Case Note & Summary
The appeal arose from the liquidator of M/s. Easun Reyrolle Limited challenging an order from the NCLT that denied his request to encash a Demand Draft of Rs. 84,40,000 issued by the State Bank of India. The liquidator argued that the Demand Draft was part of the liquidation estate under the Insolvency and Bankruptcy Code, 2016 (IBC) and sought directions to deposit the amount into the liquidation account. However, the NCLT had previously noted that a stay order from the High Court of Delhi was in effect, preventing the encashment of the Demand Draft due to ongoing civil proceedings initiated by Bharat Heavy Electricals Limited (BHEL). The NCLT directed the parties to revive the civil suit in the District Court, which the liquidator contested as contrary to the IBC provisions. The Appellate Tribunal found that the NCLT's order was appropriate, as it did not adjudicate the merits of the liquidator's application but rather facilitated the resolution of the injunction issue. The Tribunal dismissed the appeal, emphasizing the need for the District Court to expedite the hearing of the pending suit to resolve the matter effectively.
Headnote
A) Insolvency Law - Liquidation Process - Demand Draft as Asset - Demand Draft issued to Corporate Debtor constitutes an asset under IBC - The Liquidator sought directions for encashment of a Demand Draft, asserting it as part of the liquidation estate. The Tribunal upheld the existing stay order from the High Court, directing the parties to approach the District Court for resolution, thereby facilitating the adjudication process (Paras 2-16).
Issue of Consideration
Whether the liquidator is entitled to encash the Demand Draft despite the existing stay order from the High Court.
Final Decision
The appeal was dismissed, with directions for the parties to approach the District Court for revival of the civil suit and expedite the hearing.
Law Points
- Liquidation process
- Demand Draft encashment
- IBC provisions
- Jurisdictional authority
- Interim orders
