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TMI Blog2020 (10) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... has provided certain services including 2G Spectrum Licences to the Corporate Debtor. The Bank of Baroda as one of the Financial Creditors had issued certain bank guarantees in the nature of performance bank guarantees and financial bank guarantees on behalf of the Corporate Debtor to the Respondent No. 1 for securitization of Usage Charges in different parts of the Country in terms of licence agreement. 3. The State Bank of India preferred an Application under Section 7 of Insolvency and Bankruptcy Code (the Code) against the Corporate Debtor seeking initiation of Corporate Insolvency Resolution Process (CIRP). Simultaneously the SBI had also moved various Applications under Section 7 of the Code against other Companies of the Videocon Group. 4. This Tribunal by order dated 8th August, 2019 directed consolidation of 13 out of 15 Videocon Group Companies and admitted the Company Petitions against them. It appointed Mr. Mahender Khandelwal as the Interim Resolution Professional (IRP). The consolidated Committee of Creditors (COC) held its first meeting on 16th September, 2019 with requisite majority resolved to replace the IRP with the present Applicant as the Resolution Professi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor would be doubly liable for the amount. First, as a part Respondent no. 1's claim against it and secondly as part of Respondent no. 2's claim against it. This would prejudicially impair the financial situation of the Corporate Debtor and deter prospective Resolution Applicants. In the event the bank guarantees are returned by the Respondent no. 1 the corresponding amount thereof would get reduced from the claim of the Respondent no. 2 which ultimately would reduce the claim liability of the Corporate Debtor. In addition, such return would not in any way affect the Respondent no. 1's claim. On account of the moratorium that had kicked in, upon admission of the Insolvency Petition, no action could be taken by the Respondent no. 1 against the Corporate Debtor. Otherwise that would have the effect of eroding the net worth of the Corporate Debtor and would be detrimental to the interest of the creditors. The invocation of the bank guarantees by the Respondent no. 1would not only be prejudicial but would severally undermine the objects to the Code. Anticipating any coercive action by the Respondent no. 1 in invoking the bank guarantees the Applicant came up with the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;] (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. [(2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le NCLAT in the matter of GAIL (India) Limited v. Rajeev Manaadiar & Others (Company Appeal (AT) (Insolvency) No. 319 of 2018 decided on 24.07.2018) referring to section 3(31) of the Code observed thus. "From sub-section (31) of Section 3, it is clear that the 'security interest' do not include the 'Performance Bank Guarantee', therefore, we hold that the 'security interest' mentioned in clause (c) of Section 14(1) do not include the 'Performance Bank Guarantee'. Thereby the 'Performance Bank Guarantee' given by the 'Corporate Debtor' in favour of Appellant - 'GAIL (India) Ltd.' is not covered by Section 14. The Appellant - 'GAIL (India) Ltd.' is entitled to invoke its 'Performance Bank Guarantee' in full or in part." 13. It is thus clear from the finding that bank guarantees would not come within the restrictions imposed upon by section 14 of the Code. Besides bank guarantees represents an independent contract between the Bank and the beneficiary, both the parties would be bound by the terms thereof. The Hon'ble Apex Court in the case of Hindustan Construction Company v. State of Bihar: (1999) 8 SCC 436 held as follows. "Now, a Bank Guarantee is the common mode, of securing ..... 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