Payments made to vendors after passing of the CIRP order were barred: NCLAT

Case Details: PJ Network (P.) Ltd. v. Pardeep Kumar Lakhani, Resolution Professional of Dion Global Solutions Ltd. - [2022] 138 taxmann.com 29 (NCL-AT)

Judiciary and Counsel Details

• • Anant Bijay Singh, Judicial Member & MS. Shreesha Merla, Technical Member
  • Kaushal Bansal, Adv. for the Respondent.

Facts of the Case

In the instant case, the respondent-IRP took over the affairs of the corporate debtor in terms of section 17 and CIRP Regulations. He, on perusal of the bank account of the corporate debtor, found that even before he took charge of the corporate debtor certain payments had been made by employees of the corporate debtor to vendors/appellants for the services availed by the corporate debtor prior to the CIRP period.

The respondent immediately filed the application under section 60 before the Adjudicating Authority in order to recover said amount illegally transferred to vendors.

The Adjudicating Authority allowed application holding that in terms of section 14(1), corporate debtor or its management or agents cease to exist and only IRP is in control after initiation of CIRP of the corporate debtor. The Adjudicating Authority directed appellant vendors to refund all amount in the account of the corporate debtor under the control of IRP/respondent.

On appeal, it was contended that the appellant was rendering essential services, i.e., ‘Information Technology Services’ and the payments for essential services were an exception to the general moratorium as they fell under section 14(2).

NCLAT Held

The Appellate Tribunal held that since the appellant had not taken plea of section 14(2) before Adjudicating Authority, the issue of whether services rendered by the appellant fell under essential services or not could not be considered at this stage. It was further observed that since all payments were made after CIRP was initiated against the corporate debtor, Adjudicating Authority had rightly ordered to refund all payments received by the appellant.

List of Cases Reviewed

• • Pardeep Kumar Lakhani, RP of Dion Global Solutions Ltd. v. PJ Networks (P.) Ltd. [2022] 138 taxmann.com 28 (NCLT-New Delhi) (para 17) affirmed [See Annex].

List of Cases Referred to

• • Dakshin Gujarat VIJ Co. Ltd. v. ABG Shipyard Ltd. [2018] 93 taxmann.com 384 (NCL-AT) (para 8)
  • M. Ravindranath Reddy v. G. Kishan [2020] 113 taxmann.com 526 (NCL-AT) (para 13)
  • Mykind Vacations (P.) Ltd. v. Dion Global Solutions Ltd. [2020] 120 taxmann.com 179/162 SCL 382 (NCLT – New Delhi) (para 16).