Latest - TMI e-Newsletter
New User/ Regiser
2022 (9) TMI 683 - Insolvency & Bankruptcy
Resolution Professional (RP) seeking a direction to Bank of India/the Appellant herein to release an amount of Rs.100Lakhs/- held in the ‘no lien account’ - seeking release for the purpose of CIRP of the Corporate Debtor Company/M/s. Actif Corporation Limited. - whether the amount of Rs. 1 Crore lying in the ‘no lien account’ belongs to the Appellant Bank? - HELD THAT:- It is relevant to note that this amount was admittedly paid by the ‘Corporate Debtor’ pursuant to an OTS Proposal on 15.07.2017 to show its bona fide. It is not in dispute that the OTS, as proposed, did not materialise and the amount of Rs.1 Crore was parked in the ‘no lien account’ maintained with the Bank. CIRP was initiated on 26.11.2019. Despite repeated requests of the RP, the Appellant Bank did not release the said amount.
The said amount was to be adjusted/utilised upon approval of the Resolution Plan and was not to be adjusted towards ‘Interest’ or ‘Principal’ till then. Prior to the commencement of CIRP, this amount was not adjusted by the Bank towards the loan account of Bank as the OTS Proposal had failed. Once the CIRP was initiated, keeping in view that the OTS had failed, the amount lying in the ‘no lien account’ belongs to the ‘Corporate Debtor’ and under Section 18(f) of the Insolvency and Bankruptcy Code, 2016, the IRP/RP is obligated to take control and custody of all the assets and properties of the ‘Corporate Debtor’. Further, the Bank could not have appropriated this money once the period of Moratorium has commenced on 26.11.2019.
The contention of the Learned Counsel for the Appellant Bank that the Bankers lien over the money held in a customer’s account is a Statutory Right, is unable, keeping in view the facts of the attendant case and also that CIRP had commenced on 26.11.2019, and having regard to the fact that the amount was deposited with a specific understanding that the amount shall not be used by the Bank until approval of OTS. Admittedly, the said amount was paid at the behest of the ‘Corporate Debtor’ by a third party and it was lying with the Bank for more than five years.
There is no illegality or infirmity in the Order of the Adjudicating Authority - Appeal dismissed.