2022 (5) TMI 1121 - Tri - Insolvency and Bankruptcy

Tribunal orders Respondent to transfer funds to Liquidator under IBC. Registry to return Fixed Deposit receipt.

Mr. Vinod Balachandran, The liquidator of M/s. Albanna Engineering (India) Pvt. Ltd. Versus M/s. Bharat Petroleum Corporation Limited

The Tribunal directed the Respondent to transfer specified amounts to the Liquidator's account for distribution under Section 53 of the IBC, 2016. The ... Utilization of amount for the distribution of assets under Section 53 of the Code - Realization of security interest by secured creditor - HELD THAT:- The Respondent owes a duty to mention the existence of moratorium passed by this Tribunal including the invocation of Bank Guarantee before the concerned Courts. When proceedings of CIRP and Liquidation are pending before this Tribunal, no proceedings can be continued before the Civil Courts without prior approval of this Tribunal. It is seen from the records that the claims were received and a consolidated list of claims of Rs. 78,02,52,535/- was prepared and that the Corporate Debtor does not have any liquidation assets other than the Liquidation Assets i.e., the amount of Rs.25,13,38,078/- and Rs. 5,46,08,871.37/- in relation to the Corporate Debtor under Section 36 of IBC, 2016. There is no asset of the Corporate Debtor available and the only source to be distributed among the claimants to the tune of Rs. 30,59,46,949/- is the Fixed Deposit and interest accrued therein as also the amount retained by the Respondent under the direction of this Tribunal - Application disposed off. Issues Involved:1. Transfer of Fixed Deposit and accrued interest.2. Retention of funds by the Respondent.3. Claims filed by various creditors.4. Pendency of garnishee/injunction orders.5. Application of moratorium under Section 14 of IBC, 2016.6. Distribution of assets under Section 53 of IBC, 2016.Issue-wise Detailed Analysis:1. Transfer of Fixed Deposit and accrued interest:The Liquidator of M/s. Albanna Engineering (India) Pvt. Ltd. sought directions for the transfer of Rs. 25,13,38,078/- deposited as Fixed Deposit and accrued interest, and Rs. 5,46,08,871.37/- retained by the Respondent to the Liquidator's account for asset distribution under Section 53 of the IBC, 2016. The Tribunal directed the Respondent to transfer these amounts to the Liquidator's account within two weeks.2. Retention of funds by the Respondent:The Respondent argued that they had no contractual obligations with the Corporate Debtor or its sub-contractors and that the amounts were attached by various courts through garnishee/injunction orders. The Tribunal noted that the Respondent had retained the amounts under the Tribunal's direction and that the Respondent must transfer the funds to the Liquidator.3. Claims filed by various creditors:The Liquidator received claims from secured financial creditors, operational creditors (government claims), and other operational creditors. The total claims amounted to Rs. 78,02,52,535/-. The Tribunal observed that the Corporate Debtor had no liquidation assets other than the amounts in question, which were to be distributed among the claimants.4. Pendency of garnishee/injunction orders:The Respondent cited pending garnishee/injunction orders as a reason for not transferring the funds. The Tribunal noted that the moratorium under Section 14 of the IBC had ceased, and the Liquidator must appear before the civil courts to vacate these orders. The Tribunal also emphasized that the Respondent should inform the civil courts about the moratorium and the Tribunal's orders.5. Application of moratorium under Section 14 of IBC, 2016:The Liquidator argued that the moratorium continued during the liquidation stage as per Sections 33(5) and 33(6) of the IBC. The Tribunal agreed that the moratorium had ceased but highlighted that the Liquidator must take steps to vacate the garnishee/injunction orders.6. Distribution of assets under Section 53 of IBC, 2016:The Tribunal referred to Section 53 of the IBC, which outlines the order of priority for asset distribution. The Tribunal concluded that the only source of funds for distribution was the Fixed Deposit and retained amounts. Consequently, the Tribunal directed the Respondent to transfer these funds to the Liquidator for distribution as per Section 53.Conclusion:The Tribunal allowed the application, directing the Respondent to transfer the specified amounts to the Liquidator's account for distribution under Section 53 of the IBC, 2016. The Registry was also directed to return the Fixed Deposit receipt to the Respondent for this purpose.