP period is commenced, it has to be construed as calm period, in which, the IRP is supposed to maintain status quo position until the Resolution plan is approved or the company is sent for Liquidation. The question of refunding allotment to one of the allottees will not arise during the CIR period, whereby this application is hereby dismissed with liberty to proceed in accordance with law. Application disposed off.

Summary

Issues Involved:
1. Application assailing the order of the Interim Resolution Professional declining a claim request for refund of money paid for the allotment of a house during the Corporate Insolvency Resolution Process (CIRP) period.

Analysis:
In the judgment delivered by the National Company Law Tribunal, New Delhi Principal Bench, the issue at hand was the entitlement of the Interim Resolution Professional (IRP) or the Resolution Professional (RP) to refund money to allottees during the CIRP period. The tribunal noted that once the CIRP period commences, it is considered a calm period during which the IRP is required to maintain the status quo until the approval of a Resolution plan or the initiation of Liquidation proceedings.

The tribunal emphasized that the primary purpose of the CIRP period is to maintain stability and ensure the effective resolution of insolvency proceedings. Therefore, any refund of money to individual allottees during this period would disrupt the process and potentially lead to preferential treatment, which is not permissible under insolvency laws. As a result, the tribunal dismissed the application seeking a refund of money paid for the allotment of a house, stating that such requests are not tenable during the CIRP period.

The judgment underscores the importance of upholding the principles of insolvency resolution and the need to prevent preferential payments that could compromise the integrity of the resolution process. By clarifying that refunding money to allottees during the CIRP period is not permissible, the tribunal reaffirmed the significance of maintaining a stable environment for the effective resolution of insolvency cases. The decision provides clarity on the limitations regarding refund requests during insolvency proceedings, ensuring adherence to the legal framework governing such matters.

Overall, the judgment serves as a reminder of the strict guidelines and procedures that govern insolvency proceedings, highlighting the tribunal's commitment to upholding the integrity of the resolution process and safeguarding the interests of all stakeholders involved.