The court determined that the monitoring agency lacks locust standi post-liquidation, and set-off can be permissible if it qualifies as equitable set-off supported by transactional links.

ORDER

Per: Kuldip Kumar Kareer, Member Judicial.

1. This is an application under Section 60 (5) of the Insolvency and Bankruptcy Code , 2016 (hereinafter referred to as “the Code”) filed by the Applicant being Monitoring Agency of the Corporate Debtor seeking directions to the Respondent, inter alia, to deposit all the amounts earned on the subject FD from the insolvency commencement date (i.e. from 20^th April, 2018) which have been wrongfully adjusted against the interest due on the working capital facility provided by the Respondent Bank, in the TRA Account of the Corporate Debtor bearing A/c No. 0004103000067111 maintained with IDBI Bank.

Case of the Applicant (in brief):

2. On 21^st April 2014, the Corporate Debtor had deposited with the Respondent Bank an amount of INR 6,45,00,000/- (Rupees Six Crores and Fourty-Five Lakhs Only) in a Fixed Deposit bearing A/c No. 495803020003715 (hereinafter referred to as “subject FD”).

3. The Corporate Insolvency Resolution Process (‘CIRP’) was commenced against the Corporate Debtor vide Order of this Tribunal dated 20^th April, 2018.

Thereafter, the resolution plan submitted by one Royale Partners Investment Fund Limited (being hereinafter referred to as ‘RPIFL’ for the sake of brevity) was approved by the CoC in its 18^th meeting held on 10^th January, 2019 with voting share of 73.17%. It is pertinent to note that the Respondent bank voted in favour of the plan. The aforementioned resolution plan was approved by the Hon’ble NCLT on 25.11.2019 in terms of Section 31 (1) of the Code. As per the terms of the approved resolution plan, the Monitoring Agency is to maintain the Corporate Debtor as a going concern till the transfer of business of the Corporate Debtor to RPIFL. Pursuant to the Hon’ble NCLT’s approval on the resolution plan, the 1^st meeting of the Steering Committee occurred on 27.11.2019, wherein the Applicant was appointed as the Monitoring Professional.

4. The Respondent Union Bank of India had submitted its claim under Form C as a ‘Financial Creditor’ for an amount of INR 485,82,00,000/- (Rupees Four Hundred and Eighty-Five Crores and Eighty-Two Lakhs only). The Applicant in his capacity as RP admitted the entire claim of the Respondent. On 28^th March 2012, the Respondent i.e. Union Bank of India had granted working capital facility to the extent of Rs. 475 crores to the Corporate Debtor. A part of the claim of the Respondent Bank was in relation to the interest outstanding on the said working capital facility extended by the Respondent Bank.

5. Prior to initiation of CIRP against the Corporate Debtor, the Respondent Bank used to credit the amount of interest earned on the subject FD to the Cash Credit Account bearing no. 495805010033028 (hereinafter referred to as “CC Account”) to set-off the interest due on the aforesaid working capital facility provided by the Respondent Bank on 28^th March, 2012. The Applicant has observed that even after insolvency commencement date, the Respondent Bank had been crediting the interest earned on the subject FD to the said CC Account. Following are the details of amount credited to the CC Account from the interest earned on the subject FD from 20.04.2018 (i.e. insolvency commencement date) to 25.11.2019 (i.e. approval of the resolution plan by the Adjudicating Authority):

(Ru