Subject – Insolvency and Bankruptcy Code, 2016
Case – Duncans Industries Limited (RP) (Applicant) Vs ICICI Bank (Respondent)
Tribunal – NCLT, Kolkata
Spirit of the Case – Removal of Lien/ Attachment in the Bank A/c of the Corporate Debtor
Case Summary :
- Application filed by the Resolution Professional (RP) of the Corporate Debtor (CD) under sections 17(1)(d), 17(2)(d) and 23(2) read with section 60(5) of the IBC, 2016 seeking the Hon’ble NCLT to provide direction to ICICI Bank to discharge the lien or attachment over the current account (635405000368) of the Corporate Debtor maintained with ICICI Bank.
Facts of the Case :
1. The Resolution Professional of the Corporate Debtor had intimated the ICICI Bank (Respondent) about the initiation of Corporate Insolvency Resolution Process against the CD. On 28.10.2020, the Resolution Professional had requested the Respondent to remove the lien or attachment over the Current Account (635405000368) of the CD with a request to provide the details/notices of the Statutory Authorities or Financial Institution in respect of which the said lien was marked against the Corporate Debtor. However, there were no such responses from the Respondent.
2. The Respondent had intimated that notice was served to them by the Deputy Commissioner of Income Tax (TDS), directing to debit freeze the account of the CD under section 226(3) of the Income Tax Act, 1961 and requesting the Respondent to make payment of Rs.1,21,39,847 on account of the default made by the CD.
3. Further Intimated that, a letter from EPFO indicating the default made by the Corporate Debtor amounting to Rs.36,66,947 also request to freeze any bank accounts linked with the Permanent Account Number (PAN) of the Corporate Debtor. They have also placed a request to pay the amount of default to EPFO.
4. Considering the Garnishee Order in place, the Respondent had intimated that it could not remove the debit freeze based on the request placed by the Resolution Professional.
5. The Resolution Professional has also confirmed that both the Income Tax Department and EPFO had filed their claims against the Corporate Debtor during the Corporate Insolvency Resolution Process.
Judgement:
1. Section 238 of the Code makes it clear that the provision of the Code will override other laws. Moreover, upon enactment of the Code, several statutes were amended to that effect, Income Tax Act, 1962, being one of them, was also amended vide third schedule of the Code.
2. Where moratorium has been imposed on the assets of the Corporate Debtor under the Code and no action can be taken against its assets under any other statute by virtue of section 238 of the Code
3. The Statutory Authorities should withdraw their direction of attachment from the assets of the Corporate Debtor and Respondent shall de-freeze all the bank accounts of the Corporate Debtor and enable operations.
Note Prepared by
M Karthick
Audit Executive of RVKS and Associates