Merely because the Corporate Debtor had enough liquidity to run the Company as a going concern, the act of the Banks to adjust the credit balance in the Cash Credit Account towards the debit balance after CIRP commenced, cannot be justified – Bank of India Vs. Mr. Bhuban Madan RP of Ferroy Alloys Corporation Ltd. – NCLAT New Delhi
NCLAT held that merely because the Corporate Debtor had enough liquidity to run the Company as a going concern, the act of the Appellant Banks to adjust the credit balance in the Cash Credit Account towards the debit balance after CIRP commenced, cannot be justified. If the Appellant’s argument is accepted, then the act of recovering receivables, under the garb of normal course of business will change the status of all the claims which would be in complete violation of Section 14 of the Code. In another issue, release of the title deeds of the Immovable Properties of the Company which are in possession of Bank of India, NCLAT held that the debt has been legally extinguished and therefore withholding of the title deeds preventing the Company from being able to create security interest for securing the non-convertible Debentures issued to the Debenture Holders, in terms of the Plan, is unjustifiable and directed the non-Applicants to release the title deeds for effective implementation of the terms of the Resolution Plan as provided for under Section 31 of the Code.
