9911796707
TMI Blog2021 (1) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 (5) of the Insolvency and Bankruptcy Code, 2016 ("the Code") for closure of its Fixed Deposit in A/c. No. 7511872416 and 7511874557 on the ground that since Corporate Insolvency and Resolution Process has been initiated against the Corporate Debtor, whatever the assets belonging to the Corporate Debtor have to come under the control and custody of the RP as per the Code. 2. The Applicant submits that there are two Fixed Deposits, under Account No. 7511874557; Outstanding Rs. 1,14,14,734.40 as on 31.03.2020 and another Account No. 7511872416 outstanding Rs. 50,60,312.99 as on 31.03.2020, which the Respondent Bank has refused to redeem on the ground that the fixed Deposits are part of the security, therefore it has priority over the rede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the Corporate Debtor is the security provided to the loan facility availed by the Corporate Debtor. In any event, since the deposit made by a party to be construed as money of the person deposited, in the present case also, the fixed deposits made by the Corporate Debtor shall be read as the monies of the Corporate Debtor until before it is appropriated. When section 14 rigors come into existence, nobody can take any action over the assets of the corporate debtor. 7. It is no doubt true that it is not that these fixed deposits have voluntarily been made to close them at the wish of the Corporate Debtor, they have in fact made to maintain debt security ratio with a rider clauses of lien and set-off, so in ordinary parlance, the corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 3(31) of the Code, whereas the RP case is it will not fall under the exemption mentioned above. In the present case, it is nether Performance Guarantee, nor a fixed deposit linked to performance guarantee, it is like any other security given against loan facility availed, under this Code, the security interest covered by loan facility is also hit by section 14 of the Code, therefore the fixed deposit given as security against loan facility cannot be equated with the performance guarantee, and the right of lien or setoff ordinarily available to the Respondent Bank is not available during CIRP initiated under the Code. 11. The Respondent Bank relied upon two judgements Cofex Exports Ltd. Vs. Canara Bank (AIR 1997 Delhi 355) and Syndi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
