Lein in Corporate Debtor prior to CIRP cannot continue after Moratorium imposed u/s 14of IBC: NCLAT [Read Order]
Lein in Corporate Debtor prior to – CIRP cannot continue after Moratorium imposed – IBC – NCLAT – TAXSCAN
Lein in Corporate Debtor prior to – CIRP cannot continue after Moratorium imposed – IBC – NCLAT – TAXSCAN
The National Company Law Tribunal (NCLT), Mumbai Bench, has held that the lien created on the Corporate Debtor’s account prior to initiation of the Corporate Insolvency Resolution Process (“CIRP”) cannot sustain after the moratorium is imposed under the Section 14 of Insolvency Bankruptcy Code (IBC) post-CIRP process.
Mrs. Teena Saraswat Pandey, the Applicant is the Insolvency Professional of M/s S & H Gears Private Limited (“Corporate Debtor”). The Applicant has submitted that even after the erstwhile IRP had published Form A on 18.03.2020, the Respondent issued a notice through its authorised recovery officer on 15.06.2020 to initiate recovery proceedings against the Corporate Debtor.
It was stated that the Respondent had filed its claim vide email dated 01.12.2020 for an amount of Rs.2,98,11,102/- which the erstwhile IRP had accepted vide email dated 01.12.2020. In respect of the said claim, the Respondent had passed multiple orders calling upon the Corporate Debtor to pay the outstanding dues.
The erstwhile IRP had specifically taken the permission of the Committee of Creditors(COC) to operate the current account of the Corporate Debtor which was maintained in HDFC Bank, Dewas Branch for the receipts and payments during the CIRP Period until the new current account was opened.
The applicant had taken over the affairs of the Corporate Debtor. It was brought to the notice of the Resolution Professional that one HDFC Bank Account bearing Account Number 08872320000129 (“Bank Account”) was frozen by the Respondent on 24.08.2018 on the ground that the Corporate Debtor was a defaulter. Hence the bank account was frozen by the Respondent.
The Applicant has submitted that vide emails dated 21.08.2021 and 09.09.2021, she has communicated with the authorized representative of the Respondent and requested the Respondent to release the lien on the bank account in which an amount of Rs.3,81,676.32 was received from the prospective Resolution Applicants during the CIRP.
The Applicant has further submitted that she had sent a legal notice on 30.09.2021 to the Respondent and has mentioned about creation of a lien on the accounts of Corporate Debtor which was under moratorium from 24.01.2020.
It has been submitted that under the provision of IBC 2016 and EPF & MP Act, 1952 the Provident Fund dues are one of the most important dues to be considered by the liquidator and has undoubtedly privilege and preference over the other payments due from the corporate debtor.
The Respondent has further submitted that the dues of workmen have to be given priority under Section 53 of the IB Code and EPF & MP Act. It has further submitted that the EPFO Authority submitted a claim before the IRP/Liquidator but the same has not been allowed by the IRP/Liquidator.
The two-member bench comprising of Shri. Kuldip Kumar Kareer (Judicial Member) and Smt. Anuradha Sanjay Bhatia observed that a moratorium under Section 14 of IBC is imposed post initiation of CIRP to ensure that no depletion of assets takes place and the Corporate Debtor continues as a going concern. It has been held that the moratorium would cover the attachment of the bank account by EPFO. Any lien created before CIRP cannot sustain post-initiation of CIRP to avoid hindering the resolution process.
To Read the full text of the Order CLICK HERE
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