“A security deposit remains the property of the entity making the deposit until a valid adjustment is made; once the moratorium under Section 14 IBC kicks in, the recovery of pre-CIRP dues must concede to the procedure envisaged in the IBC.” Supreme Court of India.
Supreme Court, in a significant ruling, held that an operational creditor cannot unilaterally appropriate a cash security deposit towards dues that accrued prior to the commencement of the Corporate Insolvency Resolution Process (CIRP).
A bench of Justice Sanjay Kumar and Justice K. Vinod Chandran observed that such adjustments made after the insolvency commencement date violate the moratorium imposed under Section 14 of the Insolvency and…