Madhya Gujarat Vij. Co. Ltd vs Cma George Samuel Resolution ...

Madhya Gujarat VIJ Company Ltd. ...Appellant

Versus

CMA George Samuel Resolution Professional of Jason Dekor Pvt. Ltd. & Anr. ...Respondents

Present: For Appellant: Mr. Pradeep Mishra and Mr. Daleep Dhyani, Advocates. For Respondents: Mr. Rajendra Beniwal, Mr. Sajal Jain, Mr. Vishal Raval, Mr. Kumar Sumit, Advocates for R-1.

ORDER

(Virtual Mode)

03.02.2022: Heard learned counsel for the Appellant and learned

counsel appearing for Respondent No. 1 - Shri Rajendra Beniwal and none

has appeared for Respondent No. 2. This Appeal has been filed against the

judgment and order dated 06.09.2021 of the Adjudicating Authority (National

Company Law Tribunal) Ahmedabad Court-2 by which Interlocutory

Application No. 486 of 2020 of the Appellant has been rejected.

2. Appellant has filed IA for directing the Resolution Professional and the

Bank to make payment of the Bank Guarantee of Rs.19 Lakhs. The Bank

Guarantee was given by the Corporate Debtor on 03.08.2017 for a period of

two years to secure the electricity dues payable to the Appellant. The

Corporate Insolvency Resolution Process (CIRP) proceedings were initiated

against the Corporate Debtor on 19.12.2019. Immediately after the initiation

of proceedings, on 03.01.2020, the Appellant wrote to the Bank - Respondent

Cont'd.../ -2-

No. 2 for invocation of the Bank Guarantee. Bank on 08.01.2020 replied to

the Appellant in following words:

"Sir,

With reference to the trail mail we have to advise that the Corporate Debtor has been admitted for CIRP by the NCLT. And the RP has informed that the moratorium is in operation. Hence, the bank has been restrained from doing any transaction in this account without the knowledge or consent of Resolution Professional."

3. After refusal of the Bank to invoke the Bank Guarantee, application was

filed by the Appellant before the Adjudicating Authority. Adjudicating

Authority has taken the view that since CIRP proceedings were continuing the

Bank Guarantee cannot be invoked and the application is not maintainable.

The reason given by the Adjudicating Authority is only to the following effect:

"IA No. 486 of 2020 is filed by Madhya Gujrat Vij Company Ltd. directing the RP and Bank to allow them to encash the Bank Guarantee of Rs.19 lakhs. However, moratorium is in existence. In such situation, Bank Guarantee cannot be invoked. Moreover, the Applicant has already submitted its claim to RP. Hence, the application is not maintainable and stands rejected."

4. Learned counsel for the Appellant submits that Appellant has right to

invoke Bank Guarantee which is now settled by this Tribunal vide its judgment

dated 26.02.2021 in 'Bharat Aluminum Company Ltd. Vs. J. P. Engineers Pvt.

Company Appeal (AT) (Insolvency) No. 887 of 2021 -3-

Ltd.' reported in (2021) SCC Online NCLAT 57. This Appellate Tribunal was

considering the same issue in aforesaid case and buy the above judgment laid

down following in paragraph 37:-

"37. With the aforesaid, we hold that the Corporate

Debtor has issued bank guarantee for ensuring the

price of goods. The bank guarantee is irrevocable and

unconditional and payable on demand without

demur. The assets of the surety are separate from

those of the corporate debtor, and proceedings

against the corporate debtor may not be seriously

impacted by the actions against assets of third party

like surety. Bank guarantee can be invoked even

during moratorium period issued under section 14 of

the IBC in view of the amended provision under

section 14 (3)(b) of the IBC."

5. Submission of learned counsel for the Appellant is that the order of the

Adjudicating Authority is unsustainable in view of the law laid down in the

above judgment. We are of the view that above judgment of this Tribunal fully

covers the issue and the order of the Adjudicating Authority deserves to the

set aside in view of the law laid down by this Tribunal in the matter of 'Bharat

Aluminum Company Ltd.' (supra).

6. Learned counsel for the Appellant has also referred to clause 11 of the

Bank Guarantee where he was entitled to claim within 12 months from the

Company Appeal (AT) (Insolvency) No. 887 of 2021 -4-

expiry date. Admittedly, the application for invocation of Bank Guarantee was

made immediately after initiation of CIRP proceeding. We, thus, set aside the

order of the Adjudicating Authority dated 06.09.2021.

7. Counsel for the Resolution Professional submits that the approval of the

Resolution Plan is pending before the Adjudicating Authority. We are of the

view that the Appellant was clearly entitled for invocation of Bank Guarantee,

hence, we remit the matter back to the Adjudicating Authority to pass

appropriate orders with regard to claim of the Appellant to the amount to Rs.19

Lakhs as included in the Bank Guarantee. Appropriate orders be passed by

the Adjudicating Authority in accordance with law. Appeal is allowed

accordingly.

[Justice Ashok Bhushan] Chairperson

[Dr. Ashok Kumar Mishra] Member (Technical)

[Dr. Alok Srivastava] Member (Technical) Archana/nn

Company Appeal (AT) (Insolvency) No. 887 of 2021