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2024 (12) TMI 799 - AT - IBCOwnership of the amount in the No Lien Account - whether the amount of Rs. 1 Crore lying in the No Lien Account with the Appellant/Bank belongs to the Appellant bank or to the Corporate Debtor? - HELD THAT - It is admitted fact that the said amount was paid on behalf of the Corporate Debtor pursuant to an OTS proposal on 16.07.2017. The purpose of the said payment was to show bona-fide of the Corporate Debtor towards the OTS. It is also admitted fact that OTS did not materialize and the money lying in the No Lien Account was not adjusted/enchased by the Bank. Subsequently, the CIRP was initiated on 03.01.2020 and despite repeated requests of the Resolution Professional, the Appellant bank did not release the said amount. Once the CIRP was initiated, the amount lying in the No Lien Account , which on that date belonged to the Corporate Debtor, by natural corollary is an asset of the Corporate Debtor which the IRP/RP was obliged to take under his control/custody as per provisions of Section 18 of IBC, 2016. Since the moratorium had commenced, on initiation of CIRP on 03.01.2020, the Bank in any case could not have appropriated this money. Following the judgment of the Co-ordinate Bench in the case of Bank of India Vs. Vinod Kumar P. Ambavat 2022 (9) TMI 683 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI and on consideration of the facts of this case, we find that the Adjudicating Authority has rightly held that the said amount of Rs. 1 Crore lying in No Lien Account with the Appellant bank is an asset of the Corporate Debtor. The IRP/RP has rightly claimed the said deposit for its utilization in CIRP. There are no reason to interfere in the order of the Adjudicating Authority and accordingly, this appeal is dismissed.
Issues:
1. Release of an amount of Rs. 1 Crore held in the "No Lien Account" by the Appellant. 2. Ownership of the amount in the "No Lien Account" - whether it belongs to the Appellant bank or the Corporate Debtor. 3. Interpretation of Section 18(f) of the Insolvency and Bankruptcy Code, 2016 in relation to assets of the Corporate Debtor. 4. Validity of the claim made by the Bank of India regarding the amount in question. 5. Application of relevant legal precedents and judgments in determining the ownership and utilization of the amount. Detailed Analysis: 1. The appeal was filed against an order allowing the release of Rs. 1 Crore held in the "No Lien Account" by the Appellant, which was requested for Corporate Insolvency Resolution Process (CIRP) purposes. The Corporate Debtor was admitted into CIRP and the Interim Resolution Professional (IRP) sought the release of the amount, but the Appellant refused. 2. The dispute arose regarding the ownership of the amount in the "No Lien Account." The Adjudicating Authority held that the amount belonged to the Corporate Debtor based on the purpose of payment and the failure of the One Time Settlement (OTS) proposal. The Bank of India claimed ownership, citing the cheque issuer and statutory rights. 3. Section 18(f) of the Insolvency and Bankruptcy Code, 2016 was interpreted to determine the ownership of assets of the Corporate Debtor. The Adjudicating Authority emphasized that the amount paid by the Corporate Debtor for OTS purposes was to be considered an asset of the Corporate Debtor under the Code. 4. The Bank of India argued that the amount was not an asset of the Corporate Debtor, pointing to the cheque issuer and contractual arrangements. However, the Respondent contended that the Bank's conduct of not adjusting the amount in its claim indicated that it remained the asset of the Corporate Debtor. 5. The judgment relied on legal precedents to establish that once CIRP commenced, the amount in question belonged to the Corporate Debtor and could not be appropriated by the Bank. The decision aligned with previous rulings and dismissed the appeal, upholding the Adjudicating Authority's order for the release of the amount for CIRP utilization. The judgment highlighted the importance of adhering to the Code's provisions and relevant legal interpretations in resolving such disputes.
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