2020 (5) TMI 294 - HC - Companies Law

Invocation of Bank Guarantee - petitioner intends to approach the NCLT and seeks an injunction against the IOCL from encashment/invocation of the bank guarantees, forming subject matter of this writ petition, but that, owing to the lockdown, announced by the Central Government, consequent upon the n-COVID-2019 crisis, which is to continue in force till 3rd May, 2020 as of now, he is not in a position to do so - HELD THAT - Issue notice to the respondents to show cause as to why rule nisi be not issued. Renotify on 10th June, 2020 before the Roster Bench.

Summary

Issues:
1. Invocation of bank guarantees by IOCL in relation to the Haldia Refinery Project.
2. Jurisdiction of NCLT in passing orders related to bank guarantees.
3. Impact of lockdown due to n-COVID-2019 crisis on legal proceedings.
4. Stay of encashment of bank guarantees in the present case.

Analysis:
1. The petitioner, acting as a Resolution Professional of a company, filed a writ petition seeking to quash IOCL's actions in invoking bank guarantees related to the Haldia Refinery Project. The petitioner cited unavoidable circumstances due to the n-COVID-2019 pandemic crisis as the reason for approaching the court. The NCLT had previously stayed the encashment of other bank guarantees in a related matter, which was challenged by IOCL before the High Court. The High Court directed IOCL to seek remedies before the NCLAT, thereby allowing the NCLT's order to remain enforced.

2. IOCL moved an application before the NCLT to vacate the interim order, arguing that the NCLT lacked jurisdiction to pass such orders. However, as of the present hearing, the NCLT's order remains in force. The petitioner intended to approach the NCLT for a similar injunction against IOCL but was unable to do so due to the lockdown. The petitioner highlighted the extended closure of NCLT offices and the challenges faced in seeking urgent relief during the lockdown period.

3. The impact of the lockdown on legal proceedings was evident as the petitioner faced difficulties in approaching the NCLT for relief against IOCL's actions. The petitioner's efforts to communicate with the NCLT through email remained unanswered, while IOCL proceeded to invoke and encash certain bank guarantees during this period. The petitioner's plea in the writ petition regarding these bank guarantees became moot due to IOCL's actions and the ongoing lockdown situation.

4. In a related writ petition, the High Court had already stayed the encashment of three other bank guarantees until a specified date. The court was inclined to do the same in the present case but deferred the decision as the respondent sought time to consult with their client. Consequently, the court issued notice to the respondents to show cause and directed them to file a counter affidavit within a specified period. An ad interim order was passed restraining the encashment of certain bank guarantees until the next date of hearing.

Overall, the judgment addressed the complex interplay of legal issues surrounding the invocation of bank guarantees, the jurisdiction of the NCLT, the impact of the pandemic-induced lockdown on legal proceedings, and the stay of encashment of bank guarantees in light of the ongoing circumstances.