Oriental Bank Of Commerce vs Moser Baer India Limited Through: ...

(arising out of order dated 25th April, 2018 passed by National Company Law Tribunal, Principal Bench, New Delhi in C.P. No. IB-378 (PB)/2017 in C.A. No. 207(PB)/2018 & CA No. 247(PB)/2018)

IN THE MATTER OF:

Oriental Bank of Commerce, Sub Cluster, South Delhi, 92-E/1, R.K. Market, Post J.N.U., Munirka, New Delhi - 110 067. ...Appellant

Versus

Devendra Singh, Resolution Professional of Moser Baer India Limited, Witworth Insolvency Professional Pvt. Ltd., 99, DDA Site-1, Shankar Road, New Rajinder Nagar, New Delhi. ...Respondent

Company Appeal (AT) (Insolvency) No.240 of 2018

IN THE MATTER OF:

Oriental Bank of Commerce Sub Cluster, South Delhi, 92-E/1, R.K. Market, Post J.N.U., Munirka, New Delhi - 110 067. ...Appellant

Versus

1. Moser Baer India Ltd., 43B, Okhla Industrial Estate, New Delhi - 110 020. 2

2. Devendra Singh, Resolution Professional of Moser Baer India Limited, Witworth Insolvency Professional Pvt. Ltd., 99, DDA Site-1, Shankar Road, New Rajinder Nagar, New Delhi. ...Respondents

Present:

For Appellant : Mr. Saran Suri, Ms. Adrija Das and Mr. Roshan Kumar, Advocates Ms. Seema Jangid, C.S.

For Respondent: Mr. Abhishek Anand, Mr. Tushar Tyagi and Ms. Chetna Singh, Advocates

JUDGMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

In the 'Corporation Insolvency Resolution Process' against 'Moser Baer

India Limited' (Corporate Debtor) an application was filed by the 'Resolution

Professional' for direction to the Appellant - 'Oriental Bank of Commerce' to

prematurely cancel the Fixed Deposit Receipt Nos. 06193031032707,

06193031032714, 06193031032721, 06193021014928 and

06193031032691 lying with it in the name of the 'Corporate Debtor' and

transfer the proceeds of the 'Fixed Deposit Receipts' into the account known

as the Trust and Retention Account with the 'Central Bank of India'.

2. The 'Oriental bank of Commerce' also filed an application to consider it

as a 'Financial Creditor' as guarantee given by the 'Corporate Debtor' having

invoked by it.

Company Appeal (AT) (Insolvency) Nos. 239 & 240 of 2018 3

3. The Adjudicating Authority (National Company Law Tribunal), Principal

Bench, New Delhi by common impugned order dated 25th April, 2018 while

allowed the prayer made by the 'Resolution Professional', rejected the prayer

of the 'Oriental Bank of Commerce' with the following observations:

"When we have examined the endorsements sent

to the Corporate Debtor M/s Moser Baer India Limited,

it becomes evident that the OBC has indicated to the

Corporate Debtor that it had given Corporate Guarantee

to secure the credit facilities sanctioned to M/s Halio

Photo Voltaic Limited and they were advised to get the

account adjusted failing which the OBC was to initiate

legal action. Similarly, endorsement has been made in

the letter dated 01.12.2015. It has been rightly

contended by Mr. K. Dutta, learned counsel for the

Resolution Professional that these endorsements cannot

be regarded as invocation of Corporate Guarantee. We

entirely agree with the submission made by the learned

counsel and do not feel persuaded to accept the

contention advanced by Mr. Suri on behalf of the OBC.

We are further of the view that the Corporate

Insolvency Resolution Process in this case was triggered

on 14.11.2017 and the amount from the FDRs has been

appropriated after the aforesaid date on 30.11.2017

and intimation was sent on 17.12.2017. In any case

Company Appeal (AT) (Insolvency) Nos. 239 & 240 of 2018 4

this was barred by Section 14 of the Code and the

directions issued by us in the order dated 14.11.2017.

In the case of AXIS bank Limited (supra), the Principal

Bench has taken the view that in accordance with the

provisions of Regulation 13 of the Insolvency and

Bankruptcy Board of India (Corporate Resolution

Process for Corporate Persons) Regulations, 2016 the

Interim Resolution Professional/ Resolution Professional

has to verify every claim as on the insolvency

commencement date. Therefore, as per the books of

account, on 14.11.2017 the amount in Fixed Deposits

stood in the name of the Corporate Debtor. Any

withdrawal from the account/FDR by appropriation by

OBC has to be regarded as violative of Regulation 19

also. In the absence of such a bar, it will not be possible

for the Resolution Professional to verify the claim and

the object of moratorium as contemplated under Section

14(1) (c) would stand defeated. The Appellate Tribunal

in the Indian Overseas Bank vs. Mr. Dinkar T.

Venkatsubramaniam (supra) has also taken the same

view in para 5 of its judgement which reads as under:-

"Having heard learned counsel for

the Appellant, we do not accept the

submissions made on behalf of the

Company Appeal (AT) (Insolvency) Nos. 239 & 240 of 2018 5

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."

We are further constrained to observe that the

OBC has unnecessarily contested this litigation and the

Interim Resolution Professional/ Resolution Professional

was merely performing his duties imposed on him by

Section 17(1) (d) of the Insolvency and Bankruptcy Code,

2016. Therefore, the claim made by the OBC in its

application No. 247(PB)/2018 is devoid any merit."

3. The case of the Appellant is that the Bank has granted credit facilities

to the 'Helios Photo voltaic Limited' (HPVL). While giving such credit facilities

Company Appeal (AT) (Insolvency) Nos. 239 & 240 of 2018 6

'Moser Baer India Limited' (Corporate Debtor) had stood as 'corporate

guarantor' pursuant to which an 'Agreement of Guarantee' was executed on

12th September, 2008.

4. The 'Corporate Debtor' during 2012-13 created 5 Fixed Deposits

aforesaid with the Appellant amounting to Rs. 2,45,45,832/-. In the

meantime, the principal borrower was declared 'Non-Performing Asset (NPA)

on 31st March, 2013 and by Demand Notices dated 22nd July 2014 and 1st

December, 2015 the amount was recalled by the Appellant from the principal

borrower. A copy of the said notice was sent to the 'Corporate Debtor' to which

'Corporate Debtor' replied by letter dated 24th December, 2015 accepting its

indebtedness towards the Appellant. Thereafter, the 'Corporate Insolvency

Resolution Process' was initiated against the 'Moser Baer India Limited'

(Corporate Debtor). Pursuant to the invocation aforesaid, the Appellant Bank

sent notice dated 30th November, 2017 subject to encashment of the FDRs to

the 'Corporate Debtor' with a copy to the 'Resolution Professional' and

pursuant to the commencement of the 'CIRP', the Appellant filed its claim to

the tune of Rs. 8,49,94,18,669.25 as on 14th November, 2017 vide Form-C

dated 28th November, 2017. Learned counsel appearing on behalf of the

Appellant submitted that the Adjudicating Authority failed to appreciate the

distinction and the true meaning of the terms 'Invocation', 'Appropriation' and

Company Appeal (AT) (Insolvency) Nos. 239 & 240 of 2018 7

'Encashment'. The 'Resolution Professional' given the view that the principles

of the bankers' general lien, Section 171 of the Contract Act, 1872 and agreed

terms of the 'Corporate Guarantee', the Appellant was not entitled to stake its

claim over the said FDRs to the tune of Rs. 3,58,09,820/- after the

demand/invocation. It was submitted that the Appellant has exercised its

right having control over the property (FDRs).

5. Insofar as the claim of the Appellant as 'Financial Creditor' is

concerned, the Appellant having invoked the guarantee, this Appellate

Tribunal in interim order dated 25th May, 2018 allowed the Appellant to

attend the meeting of the 'Committee of Creditors' subject to the decision of

both the appeals. However, the Appellant was not given a right of voting with

the condition that if the 'resolution plan' approved in the meantime that shall

be subject to the decision of these Appeals.

6. Learned counsel appearing on behalf of the Appellant brought to our

notice that during the pendency of the appeal, 'Moser Baer India Limited'

(Corporate Debtor) has undergone the 'Liquidation' vide order dated 20th

September, 2018 passed by the Adjudicating Authority. The said order of the

'Liquidation' is not under challenge in these appeals. The Appellant has also

brought to the notice of this Appellate Tribunal that the Appellant has filed

Company Appeal (AT) (Insolvency) Nos. 239 & 240 of 2018 8

the claim before the 'Liquidator' which is now being accepted in view of Email

dated 3rd December, 2018.

7. In view of aforesaid development, we are not inclined to interfere with

the impugned order. The 'Liquidator' and the Adjudicating Authority are

required to act in accordance with law. Both the appeals stand disposed of

with aforesaid observations. No costs.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice A.I.S. Cheema ] Member (Judicial) New Delhi 31st May, 2019

/ns/

Company Appeal (AT) (Insolvency) Nos. 239 & 240 of 2018