Can FDRs kept with bank be treated as asset of Corporate Debtor?
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- Last Updated on 5 March, 2022
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Case Details: Monitoring Agency of Anush Finlease & Construction (P.) Ltd. v. State Bank of India - [2022] 135 taxmann.com 251 (NCLAT- New Delhi)
Judiciary and Counsel Details
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- Anant Bijay Singh, Judicial Member and MS. Shreesha Meria, Technical Member.
- Ashish Verma and Iswar Mohapatra, Advs. for the Appellant.
- Apoorv Sarvaria and RP Vats, Advs. for the Respondent.
Facts of the Case
In the instant case, pursuant to an application filed under section 7, CIRP had been initiated against the corporate debtor and the resolution plan approved by CoC had been approved by the Adjudicating Authority. Prior to insolvency resolution, the corporate debtor had obtained authorisation for 40 export promotion capital goods from the Additional Directorate General of Foreign Trade.
The Corporate debtor maintained Fixed Deposit receipts (FDR’s) with respondent banks against authorisation and licence. Said FDRs were being maintained against bank guarantees issued by the corporate debtor.
The appellant monitoring agency of the corporate debtor requested respondents to release said FDRs but they failed to comply.
Being aggrieved, the appellant filed an application before the Adjudicating Authority but the same was dismissed.
NCLAT Held
On appeal, the NCLAT observed that as per RBI Guidelines and various judgments in this regard margin money is construed as a substratum of a trust created to pay to the beneficiary to whom bank guarantee is given and cannot be treated as an asset of the corporate debtor. Therefore, Adjudicating Authority rightly dismissed the application of the applicant.
Case Review
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- Phoenix ARC (P.) Ltd. v. Anush Finlease & Construction (P.) Ltd. [2022] 135 taxmann.com 250 (NCLT – New Delhi) (para 35) affirmed [See Annex].
List of Cases Referred to
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- Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta [2019] 111 taxmann.com 234 (SC) (para 9)
- Ansal Engineering Projects Ltd. v. Tehri Hydro Development Corpn. Ltd. [1996] 5 SCC 450 (para 34).
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