Case Note & Summary
This appeal was filed by Geeta Singh against Canara Bank (formerly Syndicate Bank) and another respondent, challenging the impugned order dated 31.05.2024. The order held that despite ample opportunities granted to the appellant to pay the amount under the One Time Settlement (OTS), the appellant could not settle the outstanding claim, and the OTS failed on 07.02.2024. The appellant's counsel submitted that they had deposited an amount of Rs. 5.20 Crores in a no lien account of the respondent bank. However, the respondent bank's counsel submitted that the bank had reversed the entry because the deposit was made through some other account which was not an account of the borrower. The appellant's counsel then submitted that if the CIRP proceedings are stayed, they would be in a position to deposit the amount from its own account within two weeks from the date of the order, in case the earlier entry is reversed. The respondent bank's counsel submitted that the amount so deposited shall not be considered to be deposited against the OTS dated 28.03.2023. The court, considering the submission to settle the matter, directed that an amount of Rs. 5.20 Crores be deposited in a no lien account by the appellant within two weeks from the date of the order, in case the earlier entry is reversed. The court also directed that the amount so deposited shall be considered to be deposited against the OTS dated 28.03.2023.
Headnote
A) Insolvency Law - One Time Settlement - Failure of OTS - The appellant failed to pay the OTS amount despite opportunities, leading to OTS failure on 07.02.2024. The appellant deposited Rs. 5.20 Crores in a no lien account of the respondent bank, but the bank reversed the entry as it was deposited through another account not belonging to the borrower. The appellant offered to deposit the amount from its own account if CIRP proceedings are stayed. The court directed the appellant to deposit Rs. 5.20 Crores in a no lien account within two weeks, and the bank to consider the deposit as per the OTS dated 28.03.2023. (Paras 1-4)
Issue of Consideration
Whether the appellant should be permitted to deposit Rs. 5.20 Crores in a no lien account to settle the OTS and stay CIRP proceedings.
Final Decision
The court directed the appellant to deposit Rs. 5.20 Crores in a no lien account within two weeks from the date of the order, in case the earlier entry is reversed. The amount so deposited shall be considered to be deposited against the OTS dated 28.03.2023.
Law Points
- One Time Settlement (OTS) failure
- deposit in no lien account
- stay of CIRP proceedings
- settlement of outstanding claim
Case Details
2024 LawText (NCLAT) (01) 34
Comp. App. (AT) (Ins) No. 1157 of 2024
Ms. Purti Gupta and Ms. Heena George for Appellant; Mr. Hitesh Sachar for Respondent 1/Canara Bank
Canara Bank (E-Syndicate Bank) & Anr.
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Nature of Litigation
Appeal against order dated 31.05.2024 regarding failure of One Time Settlement (OTS) in insolvency proceedings.
Remedy Sought
Appellant sought to deposit Rs. 5.20 Crores in a no lien account and stay of CIRP proceedings.
Filing Reason
The appellant failed to pay the OTS amount despite opportunities, leading to OTS failure on 07.02.2024.
Previous Decisions
Impugned order dated 31.05.2024 held that OTS failed on 07.02.2024.
Issues
Whether the appellant should be permitted to deposit Rs. 5.20 Crores in a no lien account to settle the OTS.
Whether the CIRP proceedings should be stayed pending such deposit.
Submissions/Arguments
Appellant submitted that they deposited Rs. 5.20 Crores in a no lien account of the respondent bank.
Respondent bank submitted that the entry was reversed as the deposit was made through another account not belonging to the borrower.
Appellant submitted that if CIRP proceedings are stayed, they will deposit the amount from its own account within two weeks.
Respondent bank submitted that the amount shall not be considered against the OTS dated 28.03.2023.
Ratio Decidendi
The court allowed the appellant to deposit the OTS amount in a no lien account to facilitate settlement, directing the bank to consider the deposit against the OTS.
Judgment Excerpts
This appeal is against the impugned order dated 31.05.2024 wherein it was held despite the ample opportunities granted to the appellant while extending the amount be paid under the OTS, the appellant could not settle the outstanding claim and as such the OTS failed on 07.02.2024.
The learned counsel for the appellant submits they have deposited an amount of Rs. 5.20 Crores in no lien account of the respondent bank.
The learned counsel for the respondent bank on instructions submit the bank has already reversed the entry as was deposited through some other account which was not an account of the borrower.
In any case, since there is a submission to settle the matter it would be appropriate if an amount of Rs. 5.20 Crores is deposited in no lien account, by the appellant within two weeks from today as stated, in case the earlier entry is reversed.
Procedural History
The appeal was filed against the impugned order dated 31.05.2024. The matter was heard on 10.06.2024, and the court passed the order directing deposit of Rs. 5.20 Crores in a no lien account.
Acts & Sections
- Insolvency and Bankruptcy Code, 2016:
