2020 (5) TMI 293 - HC - Companies Law

Invocation of Bank Guarantee - petitioner unable to approach this Court due to COVID pandemic situation - petitioner only seeks a limited amnesty for his client by way of a restraint against the IOCL, from encashing the aforesaid three bank guarantees, till expiry of one week from lifting of the lockdown, imposed by the Central Government, which is presently in force till 3rd May, 2020 - HELD THAT - This writ petition is disposed of by granting limited relief, to the petitioner, to the extent that, till the expiry of period of one week from the lifting of the lockdown, imposed by the Central Government, consequent to n-COVID-2019 pandemic, the IOCL shall remain injuncted from encashing/invoking the aforesaid three bank guarantees, i.e. Bank Guarantee No. 0346415BG0000105 dated 9th December, 2015 for an amount of ₹14,73,82,051/- issued by Respondent No. 2, Bank Guarantee No. 160127IBGA00005 dated 25th February, 2016 for an amount of ₹ 29,47,64,102/- and Bank Guarantee No. 160127IBGA00014 dated 19th April, 2016 issued by Respondent No. 3 for an amount of ₹49,44,58,134/-, till the expiry of one week from the lifting of the lockdown imposed by the Central Government, which is presently in force till 3rd May, 2020.

Summary

Issues:
1. Invocation of bank guarantees by IOCL during the n-COVID-2019 pandemic crisis.
2. Jurisdiction of NCLT to pass orders regarding bank guarantees.
3. Petitioner's inability to approach NCLT due to lockdown restrictions.
4. Request for limited relief against encashment of bank guarantees.

Analysis:
1. The writ petition filed by the Resolution Professional of a company sought to quash communications from IOCL invoking bank guarantees related to a refinery project. The petitioner cited unavoidable circumstances due to the n-COVID-2019 pandemic crisis as the reason for approaching the court. The petitioner highlighted a previous order by NCLT and subsequent court proceedings regarding similar bank guarantees.

2. The respondent, representing IOCL, challenged the jurisdiction of NCLT to issue orders staying the invocation of bank guarantees. Despite IOCL's reservations, the NCLT's order remained in force, preventing IOCL from encashing the bank guarantees. The petitioner intended to seek a similar injunction from NCLT but faced challenges due to lockdown restrictions.

3. The petitioner's counsel requested a limited amnesty to prevent IOCL from encashing the bank guarantees until one week after the lockdown is lifted. The respondent expressed reservations but acknowledged the reasonableness of the request. The court granted the limited relief, emphasizing that it did not imply a judgment on the case's merits.

4. The court disposed of the writ petition by granting the requested relief, specifying the bank guarantees subject to the injunction and the duration of the restraint. The judgment clarified that it did not delve into the case's merits and should not be construed as an opinion on the petitioner's entitlement to an injunction. The court also disposed of related applications in light of the writ petition's judgment.