Indian Overseas Bank vs Mr. Dinkar T. Venkatsubramaniam ...

Indian Overseas Bank . ..Appellant

Vs.

Mr. Dinkar T. Venkatsubramaniam Resolution Professional for Amtek Auto Ltd. Respondent

Present: For Appellant: - Mr. Karan Khanna and Ms. Asmita Kumar, Advocates.

For Respondent:- None

ORDER

15.11.2017- The 'Corporation Bank'-'Financial Creditor' preferred an

application under Section 7 of the Insolvency and Bankruptcy Code,

2016 (hereinafter referred to as 'T&B Code) for initiation of 'Corporate

Insolvency Resolution Process' against M/s. Amtek Auto Ltd ('Corporate

Debtor'). The application was admitted on 24th July, 2017, order of

moratorium was passed and 'Interim Resolution Professional' was

appointed on 27th July, 2017. While declaring moratorium, the following

order was passed by the Adjudicating Authority (National Company Law

Tribunal) Chandigarh Bench, Chandigarh in terms of Section 14(1) of

the 'I&B Code', as under: -

"(a) the institution of suits or continuation of

pending suits or proceedings against the corporate

debtor including execution of any judgment, decree -2-

or order in any court of law, tribunal, arbitration

panel or other authority;

(b) transferring, encumbering, alienating or

disposing of by the corporate debtor any of its assets

or any legal right or beneficial interest therein;

(c) any action to foreclose, recover or enforce any

security interest created by the corporate debtor in

respect of its property including any action under the

Securitisation and Reconstruction offinancial Assets

and Enforcement of Security Interest Act, 2002 (54

of 2002);

(d) the recovery of any property by an owner or

lessor where such property is occupied by or in the

possession of the corporate debtor."

2. As per Section 17 (1) (d) of the 'l&B Code', the financial institutions

maintaining the accounts of the 'Corporate Debtor' have to act on the

instructions of the 'Interim Resolution Professional' in relation to such

accounts and furnish all information relating to the 'Corporate Debtor'

available with them to the 'Interim Resolution Professional'. The

Appellant-'Indian Overseas Bank', Hosur Branch is one of the 'Financial

Creditor' of the 'Corporate Debtor' and constitutes 4.08% of the total

value of the financial debt. The 'Corporate Debtor' is maintaining an -3-

account with the Appellant-'Indian Overseas Bank' in its Hosur Branch

to the extent of Rs.6,65,13,958/-. In view of initiation of 'Corporate

Insolvency Resolution Process' and in terms of Section 17, the 'Interim

Resolution Professional' by letter dated 1st September, 2017 requested

the Appellant -'Indian Overseas Bank' to transfer the amount of

Rs.6,65,13,958/- through RTGS to the bank account of the 'Corporate.

Debtor' maintained with the Corporation Bank and cheque No. 870093

dated 1st September, 2017 was also enclosed with the said letter.

3. It appears that in spite of reminder to the Appellant-'Indian

Overseas Bank' amount having not been transferred, notice was given to

the Appellant-'Indian Overseas Bank'. The Appellant opposed the

application and stated that the amount available in the current account

of the 'Corporate Debtor' at Hosur Branch is neither a security interest

nor an asset of the 'Corporate Debtor' and therefore, it is not liable to

release the amount to the 'Corporate Debtor' and the amount available in

the said current amount is to be appropriated towards the dues payable

to the Appellant- 'Indian Overseas Bank'. The stand taken by the

Appellant having rejected by the Adjudicating Authority and the

Appellant having been directed to transfer the amount of

Rs.6,65,13,958/- to the bank account of the 'Corporate Debtor'

maintained with the Corporation Bank, present appeal has been

preferred against the impugned order dated 13th October, 2017 in CA

No. 142/20 17 in CP (IB) No. 42/Chd/Hry/2017.

-4-

4. Learned counsel for the Appellant has taken similar plea as was

taken before the Adjudicating Authority that the amount of 'Corporate

Debtor' lying in the Hosur Branch of Appellant- 'Indian Overseas Bank'

was neither a security interest nor an asset of the 'Corporate Debtor' and

the 'Corporate Debtor' having borrowed the amount from the Appellant-

'Indian Overseas Bank', the amount required to be appropriated to the

dues.

5. 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 an 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.

6. If the 'Corporate Debtor' has borrowed some amount from the

Appellant-'Indian Overseas Bank' and the Appellant- 'Indian Overseas

Bank' come within the definition of 'Financial Creditor' as defined in

Section 5(7) of the 'I&B Code', it is always open to the Appellant- 'Indian

Overseas Bank' to file its claim before the 'Interim Resolution

Professional' for getting the amount back. If the Appellant claims to be

'Financial Creditor' and file's such claim before the 'Interim Resolution

Professional' showing the principal amount and interest thereon, the -5-

'Interim Resolution Professional will consider the same and the Appellant

being 'Financial Creditor' may be taken in the Committee of Creditors'.

7. We find no merit in this appeal, therefore, we are not inclined to

interfere with the impugned order dated 13th October, 2017. However,

liberty is given to the Appellant-'Indian Overseas Bank' to raise its claim

before the 'Interim Resolution Professional' and request him to allow it to

be a member of the Creditors Committee which should be considered in

accordance with law.

8. The Appellant will act in terms with the order passed by the

Adjudicating Authority and transfer the amount to the Corporation Bank

immediately but not later than 30th November, 2017.

9. The appeal stands disposed of with aforesaid observation.

However, in the facts and circumstances of the case, there shall. be no

order as to cost.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice Bansi Lal Bhat) Member(Judicial) Ar/uk