2024 (1) TMI 460 - AT - Insolvency and Bankruptcy

Wrongful and fraudulent invocation of guarantee by the Concessionaire - Invocation of bank guarantee by Concessionaire after termination of the agreement - HELD THAT - The Adjudicating Authority have already granted leave to the Liquidator to proceed in arbitration against the Concessionaire where claim on basis of wrongful invocation of guarantee is also included, the Adjudicating Authority did not commit any error in directing deletion of name of Respondent No. 1 in application under Section 66 of the Code. It is observed that after a decision by the Arbitrator in the arbitration proceeding to be filed by the Liquidator in event facts and findings come in the proceeding which may oblige the Liquidator to file an application under Section 66 against the Concessionaire, the liberty is granted to the Appellant and the deletion of name by the order impugned shall not come into way in filing a fresh application under Section 66 of the Code, if any such circumstance arises. Appeal dismissed.

Summary

Issues involved:
The judgment involves the challenge to an Order passed by the National Company Law Tribunal regarding the deletion of a party from a Section 66 Application under the Insolvency and Bankruptcy Code, 2016.

Details of the Judgment:

Issue 1: Invocation of Bank Guarantee
- The Liquidator challenged the Order deleting the Concessionaire as Respondent No. 8 in the Application.
- The Liquidator claimed the invocation of the bank guarantee after termination was wrongful and fraudulent.
- The Adjudicating Authority believed pursuing two proceedings simultaneously was not permissible.
- The Liquidator had sought approval to initiate arbitration proceedings against the Concessionaire.
- The Adjudicating Authority granted leave for arbitration against the Concessionaire on a previous date.

Issue 2: Arbitration Proceedings
- The Liquidator filed an application seeking authorization to institute arbitration for recovery.
- The Liquidator detailed claims against the Concessionaire, including compensation for illegal termination and wrongful invocation of bank guarantees.
- The claims in the application totaled INR 570.14 Crores.
- The Adjudicating Authority had already granted leave for arbitration against the Concessionaire.

Conclusion:
- The Tribunal dismissed the appeal but granted liberty to the Liquidator to file a fresh application under Section 66 if necessary after the arbitration proceedings.
- The Adjudicating Authority's decision to delete the Concessionaire as a party in the Section 66 Application was upheld.
- The Tribunal observed that the Liquidator could pursue further action if circumstances required, post the arbitration proceedings.