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2020 (10) TMI 866 - Tri - Insolvency and BankruptcyDirections to Respondent Bank to release, refund and transfer the amount of the fixed deposit along with accrued interest till date of payment, to the bank account of the Corporate Debtor - It is submitted by the RP that as per Section 18(1) of the IB Code, the RP is required to take control and the custody of any asset over which the Corporate Debtor has ownership rights as recorded in the Balance Sheet of the Corporate Debtor - HELD THAT - It is a matter of record that the above said fixed deposits are of Corporate Debtor and once the CIRP is initiated the RP has to comply Section 18(1)(f) of the IB Code. This Adjudicating Authority hereby directs the Respondent Bank to release the aforesaid amount of ₹ 65,02,500/- to the account of the Corporate Debtor and/or pool amount, if any, opened/ maintained by the RP for the purpose of CIRP along with the interest to complete the CIRP. However, Commissioner of Customs, Mumbai/Asst. Commissioner of Customs, may claim their dues as Operational Creditor and put the same before RP for consideration. Application disposed off.
Issues:
1. Release of fixed deposit amount under Insolvency and Bankruptcy Code. 2. Maintainability of the application seeking directions for releasing the fixed deposit. 3. Interpretation of Section 18(1)(f) of the Insolvency and Bankruptcy Code. 4. Validity of sovereign bank guarantees issued by the Respondent Bank. 5. Applicability of Section 238 of the Insolvency and Bankruptcy Code. Analysis: 1. The Resolution Professional (RP) of GPT Steel Industries Limited filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking directions for the release of a fixed deposit amounting to ?65,02,500 along with accrued interest. The RP highlighted that the fixed deposits belonged to the Corporate Debtor and were essential for the Corporate Insolvency Resolution Process (CIRP) to proceed effectively. 2. The Respondent Bank contended that the application was not maintainable due to the existence of sovereign guarantees issued in favor of the President of India for export obligations. The Bank argued that the Bank Guarantees were continuing and linked to the performance of export obligations by the Corporate Debtor, emphasizing that the RP's claim could not be granted by the Adjudicating Authority. 3. The Adjudicating Authority analyzed Section 18(1)(f) of the Insolvency and Bankruptcy Code, which mandates the RP to take control and custody of assets owned by the Corporate Debtor. Citing the overriding effect of the Code, the Authority referred to previous Supreme Court judgments to support the RP's right to access and manage assets for the CIRP, emphasizing the need to comply with the Code's provisions. 4. Regarding the validity of the sovereign bank guarantees, the Authority recognized the Bank's obligations but directed the Respondent Bank to release the fixed deposit amount to the Corporate Debtor's account or the RP's pool amount for the CIRP. The Authority also allowed the Commissioner of Customs to claim their dues as an operational creditor, subject to RP's consideration. 5. In conclusion, the Adjudicating Authority disposed of the application with the directive for the Respondent Bank to release the fixed deposit amount, emphasizing the importance of following the Insolvency and Bankruptcy Code's provisions to facilitate the Corporate Insolvency Resolution Process effectively.
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