Pre-CIRP security deposit adjustment and moratorium limits: later accounting entries cannot undo a settled resolution plan basis.

A competent authority's pre-CIRP decision to appropriate a security deposit was treated as the operative act, so later bill entries and Form-B recording that adjustment were only consequential accounting treatment and did not amount to a prohibited post-moratorium appropriation under the Insolvency and Bankruptcy Code. The disconnection notice under the Electricity Act did not displace that separate adjustment decision. The record further showed that the resolution professional accepted the respondent's net claim, the information memorandum and resolution plan proceeded on that basis, and the approved plan had already been implemented, making reopening of the adjustment impermissible because it would disturb settled commercial terms. The challenge to the alleged post-CIRP appropriation therefore failed.

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Issues: Whether the respondent unlawfully appropriated the corporate debtor's security deposit and adjusted CIRP-period payments towards pre-CIRP dues in violation of the moratorium under the Insolvency and Bankruptcy Code, 2016.

Analysis: The disputed adjustment turned on the date on which the security deposit was decided to be appropriated. The internal office note dated 14.12.2022, signed by the competent authority, was treated as the operative decision for adjustment, while the later reflection of the adjustment in the bill dated 02.01.2023 and in Form-B dated 06.01.2023 was regarded as consequential accounting treatment. The disconnection notice under Section 56 of the Electricity Act, 2003 was held not to negate the separate adjustment decision. The record also showed that the resolution professional admitted the respondent's net claim, the information memorandum and resolution plan proceeded on that basis, and the resolution plan had already been approved and implemented. In that context, reopening the adjustment claim was held to impermissibly disturb the settled commercial terms of the approved resolution plan.

Conclusion: The alleged post-CIRP appropriation was not proved, and the challenge to the adjustment failed.

Ratio Decidendi: Where a competent authority's decision to adjust a security deposit is taken before commencement of CIRP, subsequent accounting entries do not constitute a prohibited post-moratorium appropriation, and a settled claim reflected in and acted upon under an approved resolution plan cannot be reopened merely to alter the plan's financial basis.

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