TMI Blog2017 (11) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... added the word M/S. before its name while opening the current account in the Hosur branch and provided different Id code with the introduction of a local trader and that is why the current account could be opened in the Hosur branch, which otherwise could not have been done. For the aforesaid mystery, it is for the bank to take appropriate action by holding an enquiry, but from the current account, which the bank itself says that it had no prior knowledge, there was no scope of set off after appointment of the interim resolution professional. In view of the above, the application filed by the resolution professional is partly allowed and the respondent bank is directed to deposit the amount, which was lying in the credit of the current account of corporate debtor in Hosur branch as on 29.08.2017 in the account of the corporate debtor maintained in the Corporation Bank after leaving an amount of ₹ 60,000/- in the account of the corporate debtor as per letter dated 01.09.2017 Annexure A-11 (Colly) already sent by the applicant to the respondent. The applicant/resolution professional is further at liberty to take appropriate proceedings against the key managerial persons, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he corporate debtor and constitutes 4.08% of the total value of the financial debt. The applicant vide emails dated 31.07.2017 and 05.08.2017 intimated the respondent bank with regard to the commencement of corporate insolvency resolution process (CIRP) and the orders passed by the Adjudicating Authority and issued the instructions in terms of Section 17 (d) of the Code to the respondent to freeze all debit transactions until further communication and further instructed the bank not to allow payment of any cheque without the instructions of the applicant. Copy of the emails dated 31.07.2017 and 05.08.2017 are at Annexure A-5 (Colly). 4. Thereafter the applicant requested the respondent bank on 08.08.2017 for registering change in the signatory of all the bank accounts maintained by the respondent bank and instructed the bank to operate the bank accounts in accordance with the instructions contained therein. Copy of the letter is at Annexure A-6. On 09.08.2017, the applicant instructed the respondent to transfer all the funds as available with it in the bank account of the corporate debtor to the account of the corporate debtor and copy of the said email is at Annexure A-7. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the corporate debtor had given a false declaration while opening the aforesaid account in the Hosur branch that they are not enjoying any credit facility with any other bank/any other branch of the respondent bank. The corporate debtor has routed about ₹ 27.07 crores through that account after the account became NPA from 29.05.2016. These proceeds should have been routed through the cash credit account of the respondent bank to regularise the overdues and also ad-hoc CC limit sanctioned by the bank. This letter Annexure A-12 was sent by the Rajiv Circle branch being the central office of the respondent located at Chennai. The central office of the respondent bank also recorded that they have taken serious note of the breach of trust committed by the corporate debtor, which was un-acceptable to the bank. 9. Having narrated the aforesaid facts, the applicant has stated that the action of the bank in setting off the dues from the operational collections violates the declaration of moratorium issued by the Adjudicating Authority. 10. Prayer, thus, was made in the application to issue the necessary directions to the respondent bank to refund the amount appropriated/set- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate debtor at Hosur branch of the respondent was neither a security interest nor an asset of the corporate debtor. Since the corporate debtor is liable to pay huge amount to the respondent, the amount available in the said current account was appropriated towards the said dues and amended claim was filed on 08.09.2017. 14. It is stated that the respondent has not committed violation of any of the provisions of Sections 14, 17, 18 and 20 of the Code. The respondent is one of the secured financial creditor and member of the committee of creditors. 15. Regarding the allegation that the respondent bank through Hosur branch is a member of the committee of creditors, it has been clarified that Hosur branch had no exposure to the corporate debtor. It is Rajiv Circle branch of the bank which has the creditor exposure to the corporate debtor. 16. The allegations of facts with regard to sending of various letters/emails are not denied. It is stated that there are instructions by the applicant to the respondent to freeze the account in compliance whereof, the account has been frozen. The amount of ₹ 6.67 crores was available in the current account of the corporate debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much of the damage was done because of deposits from different customers to whom the goods were sold by the corporate debtor to the tune of ₹ 5.24 crores (approx.) for the period from 16.08.2017 to 29.08.2017 as evident from the statement of account Annexure A-13. 22. However, learned counsel for respondent bank submits that the bank has rightly appropriated the amount lying in the current account of the corporate debtor by way of set off and this cannot be said to be a recovery or any of the actions, which are prohibited by the moratorium as per Section 14 (1) of the Code. 23. Learned counsel for applicant referred to email Annexure A-5 at page 38, written to the respondent bank directing it to debit freeze all accounts held in the name of corporate debtor on the basis of email already sent on 31.07.2017. Therefore, the respondent Bank could not adjust or set off the amount towards its ad hoc credit limit granted for the current account. 24. Under clause (d) of Section 17 (2) of the Code, the financial institutions maintaining accounts of the corporate debtor shall act on the instructions of the interim resolution professional in relation to such accounts and furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf says that it had no prior knowledge, there was no scope of set off after appointment of the interim resolution professional. 28. In view of the above, the application filed by the resolution professional is partly allowed and the respondent bank is directed to deposit the amount, which was lying in the credit of the current account of corporate debtor in Hosur branch as on 29.08.2017 in the account of the corporate debtor maintained in the Corporation Bank after leaving an amount of ₹ 60,000/- in the account of the corporate debtor as per letter dated 01.09.2017 Annexure A-11 (Colly) already sent by the applicant to the respondent. 29. The applicant/resolution professional is further at liberty to take appropriate proceedings against the key managerial persons, who had issued the cheques for withdrawal of the huge amount even after the appointment of the resolution professional and the respondent to hold an enquiry into the alleged mischief committed by the Corporate Debtor and take further steps as may be necessary. 30. Let compliance of this be made by the respondent bank within a period of fifteen days from the date of receipt of the certified copy of this ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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