TMI Blog2018 (8) TMI 1951X X X X Extracts X X X X X X X X Extracts X X X X ..... could be satisfied as per the waterfall given under section 53 of the I and B Code, 2016 - there appears to be a complete prohibition of the activities as are emanated under section 14 of the I and B Code, 2016, during the period of moratorium. Whether the fixed deposit worth ₹ 50,00,000 is to be treated as security charge on the corporate debtor? - HELD THAT:- The case on hand is that the corporate debtor has obtained overdraft facilities with regard to the fixed deposit of ₹ 50,00,000 which the respondent-bank claims to be the security for extending the facilities to the corporate debtor. But, there is no compliance with the provisions of section 77 of the Companies Act, 2013. Therefore, the respondent-bank cannot be treated as secured creditor in respect of the fixed deposit of ₹ 50 lakhs deposited with the respondent-bank by the corporate debtor. Since a charge has not been created in relation to the fixed deposit worth of ₹ 50 lakhs, therefore, the respondent-bank is not a secured creditor as claimed by it. Thus, the application of the resolution professional is allowed and the respondent-bank is directed to refund the amount of ₹ 3,95,56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set filed with the application. 4. The resolution professional has stated that subsequent to the declaration of moratorium under section 14 of the I and B Code, 2016, the respondent, viz., Axis Bank Ltd., had continued to deduct monthly interest on the over-draft accounts that were maintained by it. In order to obtain the said amount the resolution professional had placed the issue before the first meeting of the CoCs held on March 1, 2018 whereby 85.14 per cent. of the members had voted to refund the deducted sums, and even then, the respondent-bank had failed to refund the deducted sums back to the account of the corporate debtor. 5. It is further stated that the resolution professional had sent a letter dated April 12, 2018 to the regional office of the respondent to refund the deducted sum from January 25, 2018 till March, 2018 the copy which is placed at pages 104 and 105 of the typed set filed with the application and a reminder was sent on May 28, 2018 copy of which is placed at pages 106 and 107 of the typed set filed with the application. 6. It is stated by the resolution professional that the respondent should have obtained explicit approval from the CoCs and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby he had informed that the respondent has not registered a charge with regard to the fixed deposit of ₹ 50,00,000 as per section 77 of the Companies Act, 2013. Therefore, he shall not be in a position to admit the security interest on the said fixed deposit, the copy of the e-mail is placed at pages 122 and 123 of the typed set filed with the application. The applicant has also sent a reminder dated June 6, 2018 to the respondent, copy of which is placed at pages 124 and 125 of the typed set filed with the application. 11. The applicant has further stated that due to awaiting of any response/ confirmation from the respondent herein about release of lien on the fixed deposit, the resolution applicants are unable to determine the implementation schedule of the resolution plan as required under regulation 38(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and the delay and nonaction on the part of the respondent is leading to delay in finalising the resolution plan. 12. It is stated that the respondent is in gross violation of section 14 of the I and B Code and such an unlawful act is setting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at date. Therefore, the respondent is entitled to levy the same, and the applicant, seeking the suspension of levy of interest during the moratorium period is not permissible. It is further stated that the reliance placed on section 14 of the I and B Code, 2016 is also misplaced and denied and as per the Banking Regulation Act, 1949, the respondent is entitled to levy interest in the usual course of its accounting practice and no such restriction to suspend the levy of interest during the moratorium period has been laid down in either the Banking Regulation Act, 1949 or the I and B Code, 2016. 17. The respondent has stated that as regards the return of the fixed deposit of ₹ 50,00,000 the overdraft facility to the tune of ₹ 50,00,000 was extended to the corporate debtor as against the collateral security and the necessary security document has been placed before the applicant as well. It is further stated that the said fixed deposit is the only security created by the corporate debtor in favour of the respondent. The respondent, being the secured creditor, having a prior and valid charge/pledge over the same, the applicant cannot seek to rewrite the contract between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidation. Thus, under the process of liquidation, the claimants (secured creditors are to be dealt under section 52) could be satisfied as per the waterfall given under section 53 of the I and B Code, 2016. Therefore, there appears to be a complete prohibition of the activities as are emanated under section 14 of the I and B Code, 2016, during the period of moratorium. This issue is already settled by the National Company Law Tribunal/National Company Law Appellate Tribunal in catena of judgments. In this connection, we may rely upon the order passed by the National Company Law Tribunal, Chandigarh Bench in Dinkar T. Venkatsubramanian v. Indian Overseas Bank [2018] 1 Comp Cas-OL 29 (NCLT), dated October 13, 2017 wherein the Tribunal has observed as under (page 37) : ... any amount lying in the current account of the corporate debtor has to be placed at the disposal of the resolution professional without any scope of an adjustment in the manner, the respondent has tried to do... In view of the above, the application filed by the resolution pro fessional is partly allowed and the respondent-bank is directed to deposit the amount, which was lying in the credit of the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected by the official liquidator for distribution in accordance with law . The said judgment was upheld by the hon'ble apex court on the appeal filed as has been reported in Kerala State Financial Enterprises v. Official Liquidator, High Court of Kerala [2006] 133 Comp Cas 915 (SC). A similar opinion has been expressed in another judgment passed by the hon'ble High Court of Bombay in Antifriction Bearings Corporation Ltd. v. State of Maharashtra, AIR 1999 Bom 37. 26. In the light of the factual and legal position stated above, since a charge has not been created in relation to the fixed deposit worth of ₹ 50 lakhs, therefore, the respondent-bank is not a secured creditor as claimed by it. Thus, the application of the resolution professional is allowed and the respondent-bank is directed to refund the amount of ₹ 3,95,567 being the interest, deducted on the overdraft accounts that were maintained by it and to release the lien on the fixed deposit worth of ₹ 50 lakhs and allow the resolution professional to take control and custody of the fixed deposit and to account the interest deducted and fixed deposit as part of the assets of the corporate deb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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