Bank Deposit In Pursuance of One Time Settlement Proposal Remains Corporate Debtor’s Asset When Settlement Fails: NCLAT Rules Against BOI

The NCLAT ruled that a bank deposit made in pursuance of a one-time settlement (OTS) proposal remains a corporate debtor's asset if the settlement fails. In this case, the Bank of India had argued that the deposit should be treated as the bank’s asset after the settlement agreement was not executed. However, the NCLAT held that the deposit was still part of the corporate debtor’s assets until the settlement was successfully concluded. The ruling emphasizes that assets in dispute should not be transferred until a settlement is finalized, protecting the debtor’s assets during the settlement process. This decision underscores the importance of clear terms in financial settlements under the Insolvency and Bankruptcy Code (IBC).