# In the matter of Bank of Baroda Vs. Mr. Sundaresh Bhatt CA(AT)(Ins) No.635 of 2019

> NCLAT judgment dated 2020-02-20. Citation: TCN-2020-NCLAT-00384. Bank of Baroda filed an appeal against an order passed by the Adjudicating Authority in I.A.…

- **Court:** NCLAT
- **Order date:** 20 Feb 2020
- **Citation:** TCN-2020-NCLAT-00384
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/bank-of-baroda-vs-mr-sundaresh-bhatt-ca-69c40dfa

## Summary

### Background

Bank of Baroda filed an appeal against an order passed by the Adjudicating Authority in I.A. No. 303 of 2018 in CP(IB) No. 53 of 2017, related to the Corporate Insolvency Resolution Process (CIRP) of ABG Shipyard Ltd. The Resolution Professional had filed an application seeking directions against the Bank of Baroda to deposit Rs. 9,73,83,818, which the bank had appropriated from fixed deposits maintained by the Corporate Debtor as margin money. The Adjudicating Authority directed the Bank to reverse the entry and return the appropriated amount.

## Facts

ABG Shipyard Ltd. was undergoing Corporate Insolvency Resolution Process (CIRP). Bank of Baroda (Appellant) had appropriated Rs. 9,73,83,818 from fixed deposits (FDs) maintained by ABG Shipyard Ltd. as margin money. The Resolution Professional (RP) filed an application before the Adjudicating Authority, arguing that the appropriation violated the moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC). The RP contended that the Bank was aware of the CIRP initiated by ICICI Bank. The Bank argued that it had an agreement with ABG Shipyard and a bank guarantee was invoked on 17.06.2017, justifying the appropriation. The Adjudicating Authority ruled in favor of the RP, directing the Bank to reverse the appropriation. The Bank appealed this decision,

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## Issues and analysis

### Issue 1: Whether the Bank of Baroda's appropriation of fixed deposits belonging to ABG Shipyard Ltd. was in …

**Ratio:** Section 14 of the IBC imposes a moratorium upon the initiation of CIRP, prohibiting any

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**Reasoning:** The Adjudicating Authority and the Appellate Tribunal both found that the Bank of Baroda

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**Interpretation:** Section 14 is interpreted strictly to prevent any actions that could diminish

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**Application:** Since the Bank of Baroda appropriated the funds after the moratorium was in

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## Parties

- **Judges:** A.I.S. C…; Anant Bijay…; +1 more
- **Appellants:** Bank of B…
- **Respondents:** ABG Shipyar…; Sundaresh…

## Timeline

- **2017-06-17 — Bank Guarantee…**: A Bank Guarantee related to ABG Shipyard…
- **2017-08-01 — CIRP Init…**: Application under Section 7 of IBC admitted,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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