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TMI Blog2021 (5) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... are not included under section 14 of the I B Code. However, we have to go into the facts of the case before deciding the issue in question. In the present case NEA has given Completion Certificate to the applicant even though there are minor pending works as claimed by the applicant and it is also the fact that the project is in commercial operation by NEA. The Hon'ble Supreme Court in M/S GANGOTRI ENTERPRISES LTD. VERSUS UNION OF INDIA OTHERS [ 2016 (5) TMI 516 - SUPREME COURT ], observed that every case has to be decided with reference to the facts of the case involved therein. Thus, it becomes clear that PBG or regular BG involves only compensation payable to the party, which suffered losses. In the present case it is the contention of the applicant that in absence of invocation of BG by NEA in terms of contract dated 09.09.2011, the question that has to be decided is, can respondent No. 1 invoke BG executed by the Corporate Debtor. Respondent No. 1 has not pointed out that NEA has invoked the BG issued to them. In such case, whether it is correct on the part of respondent No. 1 to invoke BG issued by the applicant, more so when the Corporate Debtor is under CIRP, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank Guarantee on the request of the applicant in favour of respondent No. 1. 4. National (sic, Nepal) Electricity Authority (employer), a corporation incorporated under the law of Nepal has its principal place of business at Kathmandu, Nepal. The employer has awarded contract on 09.09.2011 to design, manufacture, test, deliver, install, complete and commission certain facilities, viz. Damak-Kabel 132 kV transmission to Joint Venture Parties of respondent No. 1/Jaguar Overseas Ltd. and applicant/Aster Pvt. Ltd. Both respondent No. 1 and the applicant have entered into a Joint Venture Cooperation Agreement on 21.09.2010 (ANNEXURE-1), under the name Jaguar Overseas and Aster JV Private Limited and it was incorporated under the law of India. Accordingly a contract agreement dated 09.09.2011 (ANNEXURE-2) has been entered into for supply of towers as described in para (B), page 4. 5. The project involves supplies and services. The applicant is responsible for supply of towers and respondent No. 1 is responsible for supply of other bill of quantities material. (para C, page 4). 6. It was provided in Joint Venture Cooperation Agreement dated 21.09.2010 (Annexure-1) for Advance B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 10.3. It is averred that the Corporate Debtor has not performed its obligations as per the Agreement due to which respondent No. 1 suffered losses. Therefore, respondent No. 1 has invoked BG of ₹ 1,40,42,898/- issued by IDBI vide its letter dated 27.08.2020 (Page 12 of the Counter) on the following grounds: (a) The BG is an independent contract. Respondent No. 2 cannot be stopped from honouring invocation of BG by respondent No. 1. (b) The contention of the applicant that moratorium declared in respect of the Corporate Debtor under section 14(1)(c) of the I B Code prevents invocation of BG has no substance. In this regard it is contended that 'security interest' as defined in section 3(31) of the I B Code does not include a PBG. Thus, in the present case the PBG given by respondent No. 2 in favour of respondent No. 1 is not covered under section 14 of the Code. Therefore, respondent No. 1 is entitled to encash the BG. 10.4. It is submitted that the works enlisted as (a) to (o) in para 22 (page 5 of the Counter) are pending to be executed by the applicant. The applicant is habitual in poor workmanship in every project, due to which it is facing proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. It is averred in para 12 of the Rejoinder that there is no case that the applicant owes any dues either to respondent No. 1 or to employer. There is no case against the applicant that it had ever committed breach of contract. 11.5. It is averred in para 13 (page 8) of the Rejoinder that the Tribunal, vide order dated 04.06.2020 passed in IA No. 337 of 2020 in CP(IB) No. 199/7/HDB/2019, has restrained respondent No. 1 from invoking BG till 12.06.2020. The above order was passed after taking into consideration the peculiar facts involved in the present case. 11.6. As regards section 14 of the I B Code, it is submitted by the applicant/Corporate Debtor that the aim of section 14 of the Code is to protect the Corporate Debtor from any action initiated against the Corporate Debtor and to ensure that the Corporate Debtor continues and moratorium will not prohibit any proceedings, continuance of which is beneficial to the Corporate Debtor. 11.7. Reliance is placed on by the applicant on the following decisions: (i) Order dated 11.12.2017 of the Hon'ble Delhi High Court in OMP (Comm.) 397/2016, in the matter of Power Grid Corporation of India Ltd. Vs. Jyoti Structures L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it is held that a PBG is not covered under section 14 of IBC. (ii) Order of the Hon'ble NCLAT, New Delhi in Company Appeal (AT) (Insolvency) No. 319 of 2018 in the case of GAIL (India) Ltd. Vs. Rajeev Manaadiar Ors. The said case deals with invocation of Performance Bank Guarantee in part and not whole of it. The Hon'ble NCLAT observed that the concerned persons will allow the appellant to extend the period of 'Bank Guarantee' for another six months to ensure completion of the period of 'moratorium'. (iii) Order dated 09.02.2018 of NCLT, Ahmedabad in Nitin Hasmukhlal Parikh (Diamond Power Transformers Ltd.) Vs. Madhya Gujarat Vij Company Limited, in IA No. 340 of 2017 in CP IB No. 28/100/NCLT/AHM/2017, wherein the Tribunal held that, 10. The moratorium order passed by this Tribunal applies in respect of Bank Guarantees other than Performance Guarantees furnished by the Corporate Debtor in respect of its property since it comes within the meaning of 'security interest'. Therefore, Respondent No. 1 is not entitled to invoke Bank Guarantees other than that comes within the meaning of performance Guarantees, during Moratorium pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agreement and narrate those breaches by way of a separate document attached to formal notice of invocation and send it to respondent No. 2/Bank for invocation. In the present case respondent No. 1 has not done so. Relevant BG is reproduced below: At the request of Aster Private Limited, we, IDBI Bank Limited, Specialised Corporate Branch, .... hereby irrevocably undertake to pay you any sum or sums not exceeding in total an amount of ₹ 1,40,42,898/- upon receipt by us of your fist demand in writing accompanied by written statement stating that Aster is in breach of its obligation under the Contract and Joint Venture Cooperation Agreement. Hence formal notice of invocation dated 27.08.2020 is against the terms of said BG as respondent No. 1 could not demonstrate breach of obligation by the applicant. 13.5. The applicant has relied on Order dated 30.08.2019 of the NCLT, Mumbai in the case of EPC Constructions India Limited Vs. Jamnagar Municipal Corporation and others in MA 661/2018 MA 1011/2019 in CP No. 1832/IBCNCLT/MB/MAH/2017; and Order of the Hon'ble Supreme Court dated 05.05.2016 in Civil Appeal No. 4814 of 2016, in the case of M/s. Gangotri Enterprise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that every case has to be decided with reference to the facts of the case involved therein. 19. NCLT, Mumbai in its order dated 30.08.2019, in the case of EPC Constructions India Limited Vs. Jamnagar Municipal Corporation and others in MA 661/2018 MA 1011/2019 in CP No. 1832/IBCNCLT/MB/MAH/2017, has held that, ... ... ... ...invocation of PBG cannot be stayed since as per the proviso (supra) the moratorium does not apply on 'PBG'. But the fact of each case ought to have bearing for applying the provisions of a Statute..... In view of the above decisions it becomes clear that PBG or regular BG involves only compensation payable to the party, which suffered losses. In the present case it is the contention of the applicant that in absence of invocation of BG by NEA in terms of contract dated 09.09.2011, the question that has to be decided is, can respondent No. 1 invoke BG executed by the Corporate Debtor. Respondent No. 1 has not pointed out that NEA has invoked the BG issued to them. In such case, whether it is correct on the part of respondent No. 1 to invoke BG issued by the applicant, more so when the Corporate Debtor is under CIRP, which certainly resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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