# In the matter of Indian Steel Corporation Limited

> NCLT judgment dated 2024-04-03. Citation: TCN-2024-NCLT-01854. The Resolution Professional (RP) for Indian Steel Corporation Limited filed an application…

- **Court:** NCLT
- **Order date:** 3 Apr 2024
- **Citation:** TCN-2024-NCLT-01854
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/indian-steel-corporation-limited-b9427a56

## Summary

### Background

The Resolution Professional (RP) for Indian Steel Corporation Limited filed an application seeking direction to Union Bank of India (the Respondent), a financial creditor, to refund Rs. 2,38,32,505/-. This amount was appropriated and adjusted by the Respondent against outstanding liabilities after the initiation of the Corporate Insolvency Resolution Process (CIRP) and the declaration of a moratorium. The Corporate Debtor was admitted into CIRP on 06.10.2021, and the Applicant was appointed as the Interim Resolution Professional and subsequently confirmed as the RP.

## Facts

Indian Steel Corporation Limited was admitted into CIRP on 06.10.2021. Mr. Ajay Joshi was appointed as the Resolution Professional (RP). Union Bank of India, a financial creditor, had granted credit facilities to the Corporate Debtor via a loan agreement dated 22.06.2013. After the CIRP initiation, the Respondent (Union Bank of India) adjusted Rs. 2,38,32,505/- from the Corporate Debtor's current account against liabilities under Letters of Credit. The RP argued that this adjustment violated the moratorium declared under Section 14 of the Insolvency and Bankruptcy Code. The Respondent claimed that the transaction occurred before the public announcement of CIRP on 08.10.2021 and that the deducted amount was margin money. The RP stated that the intimation of CIRP was

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## Issues and analysis

### Issue 1: Whether the Respondent's action of adjusting Rs. 2,38,32,505/- from the Corporate Debtor's account …

**Ratio:** The moratorium under Section 14 of the Insolvency and Bankruptcy Code prohibits any

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**Reasoning:** The NCLT reasoned that the adjustment of funds from the Corporate Debtor's account after

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**Interpretation:** Section 14 is interpreted to provide an immediate standstill to prevent

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**Application:** The NCLT applied this principle to the facts, finding that the Respondent's

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## Parties

- **Judges:** ANIL RAJ C…; Kuldip Kumar…
- **Appellants:** Ajay J…
- **Respondents:** Indian Steel…; Union Bank of…

## Timeline

- **2013-06-22 — Loan Agre…**: Union Bank of India granted credit facilities to Indian Steel Corporation Limited via a…
- **2021-10-06 — CIRP Init…**: Indian Steel Corporation Limited was admitted into CIRP by the Tribunal. Ajay Joshi was…

## 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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