2024 (11) TMI 552 - AT - IBC

Tribunal Permits Security Adjustment, Overturns Prior Ruling, Affirms Set-off Rights Under Insolvency Regulations.

Paschimanchal Vidyut Vitran Nigam Ltd. Versus Sandeep Goyal Liquidator for Chaudhary Ingots Pvt. Ltd.

Paschimanchal Vidyut Vitran Nigam Ltd. Versus Sandeep Goyal Liquidator for Chaudhary Ingots Pvt. Ltd. - TMI Issues:1. Appeal against order allowing refund of security amount.2. Challenge to adjustment of security amount in the claim.3. Interpretation of Regulation 29 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.Analysis:The judgment pertains to an appeal filed against an order allowing the refund of a security amount by the Adjudicating Authority. The Appellant had filed a claim with the Liquidator, mentioning the adjustment of the security amount. The Liquidator, however, filed an application leading to the impugned order. The Appellant contended that the Liquidator did not respond to the claim initially. The Respondent opposed this, citing a Supreme Court judgment that disallowed such adjustments. The Appellant clarified that they do not contest the view that provisions of the Electricity Act do not override the Insolvency and Bankruptcy Code (IBC).The crux of the matter lies in Regulation 29 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, which deals with mutual credits and set-off between the corporate debtor and another party. The Appellant had filed a claim form with the Liquidator, adjusting the security amount. The Adjudicating Authority referenced a Supreme Court judgment but misinterpreted it, leading to the erroneous conclusion that the adjustment by the Appellant was impermissible. The Appellate Tribunal clarified that the judgment cited actually permits set-off of accounts in cases of mutual dealings, as allowed under Regulation 29. Therefore, the direction of the Adjudicating Authority to pay a certain amount was found to be unsustainable, and the appeal was partly allowed on this basis.In conclusion, the Appellate Tribunal, after considering the submissions of both parties and examining the relevant regulations, found that the adjustment of the security amount in the claim by the Appellant was permissible under Regulation 29. The Tribunal overturned the Adjudicating Authority's decision and partially allowed the appeal, emphasizing the correctness of the Appellant's position regarding the set-off of mutual credits in this context.