# 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-01725. This case involves an application filed by the Resolution Professional of Ferro Alloys…

- **Court:** NCLT
- **Order date:** 2 Mar 2020
- **Citation:** TCN-2020-NCLT-01725
- **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-fff2c0d3

## Summary

### Background

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

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## Facts

Ferro Alloys Corporation Limited was undergoing 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 unilateral appropriation of the Corporate Debtor's funds during the moratorium period. The NCLT, Kolkata Bench had admitted the company into insolvency under Section 7 of the Insolvency and Bankruptcy Code (IBC), which was upheld by the NCLAT and the Supreme Court. The respondents claimed that the payments were made by the erstwhile Resolution Professional, not appropriated by them. The Adjudicating Authority directed a meeting to resolve the issue, but the meeting failed

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## Issues and analysis

### Issue 1: Whether the respondent banks violated Section 14 of the Insolvency and Bankruptcy Code, 2016 by …

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

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**Reasoning:** The court considered the arguments of both the applicant and the respondents. The

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**Interpretation:** Section 14 is interpreted to mean that any action by creditors to recover dues

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**Application:** The court applied this interpretation to the facts, finding that the actions of

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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 Ap…**: 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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