# In the matter of Ferro Alloys Corporation Ltd. CA (IB) No. 92-CTB-2019 Connected with TP  No. 42-CTB-2019 Arising out of CP (IB) 251-KB-2017

> NCLT judgment dated 2020-03-02. Citation: TCN-2020-NCLT-01731. This case involves an application filed by the Resolution Professional of Ferro Alloys…

- **Court:** NCLT
- **Order date:** 2 Mar 2020
- **Citation:** TCN-2020-NCLT-01731
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/ferro-alloys-corporation-ltd-ca-ib-no-92-ctb-2019-connected-with-tp-no-42-ctb-20-5cf2e0ef

## Summary

### Background

This case involves an application filed by the Resolution Professional of Ferro Alloys Corporation Limited under Section 14, Section 17, and Section 60(5) of the Insolvency and Bankruptcy Code, 2016, against Central Bank of India, Syndicate Bank, Bank of India, and State Bank of India. The applicant sought directions against the respondents' unilateral action of appropriating the receivables of the Corporate Debtor deposited in the cash credit and working capital accounts. The NCLT Kolkata Bench had previously admitted the case under Section 7 of the IBC, which was upheld by NCLAT and later by the Supreme Court. Various extensions for the Corporate Insolvency Resolution Process were granted, and a resolution plan was approved on January 30, 2020.

## Facts

Ferro Alloys Corporation Limited faced Corporate Insolvency Resolution Process (CIRP). Rural Electrification Corporation was the Financial Creditor. The Resolution Professional filed an application against Central Bank of India, Syndicate Bank, Bank of India, and State Bank of India, alleging that these banks unilaterally appropriated receivables of Ferro Alloys Corporation Limited during the moratorium period. The NCLT Kolkata Bench had admitted the case under Section 7 of the Insolvency and Bankruptcy Code, which was upheld by NCLAT and the Supreme Court. The banks argued that they had not violated Section 14 of the IBC, as some payments were made by the Resolution Professional. The Adjudicating Authority directed a meeting to resolve the issue, but the banks did not

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## Issues and analysis

### Issue 1: Whether the actions of the respondent banks in appropriating the receivables of the Corporate …

**Ratio:** Section 14 of the Insolvency and Bankruptcy Code, 2016 imposes a moratorium during the

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**Reasoning:** The Adjudicating Authority considered the arguments of both the applicant and the

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**Interpretation:** Section 14 is interpreted strictly to prevent any recovery actions by creditors

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**Application:** The Adjudicating Authority found that the banks' actions of appropriating the

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## Parties

- **Judges:** Sucharit…; Satya Ranjan…
- **Appellants:** Resolution…
- **Respondents:** Ferro Alloys…; Central Bank of…

## Timeline

- **2017-07-06 — NCLT Ord…**: Hon'ble NCLT, Kolkata Bench passed an Order of admission under Section 7 of Insolvency…
- **2017-01-01 — NCLAT Or…**: The Hon'ble NCLAT in Company Appeal (AT) No. 92 of 2017 dismissed the appeal and upheld…

## 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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