# In the matter of Sandeep Khaitan, Resolution Professional for National Plywood Industries Ltd.  vs. JSVM Plywood Industries Ltd. & Anr.

> SC judgment dated 2021-04-22. Citation: TCN-2021-SC-00048. The case involves a criminal appeal against an order by the High Court of Guwahati, which allowed…

- **Court:** SC
- **Order date:** 22 Apr 2021
- **Citation:** TCN-2021-SC-00048
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/sandeep-khaitan-resolution-professional-for-national-plywood-industries-ltd-vs-j-dbe6a51e

## Summary

### Background

The case involves a criminal appeal against an order by the High Court of Guwahati, which allowed an interlocutory application filed by the Respondent No. 1 to operate its bank account. This occurred during the Corporate Insolvency Resolution Process (CIRP) of National Plywood Industries Limited (NPIL). An application under Section 7 of the Insolvency and Bankruptcy Code (IBC) was admitted against NPIL on 26.08.2019, and the Appellant was appointed as the Interim Resolution Professional (IRP). A moratorium was also imposed. The Respondent No. 1 claimed to be an operational creditor. The former Managing Director of the Corporate Debtor challenged the NCLT order, but the NCLAT dismissed the appeal. The Supreme Court later allowed the appeal and remanded the matter to the

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## Facts

On 26.08.2019, an application under Section 7 of the IBC was admitted against National Plywood Industries Limited (NPIL), and Sandeep Khaitan was appointed as the Interim Resolution Professional (IRP). A moratorium was declared. JSVM Plywood Industries Ltd. & Anr. (Respondent No. 1) claimed to be an operational creditor. The former Managing Director of NPIL challenged the NCLT order. The Appellant alleged that the former Managing Director, in conspiracy with Respondent No. 1, engaged in an illegal transaction of Rs. 32.50 lakhs, violating Section 14 of the IBC. The Appellant filed a cyber complaint and an application under Section 19 read with Section 23(2) of the IBC. An FIR was lodged. ICICI Bank created a lien on Respondent No. 1's bank account. The NCLT

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## Issues and analysis

### Issue 1: Whether the High Court erred in allowing the Respondent No. 1 to operate its bank account during …

**Ratio:** Section 14 of the IBC imposes a moratorium that prohibits transferring, encumbering,

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**Reasoning:** The Supreme Court reasoned that allowing the Respondent No. 1 to operate its bank account

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**Interpretation:** Section 14 is interpreted as a strict prohibition on any actions that could

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**Application:** The Court applied this principle to the facts by modifying the High Court's

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## Parties

- **Judges:** K.M. Jo…; UDAY UMESH…
- **Appellants:** Sandeep K…
- **Respondents:** National Plywood…; JSVM Plywood…

## Timeline

- **2019-08-26 — Admission of Application…**: An application under Section 7 of the Insolvency and Bankruptcy Code was admitted against…
- **2019-08-26 — Appointment of Interim…**: Sandeep Khaitan was appointed as the Interim…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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