Union Bank of India Vs Rolta India Limited (NCLT Mumbai)
National Company Law Tribunal (NCLT) in Mumbai has dismissed an application filed by the Resolution Professional of Rolta India Limited, ruling that a bank can classify a corporate debtor’s account as fraud during the pendency of a Corporate Insolvency Resolution Process (CIRP). The NCLT stated that the moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC) does not bar such a classification.
The application was filed against Union Bank of India, which had classified Rolta India’s account as fraud. The Resolution Professional argued that this action contravened the moratorium in effect and could impede the conclusion of the CIRP, which has a resolution plan already approved by the Committee of Creditors.
After reviewing the matter, the NCLT concluded that Section 14 of the IBC protects the corporate debtor’s assets but does not prevent banks from identifying and classifying a fraudulent account. The tribunal viewed the classification as an administrative decision separate from the CIRP. According to the NCLT, the bank’s action does not qualify as a suit, proceeding, or a security enforcement action that would be restricted by the moratorium. The NCLT clarified that its role is to ensure the integrity of the CIRP, not to interfere with a bank’s independent classification of an account.
