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2019 (7) TMI 1251 - Tri - Insolvency and BankruptcyTermination of agreement - Directions to the Resolution Professional of the Corporate Debtor to handover to the Applicant certain Plant & Machinery owned by it which are lying at the Premises of the Corporate Debtor - Whether the termination of the agreement on 28.11.2017 by the Applicant under Clause 15.3(b) of the agreement dated 12.05.2011 during the moratorium declared under Section 14 of the IBC, 2016 on 13.09.2017 is legally tenable? HELD THAT:- The intention of the legislature in relation to Section 14 is to ensure that after the declaration of moratorium, there is a standstill period during which there is a bar on creating any encumbrance, sale or alienation of the assets of the Corporate Debtor, so that the financial position of the Corporate Debtor must remain preserved and transparent as a going concern. The suspension of all proceedings against the Corporate Debtor is essential, as it stabilizes the assets of the Corporate Debtor thereby giving the creditors clarity regarding the financial health of the Corporate Debtor and providing them a drawing board to formulate a Resolution Plan, which could effectively restructure the outstanding debts. The action of the Applicant terminating the agreement during the moratorium declared vide order dated 13.09.2017 by this Authority is in violation of Clause (d) of Sub-Section (1) of Section 14 of the IBC, as the interest created in favour of Corporate Debtor by virtue of the agreement has been taken away, on which the whole of the business of the Corporate Debtor was dependent. Thus, the termination of the agreement vide letter dated 28.11.2017 by the Applicant is declared as null and void and stands set aside. Both the Applicant and the Corporate Debtor are directed to perform their respective obligations as per the terms and conditions of the Agreement dated May 12, 2011 r/w Addendum Agreement dated April 27, 2016, as if the agreement(s) was never terminated - this Tribunal is not inclined to grant any relief to the Applicant as prayed for.
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