Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2019 (1) TMI Tri This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2019 (1) TMI 83 - Tri - Insolvency and Bankruptcy


Issues:
1. Interim Order sought by Dena Bank to restrain IRP from demanding custody of mortgaged properties.
2. Interpretation of ownership rights and possession of property in insolvency proceedings.
3. Applicability of moratorium under Section 14 of the Insolvency & Bankruptcy Code.

Analysis:
1. The Tribunal addressed Dena Bank's application seeking an interim order to prevent the Resolution Professional (IRP) from demanding custody of mortgaged properties. Dena Bank had taken physical possession of the properties under SARFAESI Act before the moratorium commenced. The Bank argued that the IRP had no right to demand possession post-moratorium. However, the IRP contended that the property belonged to the Corporate Debtor and should be under his control as per Section 18 of the Code. The Tribunal found the IRP's demand justified as the property was reflected as an asset in the Corporate Debtor's books, even though the Bank had possession rights, not ownership. The Tribunal cited a precedent to support the IRP's duty to take control of assets owned by the Corporate Debtor.

2. The Tribunal delved into the applicability of the moratorium under Section 14 of the Code. The Bank argued that since possession was taken before the moratorium, it should be exempt. However, the Tribunal opined that if a security interest had been created, including actions under SARFAESI Act, the Adjudicating Authority must prohibit further action. By analyzing the definition of "security interest" under the Code, the Tribunal concluded that the Bank's possession fell within the moratorium's scope, prohibiting any further dealings with the asset. The Tribunal emphasized that all properties of the Corporate Debtor should be considered collectively by the Committee of Creditors, including Dena Bank.

3. In conclusion, the Tribunal dismissed Dena Bank's application, finding no merit in their arguments. The judgment highlighted the importance of adhering to the provisions of the Insolvency & Bankruptcy Code, especially regarding ownership rights, possession, and the applicability of the moratorium. The decision underscored the need for all creditors, including Dena Bank, to cooperate within the framework of insolvency proceedings for a fair resolution or potential liquidation of assets.

 

 

 

 

Quick Updates:Latest Updates