9911796707
TMI Blog2021 (1) TMI 1159X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of protecting and preserving the assets of the Company. 2. The Applicant stated that the Financial Creditor viz. IDBI Bank Ltd had filed a petition being numbered as CP(IB) 418/2018 against the Corporate Debtor, i.e. M/S Reliance Naval and Engineering Ltd to initiate Corporate Insolvency Resolution process under Section 7 of 1B Code, 2016, which was admitted on 15.01.2020. 3. The Applicant submits that pursuant to the public announcement, the Respondent herein submitted its claim to the extent of INR 468,55, Rupees Four Hundred Sixty-Eight Fifty-Five Lakhs Ten Thousand Nine Hundred and Sixty-Three) before the IRP in 'Form C' dated 29th January, 2020. The Applicant submits that the entire Claim of the Respondent was duly admitted by the IRP. 4. The Applicant submits that the Corporate Debtor had entered into a contract dated 13th June 2016 for the Normal Refit of INS Savitri with the President of India represented by Admiral Superintend of Naval Dockyard(Visakhapatnam). The Applicant submits that as per the terms of the contract, the Corporate Debtor was required to complete the said refit within 180 (one hundred and eighty) days from the effective date be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 has been attached and marked hereto as Exhibit "I". 9. The Applicant submits that the Respondent, however, failed to extend the Bank Guarantee failing which the Customer invoked and encashed the Bank Guarantee on 29th August, 2019. 10. The Applicant submits that pursuant to the expiry of the warranty period i.e November 15, 2019, the Corporate Debtor vide its letter dated 27th November, 2019 requested the Customer for the refund of the Bank Guarantee amount as the Customer had not filed any claims in the said warranty period against the work done by the Corporate Debtor as per the scope of the Contract. 11. The Applicant submits that simultaneously, the Respondent vide its letter dated 19th December, 2019 also requested the Proforma Respondent No. I (i.e Reliance Naval and Engineering Ltd) for the Refund Amount. The Applicant submits that in light of the same, the Customer vide its letter dated 23rd December 2019 requested the Corporate Debtor and the Respondent to reconcile the dispute in relation to the Bank Guarantee between themselves and accordingly communicate to the Customer along with the details of the bank account wherein the Customer is required to deposit the Ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Refund Amount shall be in trust by the Respondent for and on behalf of the Corporate Debtor and the Respondent shall not be entitled to adjust or dispose of same. A copy of the letter dated 3rd July, 2020 from the Applicant to the Respondent is attached and marked hereto as Exhibit "L". 17. The Applicant submits that vide his letter dated 3rd July, 2020 it was brought to the notice of the Respondent that upon admission of the Company Petition 418 of 2018 vide order dated 15th January, 2020, this Hon 'ble Tribunal has declared moratorium under Section 14 of the Code and the order for moratorium shall have effect from the date of the said order till the completion of the CIRP and therefore, since the said Bank Guarantee has been secured against the Securities as stated above and no specific charge has been created in favour of the Respondent, in this regard, the Respondent shall not dispose or adjust the Refund Amount. The Applicant submits that it was also informed to the Respondent that if the Respondent shall do so, it will tantamount to enforcement of the book debts under the hypothecation agreement which is prohibited during the moratorium period. 18. The Applicant su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the dues of the Respondent is in contempt, violation and breach of Section 14 of the Code for the following reasons: (a). Pursuant to the completion of the work and expiry of the warranty period, the Corporate Debtor had written to the Customer for refund of the Bank Guarantee amount as there were no claims during the warranty period from the beneficiary against the Corporate Debtor with respect to the Project. However, the Respondent had sent a communication to the Beneficiary on 1 9th December, 2019 requesting for refund of the Bank Guarantee amount into the Respondent's designated current account. Accordingly, the Customer vide letter dated 23rd December, 2019 requested the Corporate Debtor and the Respondent to reconcile the conflict amongst themselves regarding which bank account the Refund Amount should be credited and intimate the same to the Customer for the Refund Amount. (b). The Applicant submits that as per Section 14 of the Code, moratorium has been imposed on the Company and therefore transferring, encumbering, alienating or disposing off any of the assets of the Company has been prohibited under the Code. The Applicant submits that Bank Guarantee has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). the Performance Bank Guarantee expired on 31st August 2019. Despite repeated reminders by the Indian Navy, the Corporate Debtor (i.e Reliance Naval and Engineering Limited) failed to extend the Performance Bank Guarantee. It has been recorded in paragraph No. 8(b)(ii) of the Record of Discussions meeting dated 16th July, 2019 (Exhibit-I to the Application) between the Corporate Debtor and Indian Navy that the Corporate Debtor had intimated the Indian Naw that while the Corporate Debtor was endeavoring to complete the process of extending the Performance Bank Guarantee by 16th August, 2019, in the event of the Corporate Debtor being unable to undertake the same, the Indian Navy could, inter-alia, invoke the Performance Bank Guarantee on 17th August, 2019. (ii). Subsequently, due to non-submission of the extended Performance Bank Guarantee by the Corporate Debtor as per the terms of the said Contract, the Indian Navy invoked the Performance Bank Guarantee on 22nd August, 2019. It is needless to state here that, if the Corporate Debtor would have given timely instruction to the Respondent for the renewal of the Performance Bank Guarantee, the Performance Bank Guarantee would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor any funds available in the account of Corporate Debtor, for compliance of the obligations of the Corporate Debtor under the said Contract. Pertinently, in order to meet its obligations under the Performance Bank Guarantee, the Respondent had remitted the said Amount to Indian Navy from its own funds. Accordingly, the Respondent had requested the Indian Navy to refund the said Amount in the UCO Bank Current Account. The refund of the said Amount ought to have remitted by Indian Navy in the UCO Bank Current Account, however, for its procedural ease and convenience the Indian Navy had transferred the refund of the said Amount in the current maintained by the Corporate Debtor. The said Amount was neither an asset of the Corporate Debtor nor a business receivable in the hands of the Corporate Debtor under the said Contract. In view thereof, the Respondent was entitled to claim the said Amount received in the current account maintained by the Corporate Debtor and appropriate it towards the dues in discharge of the Performance Bank Guarantee. (ix). As such, the Respondent vide its emails dated 2nd November, 2020 and 3rd November, 2020, informed the Applicant that the Respondent had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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