# In the matter of Kitply Industries Ltd. through the Mr. Bijay Mumuria, Resolution Professional Vs 1. Assistant Commissioner of Income Tax (TDS) 2. IDBI Bank Limited IA No. 54 -2018 in CP (IB) -02-GB-2018

> NCLT judgment dated 2018-11-15. Citation: TCN-2018-NCLT-00333. The case involves an application filed in the National Company Law Tribunal (NCLT), Guwahati…

- **Court:** NCLT
- **Order date:** 15 Nov 2018
- **Citation:** TCN-2018-NCLT-00333
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kitply-industries-ltd-through-the-mr-bijay-mumuria-resolution-professional-vs-1-34fab31b

## Summary

### Background

The case involves an application filed in the National Company Law Tribunal (NCLT), Guwahati Bench, concerning the Corporate Insolvency Resolution Process (CIRP) of Kitply Industries Ltd. The CIRP was initiated following an application by IDBI Bank under Section 7 of the Insolvency & Bankruptcy Code, 2016. After the admission of the application, an Interim Resolution Professional (IRP) was appointed, and a moratorium was declared. The Income Tax Department (ITD) had frozen the bank accounts of Kitply Industries Ltd. for outstanding statutory dues, leading the Resolution Professional (RP) to request the ITD to defreeze the accounts to facilitate the CIRP. The ITD did not respond to these requests.

## Facts

Kitply Industries Ltd. is undergoing Corporate Insolvency Resolution Process (CIRP) initiated by IDBI Bank under Section 7 of the Insolvency & Bankruptcy Code, 2016. An Interim Resolution Professional (IRP), Mr. Bijay Murmuria, was appointed, and a moratorium was declared. The Income Tax Department (ITD) had frozen the bank accounts of Kitply Industries Ltd. for outstanding statutory dues before the CIRP commencement. The RP requested the ITD to defreeze the accounts to facilitate the CIRP, citing Section 14 of the Code, which prohibits the continuation of proceedings against the corporate debtor during the moratorium. The ITD did not respond to the RP's requests. The last date of submission of proof of claims was fixed on 2018-05-16. The RP did not receive any

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## Issues and analysis

### Issue 1: Whether the Income Tax Department's action of freezing the bank accounts of the Corporate Debtor …

**Ratio:** Section 14(1)(a) of the Insolvency & Bankruptcy Code, 2016, prohibits the institution

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**Reasoning:** The court reasoned that the freezing of the bank accounts by the Income Tax Department

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**Interpretation:** Section 14(1)(a) is interpreted to provide a standstill period during the CIRP,

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**Application:** The court applied the ratio to the facts by stating that the ITD's freezing of

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## Parties

- **Judges:** P. K. S…
- **Respondents:** Kitply Industries…; Assistant…

## Timeline

- **2016-01-01 — Enactment of Insolvency…**: The Insolvency & Bankruptcy…
- **2017-04-26 — Income Tax Department…**: The Income Tax Department (ITD) made a demand on Kitply Industries Limited for…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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