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TMI Blog2022 (9) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 18.10.2019 by the Corporate Debtor on the ground that the Appellant has failed to perform its obligations in terms of the Agreements, read with Clause 2 of the Bank Guarantees and also keeping in view that there are no material on record with respect to any fraud, we do not find any illegality or infirmity in the Order of the Impugned Order. The question of fraud has been dealt with by the City Civil Court, which held that there was no element of fraud involved. It is the case of the Resolution Professional that the amount of Rs.2,50,16,972/- be released and permitted to be utilised against the overall outstanding amount of Rs.13,06,30,410/- to ensure that the plant of the Corporate Debtor is kept running as a Going Concern - the amount may be utilised for the functioning of the Corporate Debtor as a Going Concern. Appeal dismissed. - COMPANY APPEAL (AT) (INSOLVENCY) NO. 1089 of 2020 - - - Dated:- 23-9-2022 - [ Justice Anant Bijay Singh ] Member ( Judicial ) And [ Ms. Shreesha Merla ] Member ( Technical ) For the Appellant : Mr. Sameer Jain , Ms. Suvigya Awasthy , Mr. Himesh Thakur , Advocates For the Respondent : Mr. Sumant Batra , Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, M/s Siemens Ltd. issued two Bank Guarantees for a value of Rs. 9,41,66,068/- being BG No. 003GT0217051009 and Rs. 10,90,00,000/- being BG No. 003GT02172230034 on 20.02.2017 and 11.08.2017 respectively. Upon receiving information of the two PBGs, RECL issued a letter dated 02.05.2018, intimating the RP of the assignment of the Corporate Debtor s rights, claims under the PBGs to RECL as stipulated under the Agreements. 5. HDFC Bank/the third Respondent herein was expressly notified about the assignment of the PBGs to the fourth Respondent M/s EDAC Engineering Ltd. The parties agreed that 15.06.2018 would be considered as the deemed date of completion of the Applicant s Performance obligations. 6. It was also agreed that the Corporate Debtor would return the Balance Retention amount of Rs. Two Crores and would return the PBGs of Ten Crores Ninety Lakhs and Nine Crores Forty Lakhs. Despite the above Agreement and satisfactory performance, almost 17 months after the said Agreement, the Corporate Debtor addressed a letter to the third Respondent/HDFC and invoked the PBGs and requested HDFC to credit the monies in the trust account held by the Corporate Debtor . 7. Whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the next date of hearing. We are further informed that the said order was extended periodically and is in operation. As the NCLT is seized of the matter, we permit the petitioner to withdraw these Special Leave Petitions and approach the NCLT for any further orders. (Emphasis Supplied) 10. The Adjudicating Authority disposed of I.A. No. 238 of 2020 filed by the Appellant herein seeking a direction against the Respondents for preservation and refund of the monies under the PBGs currently lying in control and custody of the Second Respondent. 7. This Adjudicating Authority observes that the subject BG's were invoked on 18.10.2019, by MEL for alleged default committed by Applicant herein, which is much prior to the admission of CIRP in respect of MEL, which was on 07.11.2019 only. 8. It is also observed that the BG invoked are irrevocable in nature. This Adjudicating Authority also observes that the Civil Court has categorically observed that there is no element of fraud involved in the issue of invoking BGs. It is also seen that the reliefs granted in IA No's 723 724 of 2019 in COS No. 42 of 2019 namely Continuing the process of invocation of BGs til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant submitted that the suit with a prayer for injunction on invocation and encashment of PBGs, amongst others was filed by the Appellant in Hyderabad City Civil Court on 21.10.2019. The Court passed an interim injunction on 02.11.2019 against MEL from further demanding payment from the Bank and also restrained the Bank for making any payments against the PBGs. MEL filed an Appeal against the Order dated 02.11.2019, but within three days of filing of the Appeal, i.e., on 07.11.2019, MEL was sent to CIRP and moratorium under Section 14 of the Code was declared. On 06.01.2020 during the subsistence of the moratorium, the High Court passed an Order vacating the ad interim relief granted by the Trial Court. It is argued that when the moratorium, was in place, the Hon ble High Court ought not to have passed an Order allowing the Appeal as it is in violation of Section 14 of the Code. The Ld. Counsel for the Appellant relies on the following Judgments in support of this argument: SREI Infrastructure Finance Ltd. vs. Deputy Director, Directorate of Enforcement, NCLT Mumbai, [CP 405/2018] J.M. Financial Asset Reconstruction Company vs. Indus Finance Ltd. CP 405/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r book accounts of the Borrower wherever maintained in relation to the Phase-II Project; (f) A first assignment by way of security of: (i) All the right, title, interest, benefits, claims and demands whatsoever of the Borrower in the Project Documents, duly acknowledged and consented to by the relevant counter parties to the Documents as provided under such Project Documents, or as amended, varied or supplemented from time to time; (ii) The right, title and interest benefits, claims and demands whatsoever of the Borrower in, to and under all the Clearances; (iii) All the right, title, interest, benefits, claims and demands whatsoever of the Borrower in any letter of credit, guarantee, performance bond provided by any party of the Project Documents; and (iv) All the rights, title, interest, benefits, claims and demands whatsoever of the Borrower under all Insurance Contracts and Insurance Proceeds; (g) . MEL had no right to invoke the Bank Guarantees as REC stepped into the shoes of MEL and every reference to the MEL under the Bank Guarantees was to be construed as a reference to REC. As the Bank Guarantees have been wrongfully invoked what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 77 of 2020 before the Adjudicating Authority. It is argued that once the Appellant had withdrawn the SLPs, the High Court has Order attained finality. The High Court Order noted that the Bank Guarantees furnished by the Corporate Debtor to the Appellant are irrevocable and that they were rightly invoked. It is submitted that allowing the present Appeal would permit the Appellant, a back door entry for adjudication of its alleged claim. The Bank Guarantees were invoked prior to the commencement of the CIRP. It is a settled Principle of Law that the Contract of Guarantee is a separate and distinct contract executed between the Creditor and the Guarantor and that the Creditor has an independent right to recover from the Guarantor irrespective of claims being made against the Borrower. Learned Counsel placed reliance on the following Judgements in support of his case: Himadri Chemical Industries Limited Vs. Coal Tar Refining Co. (2007) 8 SCC 110, para 14 Adani Agri Fresh Limited Vs. Mehaboob Sharif and Others (2016) 14 SCC 517 Mahatma Gandhi Sahakra Sakkare Karkhane Vs. National Heany Engg. Coop. Ltd. (2007) 6 SCC 470 Gujarat Maritime Board Vs. Larse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purposes of this sub-Section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regular 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-A) 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 sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court of India. 11.01.2020 The Appellant filed I.A. No. 77 of 2020 seeking direction to deposit the amounts with the Tribunal. 30.01.2020 The Adjudicating Authority restrained the Corporate Debtor from utilising the amounts under the Bank Guarantees. 19.02.2020 The Hon ble Supreme Court permitted the Appellant to withdraw the SLPs in view of the pending I.A. No. 77 of 2020. 18. A Performance Bank Guarantee does not enjoy the benefits of a moratorium under Section 14 of the Code. It is pertinent to mention that the CIRP commenced on 07.11.2019 and notices for invocation were sent prior to the commencement on 18.10.2019. The actual disbursement took place pursuant to the Order of the Hon ble High Court of Telangana. At this juncture, it is relevant to peruse the Order of the Hon ble Supreme Court which is reproduced as hereunder : 19. Having regard to the fact that the Bank Guarantees stood invoked vide letter dated 18.10.2019 by the Corporate Debtor on the ground that the Appellant has failed to perform its obligations in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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