Bank Of Baroda vs Sundaresh Bhatt Rp Of Abg Shipyard Ltd

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI Company Appeal(AT)(Insolvency) No. 635 of 2019 IN THE MATTER OF: Bank of Baroda Corporate Financial Services Branch, Mumbai Samachar Marg, Fort, Mumbai- 400 001 ...Appellant Vs Mr. Sundaresh Bhatt, Resolution Professional, BDO India LLP, Level 9, The Ruby, North West Wing, Senapati Bapat Road, Dadar (W), Mumbai- 400 028. ....Respondent Present: For Appellant: Mr. Raunak Dhillon, Ms. Ananya Dhar Choudhury, and Mr. Parikalp Gupta, Advocates For Respondent: Mr. Kirat Singh Nagra and Mr. Satendra K. Rai, Advocate.

ORDER

20.02.2020 This Appeal has been filed by Bank of Baroda being aggrieved

by the Impugned Order passed in I.A. No. 303 of 2018 in CP(IB) No. 53 of 2017

which relates to Corporate Insolvency Resolution Process (in short 'CIRP')

proceeding pending against ABG Shipyard Ltd.

2. Respondent had filed the said application before the Adjudicating

Authority and after hearing the parties, the Adjudicating Authority has directed

the Bank to reverse the entry vide which the Bank had appropriated margin

money which was kept in the form of three Fixed Deposits (in short 'FDs'). The

Impugned order is short and may be reproduced to set out the facts and what

has been held. It reads as under:

..

"IA 303 of 2018 Company Appeal (AT) (Insolvency) No. 635 of 2019 Page 1 of 7 5.5.1 The instant IA is filed by the Applicant, the

Resolution Professional of the Corporate Debtor,

ABG Shipyard Limited under Section 50(5) read with

Section 14 & 74 of the Code seeking necessary

directions against the Respondent, the Bank of

Baroda to deposit an amount of Rs. 9,73,83,818/-

(Rupees Nine Crore Seventy-Three Lakh Eighty-

Three Thousand Eight Hundred and Eighteen Only)

appropriated by the Respondent Bank in violation of

the order passed by this Tribunal on 01.08.2017

under Section 14 of the IBC.

5.5.2 It is stated by the Applicant that before passing of

the aforesaid order by this Tribunal, Company, the

Corporate Debtor, had maintained a fixed deposit of

Rs. 9,73,83,818/- towards margin money with the

respondent Bank for various Non Fund Based

facilities sanctioned and availed by the Company,

the Corporate Debtor, the details of the same are

given hereunder:

1. FD No. 29100300001777 for Rs. 9,29,31,603/-

2. FD No. 29100300001820 for Rs. 43,51,081/-

3. FD No. 29100300001821 for Rs. 1,01,134/-

Total for Rs. 9,73,83,818/-

Company Appeal (AT) (Insolvency) No. 635 of 2019 Page 2 of 7 5.5.3 On enquiry by the RP with the Respondent bank

about the status of the aforesaid FDs, it was stated

by the Respondent Bank vide their email dated

19.07.2018 that the aforesaid FDs were terminated

and appropriated by the Bank on 02.08.2017

towards loan liability.

5.5.4 it is stated by the Applicant that Respondent Bank

was aware of the proceedings initiated by the ICICI

Bank, the Financial Creditor against the Company,

the Corporate Debtor and the Respondent Bank has

also confirmed that as on 01.08.2017, an amount of

Rs. 9.64 crores were kept as margin money and that

the Respondent Bank would not be able to adjust

the same if the application filed by ICICI bank is

accepted by NCLT without the consent of the

IRP/CoC.

5.5.5 It is further submitted by the Applicant that

pursuant to the declaration of the moratorium, the

lead bank i.e., ICICI bank had vide email dated

03.08.2017 forwarded the order dated 01.08.2107

to all banks including the Respondent. The Applicant

has submitted that despite received the aforesaid

requests and having complete knowledge about the

existence of the moratorium, the Respondent Bank-

Company Appeal (AT) (Insolvency) No. 635 of 2019 Page 3 of 7 the Bank of Baroda, has failed to reverse/roll back

the amounts of the aforesaid fixed deposits

wrongfully appropriated by the Respondent Bank.

Findings:

5.5.6 We, the Adjudicating Authority, on the facts and

circumstances of the case, agree with the Applicant

that Respondent Bank was aware of the

proceedings initiated by ICICI Bank, the financial

Creditor against the Company, the Corporate

Debtor, therefore, the Respondent bank should have

exercised due diligence and respected the

moratorium imposed by this Tribunal vide its order

dated 01.08.2017.

5.5.7 Accordingly, the instant IA is disposed of with the

following directions:

a) The Respondent Bank is directed to roll

back/reverse the wrongfully appropriated amount

of Rs. 9.74,62,608/- (Rupees Nine Crore Seventy-

Four Lakh Sixty-two Thousand Six Hundred and

Eight only) into the TRA account of the Corporate

Debtor Company maintained with ICICI Bank.

b) The Respondent Bank is directed to pay the

Applicant accrued interest on the wrongfully

Company Appeal (AT) (Insolvency) No. 635 of 2019 Page 4 of 7 appropriated amount of Rs. 9,74,62,608/- (Rupees

Nine Crore Seventy-Four Lakh Sixty-two Thousand

Six Hundred and Eight only) from the date of

wrongful appropriate of the fixed deposit till the

actual date of the reversal/roll back into the TRA

account of the Corporate Debtor Company

maintained with ICICI bank.

5.5.8 Accordingly, the IA filed by the Resolution

Professional under Section 60(5) read with Section

14 & 74 of the IBC is allowed."

...

3. Learned Counsel for the Appellant is submitting that the Bank had an

Agreement with the Corporate Debtor (Annexure-2, Page-74) and in view of the

Agreement, which is 'Master Restructuring Agreement', the Bank had issued

Bank Guarantees in favour of the Corporate Debtor assuring other parties. The

three FDs, which are relevant for the present matter, had been issued and when

a Bank Guarantee got invoked by third party on 17.06.2017 the Bank was

required to honour the Bank Guarantee. It is stated that in view of this, the Bank

had right to immediately appropriate the margin money which had been kept in

the form of FDs. Leaned Counsel states that the Bank had internally given

instruction to appropriate money on 01.08.2017 itself which was the date of

Application under Section 7 of Insolvency and Bankruptcy Code, 2016 (in short

'IBC') got admitted. Learned Counsel stated that before coming to know of the

admission of the Application, the instruction had been given internally and in

Company Appeal (AT) (Insolvency) No. 635 of 2019 Page 5 of 7 fact, the FDs account were closed on 02.08.2017 after appropriating the margin

money. Document on this count is pointed out by the learned Counsel at page

407 of the Appeal to demonstrate that the Accounts were closed on 02.08.2017.

Learned Counsel further states that in this view of the matter, the Account could

not have stated to be hit by Moratorium.

4. Learned Counsel for Resolution Professional/Liquidator refers to Reply

(Diary No. 13508) where at Annexure-2, there is Account Statement of the

Appellant Bank (at Page 57) and is pointing out entries dated 09.08.2017 to show

that the Bank had actually appropriated amounts of the FDs only on 09.08.2017.

Learned Counsel for Appellant states that those FDs were appropriated on

02.08.2017.

5. Learned Counsel of Respondent submits that when the Bank had

approached the Resolution Professional at the time of CIRP, the Resolution

Professional had taken photo of the alleged internal instruction of the Bank

dated 01.08.2017, a copy of which is at page 54 of the Reply. Learned Counsel

is demonstrating that this document shows that on 01.08.2017, the Bank was

aware regarding initiation of CIRP and even noted that in the event of Application

filed by ICICI being accepted by NCLT, they may not be able to adjust the margin

money without the consent of Committee of Creditors/Interim Resolution

Professional. It is stated that these documents show that the Bank was aware

and still appropriated the money after CIRP was initiated and under Section 14

of IBC, the Bank could not have done so.

Company Appeal (AT) (Insolvency) No. 635 of 2019 Page 6 of 7

6. Considering the submission made by both the sides, looking into the

documents and keeping in view the reasons recorded by the Adjudicating

Authority, it does appear that money which was lying with the Bank as margin

money in the Form of 3 FDs in the name of Corporate Debtor were appropriated

after the CIRP was initiated and thus the same could not have been done under

Section 14 of IBC. What internal instructions Bank gave on 01.08.2017 is not

relevant. Admittedly, F.D. Accounts were closed on 02.08.2017 when

Moratorium was in force. We do not find any error in the Impugned Order passed

by the Adjudicating Authority.

7. There is no substance in the Appeal. Appeal is dismissed. No costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Justice Anant Bijay Singh] Member (Judicial)

(Kanthi Narahari) Member(Technical) Akc/Mn

Company Appeal (AT) (Insolvency) No. 635 of 2019 Page 7 of 7