NCLT Indore-1 (30.03.2023) In IDBI Bank Ltd. Vs. Bhatia Global Trading Ltd [IA/54(MP)2023 & IA/59(MP)2023 in TP 162 of 2019 [CP(IB) 18 of 201] held that;
In a case where the trustee or the beneficiary of a particular trust make a claim against an asset held by the Corporate Debtor in trust, it cannot be inferred that the amount or the asset would be treated as a part of the assets of the Corporate Debtor and would be dealt with in accordance with the provisions of Section 53 of IBC, 2016.
Excerpts of the order;
IA/154(MP)2022 The prayer made in the IA reads thus:-
“b) Your Lordship may be pleased to direct the Respondent herein to transfer the amount of Rs. 6,88,16,906/- (Rupees Six Crores Eighty Eight Lakhs Sixteen Thousand Nine Hundred and Six Only) along with interest lying in the separate interest bearing account maintained by the Respondent herein as per directions of this Hon’ble Tribunal in its order dated 25.06.2018 passed in IA No. 119 of 2018 in the liquidation estate of the Corporate Debtor;
c) Your Lordship may be pleased to permit the Applicant-Liquidator to distribute the aforesaid amount as received from the Respondent herein (including interest) to the Stakeholders as per Section 53 of the Insolvency and Bankruptcy Code, 2016 once, the same is received from the Respondent herein.”
As we can say from the captioned prayer, the Applicant has sought issuance of a direction to Respondent to transfer the amount of Rs. 6,88,16,906/- along with the interest in a separate interest bearing account maintained by the Respondent as per the direction given by this Tribunal in terms of the order dated 25.06.2018. As has been espoused by the Applicant in the application, the amount of Rs. 6,41,64,162/- referred in the application constitute part of the assets of the Corporate Debtor, thus, needs to be utilized in terms of the provisions of Section 53 of IBC, 2016.
Per contra, learned counsel for the Respondent (Union Bank of India) submitted that in terms of the order dated 28.04.2017 passed by the Hon’ble High Court of Mumbai/Bombay, the amount was deposited with prothonotary/senior-master in trust for the benefit of Union Bank of India. According to him, at that point of time, the CIRP had not even commenced and subsequently in terms of the order dated 25.06.2018, the amount was shifted to Escrow Account. In his submission, even when an application was moved for clarification of order dated 25.06.2018, this Tribunal passed the order dated 03.06.2022 making it clear that the order dated 25.06.2018 was clear and no further clarification was required.
We have heard the learned counsels for the parties and perused the record.
As can be seen from the letter dated 14.12.2016 written by the Union Bank of India to the Corporate Debtor, the goods supplied to the Corporate Debtor at the strength of letter of credit were held to be kept in the trust for the Union Bank of India.
It was the proceed of these goods, which were kept in the trust account with prothonotary of the Hon’ble Mumbai High Court. The same amount was kept in Escrow Account and was not treated as a part of the assets of the Corporate Debtor.
In terms of the provisions of Section 36(4)(a)(i) of IBC, 2016, the amount kept by the Corporate Debtor in the trust cannot be treated as a part of the assets of the Corporate Debtor in any manner. Section 36(4)(a)(i) of IBC, 2016 reads thus:- “the following shall not be included in the liquidation estate assets shall not be used for recovery in liquidation- (a) assets owned by a third party which are in possession of the corporate debtor including- (i) assets held in trust for any third party.” From the aforementioned, it is apparent that the assets held in trust for third party cannot be treated as liquidation estate asset.”
In the present case, the situation is further different and peculiar i.e., it was before the commencement of the CIRP when the Hon’ble High Court could admit the lien of UBI over the amount in question and directed the same to be kept in the trust.
Even in the aforementioned letter of UBI also, it was clearly provided that the goods to be supplied to the Corporate Debtor were to be held in the trust for the Respondent. Even this Tribunal also did not arrive at any conclusion that the amount could be treated as a part of the assets of the Corporate Debtor.
The best argument put forth on behalf of the Liquidator is that the amount could be included as a part of the claim of the UBI qua the Corporate Debtor.
In a case where the trustee or the beneficiary of a particular trust make a claim against an asset held by the Corporate Debtor in trust, it cannot be inferred that the amount or the asset would be treated as a part of the assets of the Corporate Debtor and would be dealt with in accordance with the provisions of Section 53 of IBC, 2016.
In a situation like the present one, the proposition which would arise to be determined is, “whether certain amount which was never given by the Claimant to the Corporate Debtor or which is never due to the Claimant against the Corporate Debtor can be claimed as the debt or loan by the Claimant.” The apparent answer would be in negative.
The argument that the amount held in the Escrow Account/with prothonotary as an amount payable to the UBI as proceed of the goods supplied to the Corporate Debtor at the strength of letter of credit need to be treated as a part of the assets of the Corporate Debtor cannot be countenanced. It is not the case of the applicant that the Corporate Debtor had paid for the goods supplied to it.
In our considered view, the plea raised in the IA is not tenable and is liable to be nixed. IA is accordingly dismissed. No cost.
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