# In the matter of Diamond Power Infrastructure Limited

> NCLT judgment dated 2024-04-24. Citation: TCN-2024-NCLT-01619. The case involves an application filed under Section 60(5)(c) of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 24 Apr 2024
- **Citation:** TCN-2024-NCLT-01619
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/diamond-power-infrastructure-limited-1c211f9a

## Summary

### Background

The case involves an application filed under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016, concerning a dispute over the wrongful deduction of funds by Indian Overseas Bank (IOB) from the account of Diamond Power & Infrastructure Ltd. (DPIL) after the commencement of the Corporate Insolvency Resolution Process (CIRP). The applicant, Consortium of GSEC Ltd. and Mr. Rakesh Shah, sought the reversal of Rs. 1,58,59,294/- deducted by IOB. The CIRP against DPIL was initiated on 24.08.2018, and a resolution plan submitted by GSEC Limited in consortium with Mr. Rakesh Shah was approved on 20.06.2022. The dispute arose because IOB deducted the amount on 27.09.2018, after the CIRP commencement, as an adjustment to its claim against DPIL. DPIL argues this

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## Facts

Diamond Power & Infrastructure Ltd. (DPIL) underwent Corporate Insolvency Resolution Process (CIRP) initiated on 24.08.2018. Consortium of GSEC Ltd. and Mr. Rakesh Shah submitted a resolution plan, approved on 20.06.2022. Indian Overseas Bank (IOB) deducted Rs. 1,58,59,294/- from DPIL's account on 27.09.2018, after CIRP commencement. DPIL requested bank statements and details of fixed deposits from IOB, which IOB provided on 24.01.2023. DPIL sent emails and a legal notice to IOB, seeking reversal of the deduction, but received no satisfactory response. IOB claimed the deduction was for margin money related to bank guarantees invoked before CIRP. IOB argued the margin money was held in trust for bank guarantee beneficiaries and not part of DPIL's assets. The

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## Issues and analysis

### Issue 1: Whether the deduction of Rs. 1,58,59,294/- by Indian Overseas Bank (IOB) from the account of …

**Ratio:** The ratio is based on the principle that once CIRP is initiated, any deduction from the

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**Reasoning:** The Tribunal reasoned that the deduction occurred after the CIRP commencement, violating

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**Interpretation:** The interpretation is that Section 14 of the IBC imposes a moratorium that

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**Application:** The ratio and reasoning apply to the specific facts because IOB deducted the

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## Parties

- **Judges:** SHAMMI…; SAMEER…
- **Appellants:** Consortium of…
- **Respondents:** Diamond Power &…; Indian Overseas…

## Timeline

- **2018-08-24 — CIRP Init…**: Corporate Insolvency Resolution Process (CIRP) initiated against Diamond Power &…
- **2018-09-27 — IOB Dedu…**: Indian Overseas Bank (IOB) deducted Rs.…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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