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TMI Blog2018 (6) TMI 1750X X X X Extracts X X X X X X X X Extracts X X X X ..... tor will have right of recovery, not right of disposal over the monies lying in its current account. The right of the creditor being a remedy for realization and that remedy being suspended in the period of moratorium, such right of remedy could not be exercised soon after declaration of moratorium. Once the monies lying in current account is construed as the asset of the Corporate Debtor, section 14 will trigger in over the said asset as well. For it has been admitted that the respondent/the creditor appropriated the monies lying in the account of Corporate Debtor against the loan account soon after moratorium has been declared, such transaction has to be held as hit by sec 14 of the Code, for this reason, this Bench hereby holds that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sum and substance of this Application is for this Bench passed an order admitting CP 1371/2017 filed by DBS Bank and CP/1372/2017 filed by Standard Chartered Bank against the Corporate Debtor u/s 7 of the Insolvency Bankruptcy Code on 08.12.2017 by declaring moratorium over the assets of the Corporate Debtor on 15.12.2017, the monies lying In the current account maintained by the Corporate Debtor with the present respondent i.e. ICICI Bank Ltd. being the asset of the Corporate Debtor, ICICI should not have debited the aforesaid monies from the current account of the Corporate Debtor in the name of LCs availed by the Corporate Debtor subsequent to declaration of moratorium u/s 14 of the Code' Since ICICI has consciously debited the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the impugned transaction. 4. To which reply of ICICI is, it has already provided various loan facilities including non-funding facility i.e. LCs in this case, it says as long as money is lying in the current account of the Corporate Debtor, ICICI being the creditor, it has every right to debit the monies against LC grants paid to the third parties by the Bank, accordingly ICICI bank debited the monies from the current account of the Corporate Debtor against the LCs granted in the ordinary course of business. 5. To buttress his argument, this Counsel has relied upon a Supreme Court judgment on the matter between Shanti Prasad Jain another vs. Director of Enforcement, Foreign Exchange Regulation Act another (AIR 1962 SC 1764) para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... careful reading of section 14(1)(b), it is evident that the Corporate Debtor alone is prohibited from dealing with the asset of it, it has not been said anywhere that others should not deal with the asset of the Corporate Debtor, saying so, he has also made it clear that lt is an additional argument to his argument saying that the monies lying in the current account of the Corporate Debtor is not an asset of the Corporate Debtor. 8. On weighing the arguments of either side, the short point for discussion is as to whether the money lying with the Corporate Debtor with the respondent bank is an asset of the Corporate Debtor or not, if it is an asset of the Corporate Debtor, whether the persons other than Corporate Debtor can deal with such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditor will have right of recovery, not right of disposal over the monies lying in its current account. The right of the creditor being a remedy for realization and that remedy being suspended in the period of moratorium, I don't believe that such right of remedy could be exercised soon after declaration of moratorium. Once the monies lying in current account is construed as the asset of the Corporate Debtor, section 14 will trigger in over the said asset as well. 12. Of course, doctrines like set-off, reclamation, withholding recognised under insolvency jurisprudence of USA, UK and Germany are not available in the Code, under those jurisprudences, there is a possibility to set off or withhold funds of insolvent, creditor ls entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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