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2019 (8) TMI 875 - AT - Insolvency and BankruptcyPremature cancellation of Fixed Deposit - transfer of proceeds of the Fixed Deposit Receipts into the account known as the Trust and Retention Account with the Central Bank of India - HELD THAT - The Resolution Professional given the view that the principles of the bankers general lien, Section 171 of the Contract Act, 1872 and agreed terms of the Corporate Guarantee , the Appellant was not entitled to stake its claim over the said FDRs to the tune of ₹ 3,58,09,820/- after the demand/invocation. It was submitted that the Appellant has exercised its right having control over the property (FDRs). Claim of the Appellant as Financial Creditor - HELD THAT - The Appellant having invoked the guarantee, this Appellate Tribunal in interim order dated 25th May, 2018 allowed the Appellant to attend the meeting of the Committee of Creditors subject to the decision of both the appeals. However, the Appellant was not given a right of voting with the condition that if the resolution plan approved in the meantime that shall be subject to the decision of these Appeals. The impugned order need not interfered with - appeal disposed off.
Issues:
1. Direction to cancel fixed deposit receipts and transfer proceeds into a trust account. 2. Consideration of Oriental Bank of Commerce as a financial creditor. 3. Interpretation of invocation of corporate guarantee and appropriation of fixed deposits. 4. Claim of Oriental Bank of Commerce as a financial creditor. 5. Participation of Oriental Bank of Commerce in the Committee of Creditors. 6. Liquidation of the Corporate Debtor and filing of claims by the Oriental Bank of Commerce. Issue 1: The judgment pertains to an application in the 'Corporation Insolvency Resolution Process' against 'Moser Baer India Limited' for the cancellation of fixed deposit receipts held by 'Oriental Bank of Commerce' and transfer of the proceeds into a trust account with the 'Central Bank of India'. The National Company Law Tribunal allowed the Resolution Professional's prayer but rejected the bank's application, citing the invocation of corporate guarantee and violation of moratorium regulations. Issue 2: 'Oriental Bank of Commerce' sought recognition as a financial creditor due to a corporate guarantee given by the 'Corporate Debtor'. The Adjudicating Authority rejected this claim based on the interpretation of the guarantee invocation and the timing of fund appropriation post-insolvency commencement date. Issue 3: The judgment analyzed the invocation of the corporate guarantee by the bank and the subsequent appropriation of fixed deposits. The court emphasized that the bank's actions violated the moratorium regulations and the Resolution Professional's duties under the Insolvency and Bankruptcy Code, leading to the rejection of the bank's claim. Issue 4: The bank's claim as a financial creditor was disputed based on the invocation of the corporate guarantee and the timing of fund withdrawals post-insolvency commencement date. The court upheld the Resolution Professional's view that the bank's claim was not valid due to the violation of regulations and the moratorium provisions. Issue 5: The Appellate Tribunal allowed 'Oriental Bank of Commerce' to attend the Committee of Creditors meeting as a financial creditor but without voting rights, pending the decision on the appeals. The bank's participation was subject to the approval of the resolution plan during the appeal process. Issue 6: The judgment noted the liquidation of the 'Moser Baer India Limited' during the appeal process, with the bank filing claims before the Liquidator. The court declined to interfere with the impugned order, directing the Liquidator and Adjudicating Authority to act in accordance with the law, ultimately disposing of the appeals without costs.
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