Nbcc India Limied vs Mandeep Gujral & Ors

IN THE MATTER OF: NBCC India Ltd. ...Appellant

Versus

Jalesh Kumar Grover & Anr. ...Respondents

Present: For Appellant: Mr. Anil Kumar Airi, Sr. Advocate, Mr. Mohit Arora, Ms. Sonika Khandelwal, Advocates. For Respondents: Mr. Abhishek Anand, Mr. Karan Kohli, Ms. Komal, Advocates for R-1. and Mr. Rahul Sharma. Mr. Achin Goel, Advocate for R-2/SRA.

Company Appeal (AT) (Ins) No. 945-948 of 2023

IN THE MATTER OF: NBCC India Ltd. ...Appellant

Versus

Mandeep Gujral & Ors. ...Respondents

Present: For Appellant: Mr. Anil Kumar Airi, Sr. Advocate, Mr. Mohit Arora, Ms. Sonika Khandelwal, Advocates. For Respondents: Mr. Abhishek Anand, Mr. Karan Kohli, Ms. Komal, Advocates for R-1.

Company Appeal (AT) (Ins.) No. 59 & 60 of 2024 and 945-948 of 2023 -2-

ORDER

(Hybrid Mode)

Per: Justice Rakesh Kumar Jain (Oral)

06.08.2024: I.A. No. 187 & 188 of 2024 in Comp. App. (AT) (Ins) No.

59 & 60 of 2024:- This application is filed for seeking Condonation of

Delay in filing the appeal. Notice is the application was issued on

24.01.2024. Counsel for Respondent No. 1 has submitted that he is

not the contesting Respondent. Counsel for Respondent No. 2 who

is the Contesting Respondent has submitted that he does not want

to file any Reply to the said application. We have perused the

application and found that sufficient reasons have been assigned

for the purpose of condonation of delay, hence the application is

hereby allowed and the delay is condoned.

1. This order shall dispose of two appeals bearing Company

Appeal (AT) (Ins) No. 945-948 of 2023 titled as 'M/s NBCC India

Ltd. Vs. Ms. Mandeep Gujral & Ors. (hereinafter referred to as the

first appeal) and Company Appeal (AT) (Ins) No. No. 59 & 60 of 2024

titled as 'M/s NBCC India Ltd. Vs. Mr. Jalesh Kumar Grover & Anr.'

(hereinafter referred to as the second appeal) as the order passed in

Company Appeal (AT) (Ins.) No. 59 & 60 of 2024 and 945-948 of 2023 -3-

the first appeal is the basis of the order passed in the second

appeal.

2. The first appeal is against the order dated 24.05.2023 passed

by the Adjudicating Authority (National Company Law Tribunal,

Chandigarh Bench) by which four applications bearing I.A. Nos.

154/2021 & I.A. No. 652/2021, filed by Ms. Mandeep Gujral, I.A.

No. 62/2021 filed by the State Bank of India and I.A. No. 642/2021

filed by the Suspended Director of the Corporate Director, namely,

M/s Jaycon Infrastructure Ltd., have been dismissed. In the second

appeal, the validity of the order dated 21.09.2023 passed by

(National Company Law Tribunal, Chandigarh Bench) has been

assailed by which status quo has been ordered regarding the

invocation of the Bank Guarantee by the appellant.

3. The brief background of both the cases is that M/s Gangotri

Steel Syndicate filed an application under Section 9 of the IBC,

2016 (in short 'Code') against M/s Jaycon Infrastructure Ltd. before

the National Company Law Tribunal, Chandigarh bearing CP (IB)

No. 218/Chd/Chd/2018 which was admitted on 17.10.2019. Ms.

Mandeep Gujral was appointed as IRP and then RP. The resolution

Company Appeal (AT) (Ins.) No. 59 & 60 of 2024 and 945-948 of 2023 -4-

plan submitted by Rishabh Jain was approved by the Adjudicating

Authority on 23.08.2023. However, Jalesh Kumar Grover was

appointed as Monitoring Professional of the Monitoring Committee

in the matter of the Corporate Debtor.

4. The appellant is a Public Sector Undertaking, appointed

Corporate Debtor as a sub-contractor for carrying out certain

projects, namely, National Institute of Design at 70-73

Kurukshetra, Haryana and Security Police Line at 74-77

Bapudham, Chanakyapuri, New Delhi.

5. The Corporate Debtor executed a Performance Bank

Guarantee (PBG) in favour of the appellant in respect of both the

projects.

6. Shorn of unnecessary details, I.A. Nos. 154/2021 and

652/2021 came to be filed by the resolution professional of the

Corporate Debtor under Section 60 (5) before the Adjudicating

Authority for issuance of a direction to M/s NBCC India Ltd.

(appellant) not to invoke the performance guarantees issued by the

Corporate Debtor. The other two applications, namely, I.A. No.

Company Appeal (AT) (Ins.) No. 59 & 60 of 2024 and 945-948 of 2023 -5-

62/2021 and I.A. No. 642/2021 though filed by separate

stakeholders but the prayer made was the same.

7. The Ld. Tribunal vide its order dated 24.05.2023 held that "the

issue for adjudication is whether the moratorium will come in the

way of invoking the bank guarantee given by the corporate debtor to

respondent-NBCC. In this connection, reliance is placed on the

decision of the Hon'ble NCLAT in the case of C&C Construction

Limited (Supra) wherein, it is held that "Section 14 (3) (b) of the Code,

states that the provisions of this section shall not apply to a surety in

a contract of guarantee to a corporate debtor. We also note that

Section 3(31) of the Code which defines security interest categorically

excludes "performance guarantee".

8. It further held that "It is thus clear that, the respondent (NBCC)

in the present case cannot be prevented from invoking the bank

guarantee under the law provided there a violation of the provisions

of the contract accepted by the corporate debtor by its letter dated

12.11.2016."

Company Appeal (AT) (Ins.) No. 59 & 60 of 2024 and 945-948 of 2023 -6-

9. The Ld. Tribunal after recording the aforesaid findings,

recorded a finding in paragraph no. 24 & 25, which are reproduced

as under:

"24. While recognizing the rights of the NBCC to invoke the

provisions of the contract accepted by the corporate debtor by its

letter dated 12.11.2016, we observe that this Tribunal is not the

forum to adjudicate the contractual issues between the parties.

The main concern of this Adjudicating Authority is to ensure that

the CIRP is concluded smoothly without any disruption. In this

context, we note that as per the admission of the respondent

itself demand notice from the corporate debtor have been

received and payments will be made to the corporate debtor after

carrying out reconciliation of the demand notices with their

accounts Sufficient time has elapsed in this regard. The

respondent is directed to make the payments after reconciliation

for the work done by the corporate debtor within three weeks of

this order. so that the necessary funds are made available to the

corporate debtor to expeditiously complete the projects

undertaken.

25. After analyzing the factual matrix in its entirety, we noted

that the respondent-NBCC has made practical offers to the

corporate debtor for facilitating the execution of the project at

Company Appeal (AT) (Ins.) No. 59 & 60 of 2024 and 945-948 of 2023 -7-

Bapudham (The respondent-NBCC has already made partial

compliance of the offers made in its letter to the Resolution

Professional dated 31.05.2021. Both the parties are directed to

comply with the terms of this letter within three weeks of this

order and necessary payments in this regard be made by the

corporate debtor to the respondent-NBCC, if not made so far and

the performance bank guarantee of Baapudham be released as

per the aforementioned terms."

10. Aggrieved against the order of the Ld. Tribunal in this regard

whereby it had directed the present appellant to make the payment

after reconciliation of the work done by the corporate debtor, the

first appeal has been filed.

11. In so far as the second appeal is concerned, two applications

came to be filed bearing I.A. No. 2177 of 2023 by Mr. Rishabh Jain

(SRA), I.A. No. 2178 of 2023 by Monitoring Professional against the

present appellant in which it was alleged that the appellant has not

carried out the conciliation in terms of the order passed on

24.05.2023 in respect of the work done by the Corporate Debtor

within the period of three weeks as provided therein rather they

have filed the appeal against the order dated 24.05.2023 before the

Company Appeal (AT) (Ins.) No. 59 & 60 of 2024 and 945-948 of 2023 -8-

Appellate Authority, therefore, the invocation of the PBG may be

stayed.

12. Ld. Tribunal, as an interim order, directed that status quo

regarding the invocation of the bank guarantee be maintained by

the parties till the next date of hearing.

13. While arguing the first appeal, Sr. Counsel Sh. Anil Kumar Airi

has submitted that the Tribunal has committed a patent error in

issuing a direction to the appellant to make payment after

conciliation of the work done by the Corporate Debtor within three

weeks. It is submitted that on the one hand, the Tribunal has

observed in Paragraphs 18 & 19 that the invocation of the PBG by

the appellant cannot be prevented and on the other hand it has

been made conditional by directing the appellant to make payment

after conciliation of the work done by the Corporate Debtor is

carried out within a particular period. He further submitted that

neither the Corporate Debtor has given the running bill, much less

the completion certificate of the work done partly or the final

completion certificate, therefore, there is no question of

reconciliation.

Company Appeal (AT) (Ins.) No. 59 & 60 of 2024 and 945-948 of 2023 -9-

14. Sh. Abhishek Anand appearing on behalf of the Monitoring

Professional has submitted that the contesting respondent in this

appeal is the SRA for whom Sh. Achin Goel has put in appearance.

15. It is also submitted that on the representation made on behalf

of the Corporate debtor the appellant made payment to various

vendors on behalf of the Corporate Debtor. However, it is submitted

that there is no question of reconciliation as this order could not

have been passed by the Ld. Tribunal.

16. We have heard counsel for the parties in so far as the first

appeal is concerned and after taking note of the aforesaid facts and

circumstances, are of the considered opinion that Tribunal has

committed a patent error in issuing the impugned direction

mentioned hereinabove, therefore, the order passed by the Tribunal

in this regard is hereby set aside.

17. After we have set aside the direction of the Tribunal passed in

the order dated 24.05.2023 whereby reconciliation was ordered, we

take up the second appeal which is predicated only on the basis of

the said direction. The Tribunal in the second appeal, while passing

the impugned order dated 21.09.2023 issued notice in the

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applications being I.A. No. 2177 of 2023 and I.A. No. 2178 of 2023

and directed the applicant therein to serve notice to the respondent

(appellant herein) and in the meantime, passed the order of status

quo regarding invocation of the bank guarantee.

18. Since we have already held in the first appeal that the

direction issued by the Tribunal for reconciliation is unwarranted

and set aside the said direction, therefore, the second appeal also

succeeds and the impugned order dated 21.09.2023 of status quo

cannot sustain because the order of reconciliation dated

24.05.2023 has been set aside. Accordingly, the second appeal also

succeeds and the impugned order dated 21.09.2023 is also set

aside.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

sa/rr

Company Appeal (AT) (Ins.) No. 59 & 60 of 2024 and 945-948 of 2023