2022 (3) TMI 948 - Tri - Insolvency and Bankruptcy

Seeking directions to the Income Tax Department to release the lien on the Bank Account of Corporate Debtor under liquidation - HELD THAT - The account of the Corporate Debtor had been seized at the instance and directions of Commercial Taxes, State of Bihar and this Adjudicating Authority had directed that since the Corporate Debtor was in the course of liquidation and in order to have completion of process of liquidation in expeditious manner, the department shall release the accounts which have been seized. The Income Tax Department are directed to immediately remove their lien from the Bank Account No. 691011002989, 691044000138 in Kotak Mahindra Bank which belongs to the Corporate Debtor under Liquidation - application disposed off.

Summary

Issues involved:
1. Release of lien on bank accounts by the Income Tax Department.
2. Request for defreezing the bank account by Kotak Mahindra Bank.

Detailed Analysis:
1. The issue in this case revolves around an application filed by the Liquidator against the Income Tax Department seeking directions to release its lien on specific bank accounts. The Liquidator initiated the liquidation process and requested closure of existing accounts related to the Corporate Debtor. Despite the Liquidator's efforts to transfer the funds and close the accounts, Kotak Mahindra Bank informed that the amounts were marked with a lien to the Income Tax Department, preventing any action on the accounts. The Liquidator corresponded with the Income Tax Department to release the lien, citing the legal requirements during the liquidation process. However, there was no response from the Income Tax Department, leading to the application before the Tribunal.

2. The Tribunal noted a similar situation in a previous case where the account of the Corporate Debtor was seized by the Commercial Taxes, State of Bihar. In that instance, the Tribunal directed the department to release the seized accounts to facilitate the liquidation process efficiently. Drawing an analogy from the previous case, the Tribunal directed the Income Tax Department to remove the lien from the specified bank accounts and instructed Kotak Mahindra Bank to defreeze the accounts based on the Tribunal's order. By issuing these directions, the Tribunal disposed of the application, providing clarity on the actions required by the concerned parties in compliance with the liquidation process.

Overall, the Tribunal's judgment emphasizes the importance of facilitating the liquidation process by releasing liens on bank accounts and defreezing them to ensure the smooth progression of liquidation proceedings. The decision underscores the Tribunal's authority to issue directives to relevant parties involved in insolvency matters to uphold the legal requirements and expedite the liquidation process effectively.