Bank cannot claim Rs. 1 crore from corporate debtor's No Lien Account under Section 18 IBC moratorium

NCLAT dismissed bank's appeal regarding ownership of Rs. 1 crore in No Lien Account. Amount was deposited by corporate debtor for OTS proposal which failed to materialize. Tribunal held that since amount belonged to corporate debtor when CIRP commenced, it became corporate debtor's asset under IRP/RP control per Section 18 IBC. Bank could not appropriate funds due to moratorium. Following precedent, NCLAT confirmed amount rightfully belongs to corporate debtor for CIRP utilization.

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Issues:
1. Release of an amount of Rs. 1 Crore held in the "No Lien Account" by the Appellant.
2. Ownership of the amount in the "No Lien Account" - whether it belongs to the Appellant bank or the Corporate Debtor.
3. Interpretation of Section 18(f) of the Insolvency and Bankruptcy Code, 2016 in relation to assets of the Corporate Debtor.
4. Validity of the claim made by the Bank of India regarding the amount in question.
5. Application of relevant legal precedents and judgments in determining the ownership and utilization of the amount.

Detailed Analysis:
1. The appeal was filed against an order allowing the release of Rs. 1 Crore held in the "No Lien Account" by the Appellant, which was requested for Corporate Insolvency Resolution Process (CIRP) purposes. The Corporate Debtor was admitted into CIRP and the Interim Resolution Professional (IRP) sought the release of the amount, but the Appellant refused.
2. The dispute arose regarding the ownership of the amount in the "No Lien Account." The Adjudicating Authority held that the amount belonged to the Corporate Debtor based on the purpose of payment and the failure of the One Time Settlement (OTS) proposal. The Bank of India claimed ownership, citing the cheque issuer and statutory rights.
3. Section 18(f) of the Insolvency and Bankruptcy Code, 2016 was interpreted to determine the ownership of assets of the Corporate Debtor. The Adjudicating Authority emphasized that the amount paid by the Corporate Debtor for OTS purposes was to be considered an asset of the Corporate Debtor under the Code.
4. The Bank of India argued that the amount was not an asset of the Corporate Debtor, pointing to the cheque issuer and contractual arrangements. However, the Respondent contended that the Bank's conduct of not adjusting the amount in its claim indicated that it remained the asset of the Corporate Debtor.
5. The judgment relied on legal precedents to establish that once CIRP commenced, the amount in question belonged to the Corporate Debtor and could not be appropriated by the Bank. The decision aligned with previous rulings and dismissed the appeal, upholding the Adjudicating Authority's order for the release of the amount for CIRP utilization. The judgment highlighted the importance of adhering to the Code's provisions and relevant legal interpretations in resolving such disputes.

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