Case Note & Summary
The case involves an Interim Application filed by Rajendra Prasad Bansal (respondent in the First Appeal) seeking withdrawal of monies deposited by the appellant, Reliance Communication Limited, in the Bombay High Court. The appellant had deposited the amount pursuant to a court order dated 10th December 2012 as a condition for stay of execution of an impugned judgment in favor of the respondent, a former employee. Subsequently, the appellant underwent Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC) from 15th May 2018. The respondent sought to withdraw the deposited amount, but the appellant's Resolution Professional opposed, citing the moratorium under Section 14 of the IBC. The court framed the preliminary issue of whether the respondent could withdraw the monies despite the CIRP. The court analyzed the nature of the deposit, noting that it was made by the appellant as a condition for stay and was held by the court as security for the respondent. The court held that the moratorium under Section 14 IBC does not apply to such deposits because the deposit was not an asset of the corporate debtor but was held for the benefit of the decree-holder. The court allowed the respondent to withdraw the amount, directing the registry to release the deposit with accrued interest to the respondent. The court also clarified that the withdrawal would not affect the pending First Appeal.
Headnote
A) Insolvency and Bankruptcy Code - Moratorium - Section 14 IBC - Withdrawal of Court Deposits - The issue was whether the respondent, a former employee, could withdraw monies deposited by the appellant (corporate debtor) in court as a condition for stay of execution of a decree, after the appellant entered CIRP. The court held that the moratorium under Section 14 IBC does not apply to the withdrawal of such deposits because the deposit was made by the appellant before the CIRP and the money belongs to the respondent as per the decree. The court allowed the withdrawal, noting that the deposit was not an asset of the corporate debtor but was held for the benefit of the decree-holder. (Paras 1-10) B) Civil Procedure - Stay of Execution - Order XLI Rule 5 CPC - Deposit as Condition - The court examined the nature of the deposit made by the appellant as a condition for stay of execution of the impugned judgment. It held that such a deposit is not a payment to the court but a security for the decree-holder, and the decree-holder has a right to withdraw it upon satisfaction of the decree. The court allowed the withdrawal, emphasizing that the deposit was made to secure the respondent's claim and the respondent is entitled to it. (Paras 1-10)
Issue of Consideration
Whether the respondent can be allowed to withdraw monies deposited by the appellant pursuant to the court's order dated 10th December 2012 towards stay of execution of the impugned judgment, given that the appellant is undergoing CIRP.
Final Decision
The court allowed the Interim Application and directed the registry to release the deposited amount with accrued interest to the respondent.
Law Points
- Moratorium under Section 14 IBC does not apply to withdrawal of pre-CIRP court deposits
- Section 14 IBC
- Order XLI Rule 5 CPC
- Section 482 CrPC
