# In the matter of Central Transmission Utility of India Ltd. vs. Summit Binani & Ors.

> NCLAT judgment dated 2024-11-27. Citation: TCN-2024-NCLAT-00062. The appeal was filed by Central Transmission Utility of India Limited (CTUIL) against the…

- **Court:** NCLAT
- **Order date:** 27 Nov 2024
- **Citation:** TCN-2024-NCLAT-00062
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/central-transmission-utility-of-india-ltd-vs-summit-binani-ors-e88368b1

## Summary

### Background

The appeal was filed by Central Transmission Utility of India Limited (CTUIL) against the order dated 09.10.2020 passed by the National Company Law Tribunal (NCLT), Hyderabad, in Interim Application bearing no. 487/2020 in CP (IB) No. 492/7/HDB/2019. The NCLT order pertained to the appropriation of a security deposit by CTUIL after the initiation of the Corporate Insolvency Resolution Process (CIRP) against KSK Mahanadi Power Company Limited (Corporate Debtor). The Corporate Debtor was admitted into CIRP on 03.10.2019.

## Facts

KSK Mahanadi Power Company Limited (Corporate Debtor) is engaged in power generation. It entered into a Transmission Service Agreement (TSA) with Central Transmission Utility of India Limited (CTUIL) on 05.12.2012 for power transmission. CTUIL issued a termination notice to the Corporate Debtor on 01.08.2018 for failing to open a letter of credit. The Corporate Debtor challenged this notice before the CERC, which directed them to open a letter of credit for Rs. 108.44 crores. The Corporate Debtor made a cash deposit of Rs. 108.44 crores in lieu of the letter of credit on 08.02.2019. CIRP commenced against the Corporate Debtor on 03.10.2019. CTUIL filed a claim with the Resolution Professional for Rs. 356.41 crores on 03.01.2020. CTUIL invoked the security deposit of

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## Issues and analysis

### Issue 1: Whether a deposit lying with a third party can be adjusted against pre-CIRP dues by it during the …

**Ratio:** Section 14 of the IBC prescribes a moratorium on the initiation of CIRP proceedings and

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**Reasoning:** The Tribunal reasoned that the moratorium under Section 14 of the IBC aims to protect the

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**Interpretation:** The interpretation of Section 14 of the IBC emphasizes the importance of

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**Application:** In this case, CTUIL's attempt to adjust the security deposit against pre-CIRP

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## Parties

- **Judges:** Rakesh Kuma…; Ajai Das Me…
- **Appellants:** Central Transmissi…
- **Respondents:** KSK Mahanadi…; Summit B…

## Timeline

- **2012-12-05 — TSA Agre…**: KSK Mahanadi Power Co. Ltd. entered into a Transmission Service Agreement (TSA) with…
- **2018-08-01 — Termination…**: CTUIL issued a notice to the Corporate Debtor for termination of the TSA due to…

## 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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