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Tribunal Orders Bank to Release Rs. 100 Lacs for Debtor's Insolvency Process The Tribunal allowed the application under Section 60(5) of the Insolvency and Bankruptcy Code, directing Bank of India to release funds of Rs. 100 Lacs ...
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Provisions expressly mentioned in the judgment/order text.
Tribunal Orders Bank to Release Rs. 100 Lacs for Debtor's Insolvency Process
The Tribunal allowed the application under Section 60(5) of the Insolvency and Bankruptcy Code, directing Bank of India to release funds of Rs. 100 Lacs held in the "No Lien Account" for the Corporate Debtor's Insolvency Resolution Process, as the amount constituted an asset of the Corporate Debtor to be managed by the Resolution Professional in accordance with the I&B Code.
Issues: Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking direction to release funds for Insolvency Resolution Process (CIRP).
Analysis: 1. The applicant, a Resolution Professional, filed an application seeking direction for the release of Rs. 100 Lacs held in the "No Lien Account" by the respondent, Bank of India, for the purpose of the CIRP of the Corporate Debtor Company, M/S. Actif Corporation Ltd.
2. The Corporate Debtor was under CIRP as per the order dated 26.11.2019, and various financial creditors, including the respondent, had filed their claims.
3. The applicant claimed that despite communication and discussions in the CoC meeting, the respondent did not release the amount of Rs. 100 Lacs held in the No Lien Account, which was a violation of the I&B Code.
4. The respondent argued that the amount was part of a one-time settlement proposal made by the Corporate Debtor, involving a Cheque issued by Avazy Realcon and not the Corporate Debtor. The respondent maintained that the amount was not refundable and did not constitute an asset of the Corporate Debtor.
5. The Tribunal noted that the Corporate Debtor had provided the Cheque to the respondent as part of its commitment towards a resolution plan, with instructions to keep the amount in the No Lien Account until the plan was approved. The respondent had not adjusted this amount in the loan account of the Corporate Debtor before the commencement of CIRP.
6. The Tribunal held that the amount kept in a separate No Lien Account by the respondent was an asset of the Corporate Debtor, as agreed upon by the bank, and should be dealt with by the Resolution Professional as per the provisions of the Insolvency and Bankruptcy Code.
7. Consequently, the Tribunal allowed the application with the above observations and disposed of the matter without any order as to costs.
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