# In the matter of Zicom Electronic Security Systems Limited

> NCLT judgment dated 2024-03-01. Citation: TCN-2024-NCLT-02258. Nakshatra Asset Ventures Limited filed an application seeking a refund of the Earnest Money…

- **Court:** NCLT
- **Order date:** 1 Mar 2024
- **Citation:** TCN-2024-NCLT-02258
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/zicom-electronic-security-systems-limited-5be30d82

## Summary

### Background

Nakshatra Asset Ventures Limited filed an application seeking a refund of the Earnest Money Deposit (EMD) of Rs. 25,00,000/- deposited with Respondent No. 1, the Resolution Professional of Zicom Electronic Security Systems Limited, during the Corporate Insolvency Resolution Process (CIRP). The applicant submitted a resolution plan which was later declared non-responsive by the Committee of Creditors (CoC), leading to the forfeiture of the EMD. The applicant contested the forfeiture, arguing that their plan was unconditional and that the respondents unjustifiably sought additional information to create grounds for forfeiture.

## Facts

The Corporate Insolvency Resolution Process (CIRP) was initiated against Zicom Electronic Security Systems Limited. Nakshatra Asset Ventures Limited submitted an Expression of Interest (EOI) and later a resolution plan, depositing an Earnest Money Deposit (EMD) of Rs. 25,00,000/-. The Resolution Professional (Respondent No. 1) requested additional information regarding the composition and ownership structure of the applicant, as well as authorization from banks. The applicant claimed that providing bank authorization was not applicable as they were using their own funds. The applicant's resolution plan was declared non-responsive by the Committee of Creditors (CoC) on 18.08.2023, leading to the forfeiture of the EMD. The applicant argued that the forfeiture was

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## Issues and analysis

### Issue 1: Whether the forfeiture of the Earnest Money Deposit (EMD) by the Committee of Creditors (CoC) was …

**Ratio:** Regulation 36B (4) of the CIRP Regulations provides that any deposit taken at the time of

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**Reasoning:** The court reasoned that the RFRP clearly provided for the forfeiture of the EMD amount if

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**Interpretation:** The interpretation hinges on the balance between protecting the interests of

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**Application:** In this case, the court applied the ratio by finding that the RFRP did allow

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## Parties

- **Judges:** Reeta K…; Madhu S…
- **Appellants:** Nakshatra Asset…
- **Respondents:** Zicom Electronic…; Huzefa Fakhri…

## Timeline

- **2022-07-29 — Initiation…**: Corporate Insolvency Resolution Process was initiated against the Corporate Debtor by the…
- **2023-04-18 — Submission…**: The Applicant submitted Expression of Interest (EOI) in relation to the Corporate…

## 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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