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IRP nod must for recovering money from defaulter's bank account: NCLAT

Issue was raised in a hearing related to Indian Overseas Bank's plea against Amtek Auto

Press Trust of India  |  New Delhi 

law, court, insolvency

The NCLAT has said financial creditors cannot recover any amount from a defaulter's bank account without the nod of the (IRP) during the corporate resolution process.

Declining relief to the (IOB) against Amtek Auto's Dinnkar T Venkatsubramaniam, the National Company Law Appellate Tribunal (NCLAT) said that once moratorium is declared, financial institutions have to act "on the instructions of IRP" with respect to the corporate debtor's account.

"Once moratorium has been declared it is not open to any person including 'Financial Creditors' and the appellant bank (IOB) to recover any amount from the account of the 'Corporate Debtor', nor it can appropriate any amount towards its own dues," said the NCLAT bench headed by Chairperson Justice S J Mukhopadhaya.

The appellate tribunal said Section 17 (1)(d) of the and Code says that financial institutions maintaining the accounts of the corporate debtor have to act on the instructions of the in relation to such accounts and furnish all information relating to it.

"We find no merit in this appeal, therefore, we are not inclined to interfere with the impugned order dated October 13, 2017," it said.

The NCLAT was hearing the plea of IOB, which is one of the financial creditors of debt-ridden auto component maker

It holds 4.08 per cent of the total value of the financial debt.

However, it granted 'liberty' to raise its claim before the and "request him to allow it to be a member of the Creditors Committee which should be considered in accordance with law."

Earlier, the adjudicating authority had also rejected IOB's contentions, following which it approached NCLAT.

defaulted on repaying Rs 824-crore granted by a consortium of lenders, led by Corporation Bank.

In July this year, the Chandigarh bench of the National Company Law Tribunal (NCLT) had accepted the proceedings against initiated by the consortium of banks led by Corporation Bank.

First Published: Sun, November 19 2017. 18:32 IST