The court affirmed that the moratorium under the IBC remains effective, preventing lenders from appropriating funds from the corporate debtor during this period.

ORDER

All these Appeals have been filed against the same order of the Adjudicating Authority (National Company Law Tribunal) Mumbai Bench, Court III dated 01.10.2024 in IA No.4844 of 2023, IA No.126 of 2024 and IA No.57 of 2023. All the above Appeals have been filed by the Financial Creditors of the Corporate Debtor except Company Appeal (AT) (Insolvency) No.1978- 1979 which has been filed by the Resolution Professional of the Corporate Debtor- Siti Networks Limited. We shall notice the facts and parties from Company Appeal (AT) (Insolvency) No.1975 of 2024.

2. Brief facts giving rise to these Appeals are:-

2.1. On an application filed under Section 7 of the IBC, CIRP against the Corporate Debtor has commenced by order dated 22.02.2023 passed by the Adjudicating Authority. The Respondent No.11- Ms. Shilpi Asthana, one of the members of the suspended Board of Directors filed a Company Appeal (AT) (Insolvency) No. 274 of 2023 challenging the order dated 22.02.2023. In the Company Appeal, an interim order to the effect “in the meantime, operation of the impugned order shall remain stayed” was passed by this Tribunal on 07.03.2023. After the interim order, the management of the Corporate Debtor was taken over by the board of management. The board of management informed the financial creditor on 10.03.2023 that they had taken over the control and management of the corporate debtor. Respondent No.6- IndusInd Bank filed Civil Appeal No.1871 of 2023 before the Hon’ble Supreme Court challenging the interim order dated 07.03.2023. The Hon’ble Supreme Court, however, dismissed Civil Appeal No.1871 of 2023 on 24.03.2023. Appellant on 31.03.2023 appropriated funds from the accounts of the Corporate Debtor towards its dues and entitlements. In the Joint Lender’s Meeting held on 26.04.2023, Corporate Debtor requested the lenders to permit release of payments to its operational creditors including payment in respect of debts due before the admission order. In the JLM, all lenders also took an objection to Appellant’s act of appropriating funds. In another JLM held on 04.05.2023, lenders requested the Appellant not to appropriate funds from the corporate debtor’s account on the ground that all lenders had a pari passu charge over the cash flows of the corporate debtor. Respondent No.11 filed an application IA No.2138 of 2023 before this Tribunal seeking certain clarifications and direction that preferential payment by a lender to itself during pendency of the Company Appeal shall be reversed. The said application was subsequently dismissed as not pressed.

2.2. IA No.2340 of 2023 was filed for seeking impleadment of the Appellant and the Respondent No.3 in the Company Appeal. Impleadment Application was subsequently amended for impleading all lenders i.e. Appellant, Respondent No.1 and Respondent Nos.4 to 7 as parties to the Company Appeal. On 31.05.2023, Contempt Case was dismissed as withdrawn. Appellant further appropriated funds from the corporate debtor’s account towards its dues and entitlements on 01.06.2023. Further, on request of Respondent Nos.3 to 6 who also had similar contractual rights as the Appellant, the Appellant released funds in favour of the Respondent Nos.3 to 6. Suspended Director filed an Additional Affidavit in the IA praying that the Appellant and the Respondent Nos. 3 to 6, who had appropriated funds from the account of the Corporate Debtor, be directed to reverse such transactions. On 12.06.2023 Appellate Tribunal passed an order directing the Appellant and the Respondent No.3 not to withdraw any monies from the account of the corporate debtor. Respondent No.11 challenged the order dated 12.06.2023 before the Hon’ble Supreme Court by filing Civil Appeal No.4110 of 2023 which was dismissed by the Hon’ble Supreme Court on 07.07.2023 noticing that the IA was coming up for hearing before the Appellate Tribunal. Other IAs were filed by the suspended director before the Adjudicating Authority. On 10.08.2023, this Tribunal dism