# In the matter of Zicom Electronic Security Systems Limited

> NCLT judgment dated 2023-04-12. Citation: TCN-2023-NCLT-03859. Nakshatra Asset Ventures Limited filed an application seeking the refund of the Earnest Money…

- **Court:** NCLT
- **Order date:** 12 Apr 2023
- **Citation:** TCN-2023-NCLT-03859
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/zicom-electronic-security-systems-limited-d5d06499

## Summary

### Background

Nakshatra Asset Ventures Limited filed an application seeking the 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, but the Committee of Creditors (CoC) declared it non-responsive and forfeited the EMD. The applicant argued that the forfeiture was unjustified and violated CIRP regulations.

## 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 subsequently a resolution plan, depositing an Earnest Money Deposit (EMD) of Rs. 25,00,000/-. The Resolution Professional (Respondent No. 1) pointed out deficiencies in the plan, and the applicant provided an addendum. However, the applicant failed to provide certain required documents and introduced a condition regarding vacant possession of the Corporate Debtor's assets. The Committee of Creditors (CoC) declared the applicant's plan non-responsive and forfeited the EMD. The applicant contested the forfeiture, arguing that the plan was unconditional and that the respondents

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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:** The RFRP clearly provided for the forfeiture of the EMD amount if the Resolution Plan is

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**Reasoning:** The court reasoned that the applicant was duly sent the Information Memorandum and the

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**Interpretation:** This interpretation emphasizes the importance of adhering to the terms and

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**Application:** In this case, the applicant's resolution plan was deemed non-responsive due to

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## Parties

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

## Timeline

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

## 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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