Encashment of Bank Guarantees during CIRP period - scope of ...

Moratorium in CIRP under IBC Section 14 doesn't cover bank guarantee encashment unless fraud is involved; IOCL can proceed.

June 11, 2021

Case Laws Insolvency and Bankruptcy Tri

Encashment of Bank Guarantees during CIRP period - scope of moratorium u/s 14 of IBC - If bank guarantee is beyond the mentioned amount in the bank guarantee, if the bank guarantee is encashed by indulging into fraud behind the back of the Banks, then it could be understood that this Contract is vitiated the fraud, but in this case, the bank guarantees have remained same and the Corporate Debtor has taken additional financial support to accomplish the contract work. Such availing additional financial support cannot mean that Banks are absolved from the obligation of discharging their part of contract - The Corporate Debtor taking an additional financial support or IOCL not reducing the advance amount from the running bills will not tantamount to indulge in fraud, therefore IOCL is at liberty to encash the bank guarantees. - Tri

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Encashment of Bank Guarantees during CIRP period - scope of ...

Moratorium in CIRP under IBC Section 14 doesn't cover bank guarantee encashment unless fraud is involved; IOCL can proceed.

June 11, 2021

Case Laws Insolvency and Bankruptcy Tri

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