NCLT Ahmedabad (29.01.2021) in Sudip Bhattacharya RP Vs. UCO Bank [I.A. No. 911 of 2020 in CP(IB) No. 418 of 2018] held that;
the amount received during the CIRP when the moratorium is in force, is the asset of the Corporate Debtor and RP has to deal with the same as per the provisions of the IB Code. The Respondent is not entitled to adjust the same when the moratorium is in force. If, he has any dues pending from the Corporate Debtor on the date of commencement of CIRP, it is open for him to file his claim before the RP.
Facts of the case;
Respondent (FC) issued Bank guarantee on behalf of the applicant (CD).
The said bank guarantee was invoked and encashed by the beneficiary/ customer on 29th August, 2019.
Application of Financial Creditor viz. IDBI Bank Ltd filed against the CD, i.e. M/s Reliance Naval and Engineering Ltd to initiate CIRP under Section 7 of IB Code, 2016, was admitted on 15.01.2020.
the Respondent submitted its claim to the extent of INR 468,55,10,963 before the IRP in Form C' dated 29th January, 2020. The Applicant submits that the entire Claim of the Respondent was duly admitted by the IRP.
As there was no claim under the performance guarantee, beneficiary/customer returned the amount of bank guarantee to the respondent (FC).
Respondent submitted its revised FORM C dated 29th October, 2020 wherein it deducted the amount equivalent to the Refund Amount from its total claim amount.
Excerpts of the order;
# 1. The instant application is filed by the RP seeking with the following relieves:
(i) to direct the Respondent to forthwith refund the Refund Amount and deposit the same in the following bank account with interest at the rate of 18% p.a for the period held by the Respondent as it forms part of the assets of the Corporate Debtor as the Respondent has acted in contrary and violate the provisions of Section 14 of the Code.
(ii) to pass such other necessary orders to enable the Applicant for the purpose of protecting and preserving the assets of the Company.
# 2. The Applicant stated that the Financial Creditor viz. IDBI Bank Ltd had filed a petition being numbered as CP(IB) 418/2018 against the Corporate Debtor, i.e. M/s Reliance Naval and Engineering Ltd to initiate Corporate Insolvency Resolution process under Section 7 of IB Code, 2016, which was admitted on 15.01.2020.
# 3. The Applicant submits that pursuant to the public announcement, the Respondent herein submitted its claim to the extent of INR 468,55,10,963(Indian Rupees Four Hundred Sixty-Eight Fifty-Five Lakhs Ten Thousand Nine Hundred and Sixty-Three) before the IRP in Form C' dated 29th January, 2020. The Applicant submits that the entire Claim of the Respondent was duly admitted by the IRP.
# 22. The Applicant submits that the adjustment of Refund Amount against the dues of the Respondent is in contempt, violation and breach of Section 14 of the Code for the following reasons:
(a). Pursuant to the completion of the work and expiry of the warranty period, the Corporate Debtor had written to the Customer for refund of the Bank Guarantee amount as there were no claims during the warranty period from the beneficiary against the Corporate Debtor with respect to the Project. However, the Respondent had sent a communication to the Beneficiary on 19th December, 2019 requesting for refund of the Bank Guarantee amount into the Respondent's designated current account. Accordingly, the Customer vide letter dated 23rd December, 2019 requested the Corporate Debtor and the Respondent to reconcile the conflict amongst themselves regarding which bank account the Refund Amount should be credited and intimate the same to the Customer for the Refund Amount.
(b). The Applicant submits that as per Section 14 of the Code, moratorium has been imposed on the Company and therefore transferring, encumbering, alienating or disposing off any of the assets of the Company has been prohibited under the Code. The Applicant submits that Bank Guarantee has been secured by way of the Securities as stated above and no specific charge has been created by the Corporate Debtor in favour of the Respondent. Hence, disposing or adjusting of the Refund Amount by the Respondent would tantamount to enforcement security interest created by way of the Securities and the same has been specifically prohibited under Section 14 of the Code.
(C). The Applicant submits that the Hon'ble National Company Law Appellate Tribunal in the matter of Indian Overseas Bank vs. Mr. Dinkar T. Venkatsubramaniam, Resolution Professional for Amtek Auto Limited, Company Appeal (AT) (Insolvency) No. 267 of 2017_vide its order dated November 15, 2017, held that once moratorium is imposed by an order of the Adjudicating Authority, the same shall be applicable on all the stakeholders of the Corporate Debtor including all the financial creditors, hence the Financial Creditors cannot recover any amount from the account of the Corporate Debtor, nor can it appropriate any amount towards its own dues. Relevant paragraph has been reproduced below:
- "Having heard learned counsel for the Appellant, we do not accept the submissions made on behalf of the Appellant in view of the fact that after admission of any application under Section 7 of the 'I & B Code', once moratorium has been declared it is not open to any person including 'Financial Creditors' and the appellant bank to recover any amount from the account of the ‘Corporate Debtor” nor it can appropriate any amount towards its own dues."
A copy of the order dated November 15, 2017 has been annexed and marked hereto as Exhibit “T”.
# 23. The Applicant submits that placing reliance on the above mentioned judgment, Hon'ble NCLAT in the matter of State Bank of India vs. Debashish Nanda, Company Appeal (AT) (Insolvency) No. 49 of 2018 vide its order dated April 24, 2018 has held that:
“Prima facie, we are of the view that the appellant cannot debit any amount from the Corporate Debtor's account after the order of moratorium, as it may amount to recovery amount in spite of the order of moratorium passed by the Adjudicating Authority in violation of Section 14 of the IBC”
A copy of the order dated April 24, 2018 has been attached and marked hereto as Exhibit “U”.
# 25. Gone through the records and arguments made by the learned counsels of both sides.
# 26. It is noted that Bank Guarantee was issued on 14.07.2016 for Rs. 3,34,90,458/- in favour of the customer of the Corporate Debtor, which was valid upto 31.08.2019. The Bank Guarantee was invoked by the Customer, Indian Navy on 22.08.2019 for warranty obligations before the commencement of the CIRP date i.e on 15.01.2020. The amount paid by the Respondent Bank on invocation of Bank Guarantee from its own funds on account of non-availability of Funds in Corporate Debtor's Accounts before the commencement of CIRP amounts to grant of credit facility to the Corporate Debtor before CIRP. The amount retained by the Customer, Indian Navy by invoking Bank Guarantee was released by Indian Navy on 28.09.2020. The amount was released by the customer, Indian Navy after the date of commencement of CIRP when the moratorium is in force to the Corporate Debtor.
# 27. As per Section 14 of IB Code and in line with the decision of the Hon'ble NCLAT in the matter of Indian Overseas Bank vs. Mr. Dinkar T. Venkatsubramaniam, Resolution Professional for Amtek Auto Limited, Company Appeal (AT) (Insolvency) No. 267 of 2017, the amount received during the CIRP when the moratorium is in force, is the asset of the Corporate Debtor and RP has to deal with the same as per the provisions of the IB Code. The Respondent is not entitled to adjust the same when the moratorium is in force. If, he has any dues pending from the Corporate Debtor on the date of commencement of CIRP, it is open for him to file his claim before the RP.
# 28. The instant IA is allowed with the above observations and accordingly disposed of. No order as to cost.
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