National Company Law Appellant Tribunal, Chennai: The Bench of M.V. Venugopal, J. Judicial Member, and Kanthi Narahari, Technical Member has held that a Resolution Professional under Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016 (hereinafter as IBC) is only an authority to exercise control over Bank Accounts operated by the ‘Corporate Debtor’. He cannot freeze the ‘Bank Accounts’.

Facts of the case

The Appellant, Corporate Debtor, is a Real Estate Developer. The Corporate debtor had taken a loan from a bank to complete the construction of a multi-storied housing complex at Perungudi, Chennai. A Resolution Professional was appointed as the appellant defaulted on payments against the loan amount. Resolution Professional issued a letter to the bank for freezing bank accounts belonging to the appellant that was being utilised for the real estate project. The appellant filed a company petition before the National Company Law Tribunal, Chennai (NCLT, Chennai). NCLT, Chennai ordered to release 50% of the amount available in the Bank Accounts. Therefore, the Appellant filed the present company appeal.

Analysis and Decision

The Bench observed that as per Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016 an interim resolution professional can take control and custody of the assets over which the corporate debtor has ownership rights. Therefore, the Bench held that a resolution professional under the law can only exercise authoritative rights over the bank accounts held by the corporate debtor, he cannot order the bank authorities or any other financial institution to freeze the bank accounts of corporate debtors.

Hence, the impugned order given by NCLT, Chennai was set aside.

[Beauty Etiole Pvt. Ltd. v. C. Sanjeevi, 2022 SCC OnLine NCLAT 308, decided on 07-06-2022]

Advocates who appeared in this case :

Mr. Ramakrishnan Viraraghavan, Senior Counsel, Mr. Chetan Sagar, Advocates, for the Appellant;

Ms. M. Savitha Devi, Advocate, for the Respondents.

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