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Tribunal permits release of bank account to aid Insolvency Resolution Process The Tribunal allowed the release of a specific bank account held with HDFC Bank during the Corporate Insolvency Resolution Process (CIRP) to facilitate ...
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Tribunal permits release of bank account to aid Insolvency Resolution Process
The Tribunal allowed the release of a specific bank account held with HDFC Bank during the Corporate Insolvency Resolution Process (CIRP) to facilitate the resolution proceedings. The decision aimed to ensure the smooth progress of the CIRP without prejudicing the ongoing investigations and criminal proceedings related to the company. Releasing the bank account was deemed necessary to uphold the objectives of maximizing asset value and restructuring the debtor company as per the Insolvency & Bankruptcy Code, 2016. The Resolution Professional was instructed to update on the Resolution Plan progress, with the matter set for further hearing.
Issues: 1. Release of bank account under attachment during CIRP process.
Analysis: The Tribunal, after considering the facts and relevant case laws cited by the Respondent, decided that the attachment of a specific bank account was hindering the Corporate Insolvency Resolution Process (CIRP). The bank account in question belonged to a company and was held with HDFC Bank in Karnal, Haryana. The Tribunal found that releasing this account was crucial for the completion of the CIRP.
The Competent Authority had initiated action against the company based on complaints from depositors regarding non-refund of deposits, leading to investigations under the Maharashtra Protection of Interest of Depositors in Financial Establishment Act, 1999. While multiple other bank accounts of the company were already under attachment, the Tribunal opined that releasing the HDFC Bank account would not cause prejudice, as the aim was to allow the CIRP to proceed smoothly.
Regarding a previous judgment by the Hon’ble NCLAT in a different case, the Tribunal acknowledged that criminal proceedings were not covered under the moratorium provisions of the I&B Code. However, in the present scenario where criminal proceedings had commenced, the Tribunal emphasized the need to let both insolvency and criminal proceedings run concurrently. Releasing the bank account was deemed essential for the insolvency process to continue effectively, aligning with the objective of maximizing asset value and restructuring the debtor company as mandated by the Insolvency & Bankruptcy Code, 2016.
Consequently, the Tribunal allowed the release of the bank account under attachment, enabling the Insolvency Resolution Professional (IRP) to proceed with the insolvency proceedings. The Resolution Professional was directed to provide an update on the Resolution Plan progress, and the matter was scheduled for further hearing on a specified date.
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