Setback for Indian Overseas Bank as NCLAT orders refund of money to Amtek Auto in insolvency case

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New Delhi | Published: November 16, 2017 5:19:27 AM

NCLAT directed IOB to refund the money it had earlier appropriated from Amtek Auto’s current account with it.

NCLT, National Company Law Tribunal, Amtek Auto, insolvency case, Amtek Auto in insolvency case, Indian Overseas BankNCLAT directed IOB to refund the money it had earlier appropriated from Amtek Auto’s current account with it.

Lenders are not permitted to recover their outstanding loans by accessing a defaulter’s bank account during the corporate insolvency resolution process, the National Company Law Appellate Tribunal (NCLAT) said on Wednesday. The appellate tribunal was hearing a case between Indian Overseas Bank (IOB) and Dinkar T Venkatsubramaniam, the resolution professional of Amtek Auto. The two-member bench of the NCLAT, led by its chairperson justice SJ Mukhopadhaya, also directed the public sector lender to refund the money it had earlier appropriated from Amtek Auto’s current account with IOB’s Hosur branch for its loan repayment. The insolvency professional had dragged IOB to the Chandigarh bench of the National Company Law Tribunal (NCLT), citing violation of moratorium issued by the adjudicating authority.

The Chandigarh bench of the National Company Law Tribunal (NCLT) had earlier said it was not required to discuss the matter so minutely because any amount lying in the current account of the corporate debtor (defaulter) has to be placed at the disposal of the resolution professional “without any scope of an adjustment in the manner, the respondent has tried to do”. Following the NCLT order, IOB had approached the appellate authority, which has declined to reverse the order.

Amtek Auto defaulted on repaying Rs 824-crore loans granted by a consortium of lenders, led by Corporation Bank. The company reported a net loss of Rs 1,624 crore in 2016-17 on revenues of Rs 1,950 crore. It is among the 12 companies identified by the Reserve Bank in which banks have an exposure of more than Rs 5,000 crore and more than 60% of which has been recognised as NPAs. The RBI, had on June 13 asked banks to refer these dozen troubled companies — with a combined debt of close to Rs 2.4 lakh crore — to the NCLT, following several failed attempts at loan recovery.

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