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of <h1>Tribunal rules in favor of RP, dismisses OBC's claim on premature FD cancellation & invalid bank guarantees.</h1> The Tribunal dismissed OBC's claim, finding merit in the RP's application regarding premature cancellation of fixed deposit receipts and rejection of ... Premature cancellation of Fixed Deposit - transfer of proceeds of the ‘Fixed Deposit Receipts’ into the account known as the Trust and Retention Account with the ‘Central Bank of India’ - issuance of direction to the Oriental Bank of Commerce to remit the balance in the Current Account - HELD THAT:- The application filed by the Resolution Professional merits acceptance and the one filed by the Oriental Bank of Commerce (OBC) is liable to be dismissed. It remains undisputed that there were 5 Fixed Deposits in the name of Corporate Debtor. The Resolution Professional as well as the Committee of Creditors (CoC) desired and issued instructions to OBC to discontinue the Fixed Deposits and the amount realized from the Fixed Deposits was to be credited in the Trust and Retention Account of the Corporate Debtor. The OBC has indicated to the Corporate Debtor that it had given Corporate Guarantee to secure the credit facilities sanctioned to M/s Halio Photo Voltaic Limited and they were advised to get the account adjusted failing which the OBC was to initiate legal action. Similarly, endorsement has been made in the letter dated 01.12.2015. Any withdrawal from the account/FDR by appropriation by OBC has to be regarded as violative of Regulation 19 also. In the absence of such a bar, it will not be possible for the Resolution Professional to verify the claim and the object of moratorium as contemplated under Section 14(1) (c) would stand defeated - the OBC has unnecessarily contested this litigation and the Interim Resolution Professional/Resolution Professional was merely performing his duties imposed on him by Section 17(l)(d) of the Insolvency and Bankruptcy Code, 2016. Application dismissed. Issues:1. Premature cancellation of fixed deposit receipts and transfer of proceeds.2. Rejection of claim by the Oriental Bank of Commerce (OBC) and request to be a member of the Committee of Creditors (CoC).3. Invocation of bank guarantee, appropriation of fixed deposit amounts, and compliance with Insolvency and Bankruptcy Code.Issue 1: Premature Cancellation of Fixed Deposit Receipts and Transfer of ProceedsThe Resolution Professional (RP) filed an application seeking directions for the Oriental Bank of Commerce to cancel fixed deposit receipts and transfer the proceeds to a specified account. The RP also requested the balance in the current account of the Corporate Debtor to be remitted to another account. The RP and CoC desired the discontinuation of fixed deposits, with instructions issued to OBC for the same.Issue 2: Rejection of Claim by OBC and Request to Join CoCOBC filed an application to set aside the RP's order rejecting its claim of a substantial amount. OBC sought acceptance of its claim and to be included as a member of the CoC. OBC claimed that the bank guarantees were invoked, leading to the appropriation of fixed deposit amounts.Issue 3: Invocation of Bank Guarantee and Compliance with Insolvency and Bankruptcy CodeThe case involved the invocation of bank guarantees by OBC and subsequent appropriation of fixed deposit amounts. The Tribunal analyzed the letters indicating the invocation of guarantees and the appropriateness of such actions post the initiation of Corporate Insolvency Resolution Process (CIRP). The Tribunal emphasized the importance of compliance with the moratorium under Section 14 of the Insolvency and Bankruptcy Code.The Tribunal, after considering the arguments, found merit in the RP's application and dismissed OBC's claim. It was established that the endorsements in the letters did not constitute a valid invocation of the bank guarantees. The Tribunal highlighted the prohibition on withdrawing cash from the Corporate Debtor's accounts post-CIRP initiation. The judgment referenced relevant legal precedents and regulations to support the decision. OBC's contestation was deemed unwarranted, and the RP's application was allowed, with costs awarded to the RP.This detailed analysis of the judgment showcases the intricate legal considerations and interpretations made by the Tribunal concerning the premature cancellation of fixed deposit receipts, rejection of claims, invocation of bank guarantees, and adherence to the provisions of the Insolvency and Bankruptcy Code.
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