TMI Blog2020 (10) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... in bank accounts are liquid assets of the Corporate Debtor. Therefore any preferential payment to any creditor during the period of CIRP will squarely fall within this prohibition. It is not permissible under the provisions of IBC for the Corporate Debtor to repay the debts of one of the many financial creditors in preference to other financial creditors after initiation of CIRP and invocation of moratorium u/s 14 of the Code - the question answered in negative - application dismissed. - IA No. 29/2020 in CP (IB) No. 420/7/HDB/2018 - - - Dated:- 4-6-2020 - K. Anantha Padmanabha Swamy, Member (J) and Dr. Binod Kumar Sinha, Member (T) For the Appellant : V. K. Sajith, C. Shilpa, V. Ravi Kumar, Rubaina Khatoon For the Respondent : Rusheek Reddy and P. Mohith Reddy ORDER Dr. Binod Kumar Sinha, Member (T) 1. Under consideration is an Interlocutory Application filed by Indian Bank (in short Applicant/Financial Creditor ) under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (in short IB Code, 2016) read with rule 11, 13 32 of the National Company Law Tribunal (Adjudicating Authority) Rules, 2016, inter-alia seeking to direct the RP to restore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor including this Applicant. e) That R2 herein, Resolution Professional contented that the Corporate Debtor is under moratorium and all the payments on account of interest or debt repayment are on hold. He further stated with regard to the interest servicing to Unit I II lenders that it is not sustainable as any disbursements on account of accrued interest or towards principal would amount to a 'recovery' and would be in contravention to the provisions of section 14(1) of the IB Code, 2016. Such servicing of debt during CIRP may also amount to 'Preferential Payment'. f) That the Applicant herein along with other lenders raised concerns in the meeting dated 13.11.2019 that their account will turn NPA, if interest would not be serviced before 25.11.2019. That the Corporate Debtor should have continued to service the debt given for the business which is generating cash surplus each month. g) That any default in case of a project construction can be said to have occurred only when the construction has been completed. The project for the purpose of brick and mortar construction is divided into 3 phases, is one whole unit for the purpose of the debt. In f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically barred under section 14 of the IB Code, 2016. It was held by the Hon'ble NCLAT in Indian Overseas Bank Vs. Mr. Dinkar T. Venkatsubramanian Resolution Professional for Amtek Auto Ltd. (Order dated 15.11.2017 in Company Appeal (AT) (Insolvency) No. 267/2017), that once moratorium has been declared it is not open to any person including financial creditors and the appellant bank to recover any amount from the account of the Corporate Debtor, nor it can appropriate any amount towards its own dues. c. That the Applicant herein is not entitled to any payment towards the satisfaction of its debt during the period of moratorium. As such, the Application filed by the Applicant deserves to be dismissed for this reason alone since such payment would be in contravention of the moratorium imposed under the admission order. d. That if the RP/R2 herein is directed to make any payments as been sought by the Applicant, the same would amount to preferential treatment in favour of the applicant, at the prejudice of the remaining creditors of the Corporate Debtor. Such preferential treatment is squarely prohibited under the IB Code, 2016. e. That the legality of making interi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. 1 Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising ..... 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