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2025 Supreme(Online)(NCLT) 8110
NATIONAL COMPANY LAW TRIBUNAL
AASHISH KALIA, MEMBER (JUDICIAL), SANJIV DUTT, MEMBER (TECHNICAL)
PRANAV DAMANIA – Appellant
Versus
DEPARTMENT OF GOODS AND SERVICE TAX – Respondent
IN IA (IBC) No.1491 OF 2024 IN CP(IB) No.4304/MB/2019
For the Appellants/Petitioners: Adv. Pawan Kulkarni a/w AVP Partners
For the Respondents: Adv. Amar Mishra a/w SRM Law Associate, Abhay Nevagi and Associates, Adv. Mandar Arvind Lalsare
Recovery actions during the CIRP moratorium are void; funds withdrawn must be refunded to the corporate debtor.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 60(5) - Corporate Insolvency Resolution Process (CIRP) - Recovery of amount during moratorium - Recovery of ₹83,89,000/- from the Corporate Debtor’s bank account by Respondents during moratorium is illegal; such recovery actions are void as per Section 14, which prohibits recovery during CIRP - Recovery amounts must be returned to the Corporate Debtor - Further, freezing of accounts shall be lifted to enable the RP to manage the Corporate Debtor’s operations. (Paras 6.3, 6.4, 6.6, 6.10)
(B) Moratorium under Section 14 - Prohibition on recovery and enforcement actions - Government claims cannot be prioritized over other stakeholders under Section 53 of the Code, thus any recovery during moratorium contravenes the statutory priority mechanism. (Paras 6.6, 6.8)
Facts of the case:
Applicant seeks a refund of ₹83,89,000/- appropriated by Respondent No.1 during the moratorium of Corporate Debtor’s CIRP. The funds were withdrawn without authorization, violating the moratorium in place since the initiation of the CIRP on 07.10.2020.
Findings of Court:
Respondents' actions constituted a breach of Section 14; the recovery was unauthorized and must be reversed.
Issues: The main issues addressed whether statutory authorities can recover during a moratorium and whether freezing bank accounts was permissible.
Ratio Decidendi: The tribunal affirmed that all recovery actions taken during the moratorium are void under Section 14 and any recovery claims must be processed according to the Code.
Result: IA No.1491/2024 stands allowed.
| Table of Content |
|---|
| 1. application for refund filed during moratorium. (Para 1 , 2) |
| 2. context of funds recovery without authorization. (Para 4 , 5) |
| 3. justification of statutory actions discussed. (Para 6) |
ORDER
[PER: Coram]
1. BACKGROUND
1.1 This Application bearing I.A. No. 1491/2024 has been filed on 28.02.2024 under Section 60 (5) of the Insolvency and Bankruptcy Code 2016 (“Code”) read with Rule 11 of NCLT Rules, 2016 by Applicant, Mr. Pranav Damania, Resolution Professional (RP) of Rubique Technologies Private Limited seeking refund of an amount of Rs.83,89,000/-from the Respondent No.1 which was remitted by the Respondent No.2 without any authorization and particularly when the Corporate Debtor was undergoing CIRP. Following reliefs have been sought in the I.A.:-
a) “That this Hon'ble Adjudicating Authority may be pleased to pass an order directing the Respondent No. 1 to refund the amount of Rs. 83,89,000/- (Rupees Eighty-Three Lakhs Eighty-Nine Thousand Only) appropriated by the Respondent No. 1 during moratorium along with interest at the rate of 12% per annum from the date of remittance, i.e., 12 July, 2022 till payment and / or realization to the account of the Corporate Debtor.
b) That this Hon'ble Adjudicating Authority may be pleased to pass an order directing Respondents to de-freeze the accounts of the Corporate Debtor maintained with Respondent No. 2,3 and 4 respectively;
c) For costs d) Any further or other order as this Hon'ble Tribunal deem fit and necessary.”
2. AVERMENTS OF THE APPLICANT/ RP
2.1 CIRP in respect of the Corporate Debtor was initiated by Mr. Salil Shashank Kulkarni through CP (IB) No.4304/2019 which was admitted on 07.10.2020 appointing Mr. Ajay Gupta as IRP. The CoC, comprising the sole Financial Creditor, Blacksoil Capital Private Limited, in its 6th meeting on 05.04.2021 resolved for liquidation, leading to filing of IA No. 1059/2021. Meanwhile, an expression of interest (EoI) was received from Mr. Pravin Kumar Jain and a proposed resolution plan was submitted. However, despite repeated reminders, the erstwhile Resolution Professional neither convened a CoC meeting nor acted on requests to place the plan for consideration, withdraw the liquidation application, or seek extension of CIRP.
2.2 Due to such inaction, the sole CoC member filed IA No. 2470/2023 seeking extension of CIRP and appointment of the Applicant as RP, which was partly allowed on 31.07.2023 appointing the Applicant as RP. Thereafter, the Applicant filed an application on 19.09.2023 seeking dismissal of the liquidation application, extension of CIRP and exclusion of dormant period, which was allowed on 24.01.2024, thereby confirming the Applicant as RP, extending the CIRP, and continuing the moratorium under Section 14 .
2.3 By virtue of the order dated 24.01.2024, the CIRP of the Corporate Debtor stood extended by 60 days and consequently, the moratorium under Section 14 of the Code continued. Under , no suits, recovery actions, transfers, enforcement of security interest, or proceedings under SARFAESI could be initiated or continued during moratorium.
2.4 Respondent No.1 issued a notice in Form GST DRC-13 on 09.06.2022 to the banker of the Corporate Debtor (Respondent No.2) claiming Rs. - 4,33,92,434/- towards pending dues for different periods. Respondent No.2 responded on 13.06.2022 providing account details of four current accounts, only one of which maintained a balance of Rs. 83,89,627.31. The accounts of the Corporate Debtor remained under a “No Debit” status until the full amount under the notice was recovered or a revocation/stay order was received by Respondent No. 2.
2.5 Respondent No.1 thereafter generated a challan dated 05.07.2022 for Rs.83,89,000/-, pursuant to which Respondent No.2 remitted the said amount on 12.07.2022 from the Corporate Debtor’s account. This transaction was undertaken without authorization of the erstwhile Resolution Professional or the authorized signatory and in complete disregard of the morato
