The Court further explained that while a judgment creditor such as Suri would ordinarily be considered an unsecured creditor, the money deposited in court gave him a lien on the funds.

However, ownership of the asset remained with the corporate debtor, Siti Networks, the Court concluded.

“WIf a judgment creditor, entitled to a crystallized sum of money, would ordinarily be an unsecured creditor, on making a cash deposit in court, such judgment creditor would have a security interest in the amount so deposited. However, the asset over which the security interest was created would continue to be an asset of its owner – in this case, the corporate debtor.“, the Court observed.

The Court also emphasized that the legal framework of the IBC takes precedence over traditional concepts of creditor rights. It pointed out that, in the event of insolvency, collateral over a debtor’s assets, including money deposited in court, must comply with the provisions of the IBC.

The Resolution Professional, who is responsible for managing the corporate debtor’s assets, must identify, secure and preserve the debtor’s assets. Any release of assets or distribution of funds would depend on the final resolution of the insolvency proceedings, either through an approved resolution plan or liquidation.