Rakhiben W/o Sanjay kumar Agrawalv.State of Gujarat & Anr

Supreme Court Directs Disbursal of Deposited Amount to IRP, Prioritizes Corporate Insolvency Over Criminal Complaint Claims

Case Snapshot

Case Name: Rakhiben W/o Sanjaykumar Agrawal v. State of Gujarat & Anr.

Citation: 2026 INSC 800

Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran

Date of Judgment: July 31, 2026

Area of Law: Insolvency and Bankruptcy Code, Criminal Law, Moratorium, Anticipatory Bail

The Judgment in One Line

Amounts transferred from a corporate debtor's account to comply with anticipatory bail conditions must be disbursed to the Interim Resolution Professional, not the complainant.

Why This Judgment Matters

This judgment resolves a conflict between criminal proceedings and the Insolvency and Bankruptcy Code, 2016. The Supreme Court held that where a corporate debtor is under a moratorium, any amount deposited in court that originated from the corporate debtor's account must be treated as an asset of the corporate debtor, not as a recovery for the complainant in a criminal case. The Court prioritized the IBC's objective of preserving the corporate debtor's assets for equitable distribution to all creditors, rejecting the complainant's claim to the entire deposit. The judgment clarifies that criminal proceedings cannot be used as a recovery mechanism during the CIRP.

Background

Vimla Fuels and Metals Limited, a corporate debtor, was admitted to the Corporate Insolvency Resolution Process (CIRP) under the IBC. The petitioner, Rakhiben Agrawal (a director of the company), sought anticipatory bail in a criminal case alleging cheating of ₹36 crores related to exports. The Supreme Court, on July 22, 2025, directed her to deposit ₹7.5 crores in two tranches as a condition for anticipatory bail. She deposited ₹5.05 crores, which was transferred from the corporate debtor's bank account. The SLP was disposed of, granting anticipatory bail. The complainant sought withdrawal of the deposited amount. Meanwhile, the Interim Resolution Professional (IRP) filed an application claiming that the amount was an asset of the corporate debtor, and that the moratorium under Section 14 of the IBC barred its disbursal to the complainant.

Issues Before the Court

1. Whether the amount deposited in court as a condition for anticipatory bail, which originated from the corporate debtor's bank account, forms part of the corporate debtor's assets.

2. Whether the complainant in a criminal case can claim disbursal of such amount during the pendency of the CIRP and moratorium.

3. Whether the IRP is entitled to the amount to preserve the assets of the corporate debtor for equitable distribution to creditors.

What Did the Supreme Court Hold?

The Supreme Court allowed the IRP's application and directed the Registry to disburse ₹5,05,00,000 (along with interest) to the IRP. The Court's reasoning was clear and pragmatic:

Amount Transferred from Corporate Debtor's Account: The Court noted that out of the total amount deposited, ₹5.05 crores had been transferred from the bank account of the corporate debtor on August 4, 2025 and August 29, 2025. This fact was undisputed. Thus, the amount was not the personal asset of the accused but belonged to the corporate debtor's estate.

Moratorium Under IBC Applies: Since the corporate debtor was admitted to CIRP, a moratorium under Section 14 of the IBC was in operation. During the moratorium, no creditor can initiate or continue proceedings against the corporate debtor, and no assets of the corporate debtor can be disposed of without the IRP's consent. The complainant, being a creditor (alleged defrauded party), could not claim the amount directly.

Criminal Proceedings Not for Recovery: The Court observed that the deposit was directed in a criminal proceeding to show bona fides for anticipatory bail. The criminal proceeding was not initiated to recover the alleged defrauded amount. Therefore, the complainant could not treat the deposit as a recovery mechanism.

Balance Amount to Complainant: The Court held that while the ₹5.05 crores (company's amount) must go to the IRP, the complainant would be entitled to the balance remaining in the fixed deposit on furnishing a bank guarantee for such balance. This balanced the interests of the complainant while protecting the corporate debtor's assets.

Anticipatory Bail Not Affected: The Court clarified that its order did not intend to interfere with the anticipatory bail already granted. If the accused failed to cooperate with the investigation, the investigating officer could seek custodial interrogation separately.

IRP Entitled to Amount: The IRP was directed to receive the amount to preserve the assets of the corporate debtor and enable the CIRP to proceed seamlessly.

Key Legal Principles

1. Moratorium under Section 14 IBC is sacrosanct — during CIRP, no creditor can claim assets of the corporate debtor, and all assets vest in the corporate debtor's estate for equitable distribution.

2. Assets transferred from corporate debtor's account remain corporate assets — even if used to comply with personal bail conditions, the source determines the ownership.

3. Criminal proceedings cannot be used for recovery — the purpose of criminal law is not to recover money but to punish offences; deposits in criminal cases are for showing bona fides, not for satisfying civil claims.

4. IRP has a duty to preserve assets — the IRP must take custody of all assets of the corporate debtor to enable the resolution process.

5. Complainant's claim is subordinate to IBC process — during moratorium, the complainant must wait for the resolution process or prove its claim before the IRP.

6. Balance may be released on bank guarantee — the Court allowed the complainant to receive the remaining amount on furnishing a bank guarantee, ensuring the amount remains protected.

Important Precedents

The judgment did not cite specific precedents but relied on the general principles of the IBC, particularly the moratorium under Section 14, and the objective of preserving the corporate debtor's assets during CIRP.

Practical Impact

For advocates: This judgment is a crucial reference when disputes arise between criminal courts and insolvency proceedings. It clarifies that the IBC's moratorium takes precedence over claims in criminal cases. Advocates representing IRPs can cite this judgment to protect corporate assets from claims in unrelated criminal proceedings.

For future litigation: Courts will now be more cautious in directing deposits in criminal cases where the source of funds is a corporate debtor under CIRP. The judgment reinforces that such amounts must be returned to the corporate debtor's estate, not the complainant.

May be cited: In any case where an amount deposited in a criminal proceeding is claimed by a complainant, but the source is a corporate debtor under IBC, or where the moratorium under Section 14 IBC is invoked.

Lawcurb Quick Insight

The Court's distinction between the purpose of bail deposits and recovery mechanisms is significant. The deposit was a condition for personal liberty, not a settlement of the criminal claim. Allowing the complainant to appropriate the corporate debtor's assets would undermine the IBC's objective of equitable distribution.

Lawcurb Practice Note

When representing IRPs, immediately bring to the court's attention any amounts deposited in other proceedings that originate from the corporate debtor's accounts. Rely on the moratorium to claim these assets as part of the corporate debtor's estate, ensuring they are not diverted to individual creditors outside the IBC process.

Remember This Ratio

Amounts deposited in court from a corporate debtor's account during CIRP must be disbursed to the IRP, not to the complainant, due to the statutory moratorium.

Exam Lens

Q: What is the effect of the moratorium under Section 14 of the IBC on claims made in criminal proceedings? A: The moratorium prohibits the institution or continuation of proceedings against the corporate debtor and the disposal of its assets. Claims in criminal proceedings cannot be used to recover amounts from the corporate debtor's assets; such assets must be preserved for equitable distribution to all creditors through the CIRP.

Q: Can the complainant in a criminal case seek disbursal of amounts deposited in court for bail conditions? A: No, if the amounts originated from the corporate debtor's account and the corporate debtor is under CIRP. The complainant must prove its claim before the IRP and participate in the resolution process.

Q: What is the duty of the Interim Resolution Professional regarding assets of the corporate debtor? A: The IRP is duty-bound to preserve and protect all assets of the corporate debtor to enable the CIRP to proceed seamlessly and to ensure equitable distribution among all creditors.

Final Outcome

• MA allowed — the IRP's application is granted.

• ₹5,05,00,000 disbursed — the Registry is directed to disburse the amount (with interest) to the IRP.

• Complainant gets balance — the complainant may receive the remaining amount on furnishing a bank guarantee.

• Anticipatory bail unaffected — no interference with the grant of anticipatory bail; investigation can proceed.

• Moratorium upheld — the corporate debtor's assets are protected during CIRP.

• No costs — pending applications disposed of.

Lawcurb Verdict

This judgment is a practical application of the IBC's primacy over other proceedings. By directing the disbursal of the corporate debtor's funds to the IRP rather than the complainant, the Court has upheld the moratorium and the principle that criminal law cannot be used as a recovery mechanism. The balance struck—allowing the complainant to get the remaining amount on bank guarantee—ensures fairness while protecting the corporate debtor's estate. A timely reminder that the IBC's objectives of equitable distribution and asset preservation must be respected.

This report is prepared by Lawcurb for educational and informational purposes only. It is a concise summary of the judgment and should not be construed as legal advice. Readers are encouraged to refer to the original judgment before relying on any legal proposition.