Thermax Ltd vs Viswa Infrastures & Services Pvt Ltd & ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI Company Appeal (AT) (Insolvency) No. 176 of 2019 (arising out of order dated 19th February, 2019 passed by National Company Law Tribunal, Hyderabad Bench, Hyderabad in I.A. No. 721 of 2018 in C.P. (IB) No. 329/7/HDB/2018 )

IN THE MATTER OF:

Thermax Limited ...Appellant

Versus

Viswa Infrastructures Services Private Limited & Anr. ... Respondents

Present: For Appellant : Mr. Rajiv Ranjan, Senior Advocate with Ms. Nimita Kaul, Ms. Amrita Sarkar and Ms. Vijeta Mukherjee, Advocates

For Respondents : Mr. Ashu Kansal and Mr. Milan Singh Negi, Advocates for Resolution Professional

JUDGMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

In the 'Corporate Insolvency Resolution Process' of M/s. Vishwa

Infrastructures and Services Private Limited, the Appellant - 'Thermax

Limited' (Operational Creditor) moved an application under Section 60(5)(c) of

the Insolvency and Bankruptcy Code, 2016('I&B Code' for short) read with

Rule 11 of the National Company Law Tribunal, 2016 to direct the 'Resolution

Professional' not to proceed with encashment of the Bank Guarantee. The

Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench, 2

Hyderabad by impugned order dated 19th February, 2019 dismissed the

application.

2. The case of the Appellant (Operational Creditor) is that the Appellant

had given Bank Guarantee bearing BG No. N41GOPG130580001 dated 27th

February, 2013 for a value of Rs.33,28,147/- which was valid till March 31,

2019. It was so granted for execution of one 'Sewage Treatment Plant' to the

'Corporate Debtor' at Gacchibowli, Hyderabad for metropolitan water supply

and 'Sewage Board Project'. The plant was commissioned and handed over to

the 'Corporate Debtor' for operation and maintenance more than one and a

half year back. However, the Resolution Professional on baseless ground

invoked the Bank Guarantee aforesaid.

3. Learned counsel appearing on behalf of the Appellant submitted that

the Moratorium was declared by the Adjudicating Authority on 31st August,

2018. Vide letter dated 20th September, 2018, the Appellant had informed

the Resolution Professional regarding the demobilisation of 7 MLD STP site at

Khajaguda Talab, Gachibowli and informed on the ground that

Rs.95,17,118/- was payable by the Corporate Debtor apart from

Rs.23,61,000/- for the operation and management of work carried out for 17

months by the Appellant. Vide letter dated 10th October, 2018, 'Resolution

Professional' informed the Appellant that the 'Performance Bank Guarantee'

would be invoked since there is a possibility of the end-user i.e. 'Hyderabad

Metropolitan Water Supply and Sewage Board' (HMWSSB) invoked the

performance bank guarantee issued by the Corporate Debtor. Subsequently,

by e-mail dated 18th December, 2018, the Appellant had suggested to reach

for an amicable solution and offered to the Resolution Professional of the

Company Appeal (AT) (Insolvency) No. 176 of 2019 3

'Corporate Debtor' about continuation with the operation and maintenance of

the STP.

4. It was submitted that the Resolution Professional has not denied the

disputed fact that the 'Corporate Debtor' had received the payments from the

employer/owner i.e. 'Hyderabad Metropolitan Water Supply and Sewage

Board' for operation and maintenance under the same work order.

5. Despite the above, the Appellant was not paid the operation and

maintenance charges for 17 months which in turn constrained the Appellant

to demobilise the site. Therefore, invoking the performance Bank Guarantee

due to the demobilisation is clearly illegal.

6. It was further contended that the 'Corporate Debtor' never intimated

that the performance Bank Guarantee has been invoked by 'Hyderabad

Metropolitan Water Supply and Sewage Board'.

7. Learned counsel appearing on behalf of the Resolution Professional

submitted that the Appellant had executed 'Performance Bank Guarantee'

equivalent to 5% of the total work order in favour of the 'Corporate Debtor'.

Pursuant to the commencement of the 'corporate insolvency resolution

process' on 31st August, 2018, the Appellant malafidely demobilized the

worksite shortly thereafter on 21st September, 2018. This fact has been

disputed by the Appellant.

8. We have noticed the rival submissions and perused the record.

9. Admittedly, the 'corporate insolvency resolution process' was initiated

on 31st August, 2018 and the order was passed under Section 14 of the 'I&B

Code' declaring 'Moratorium'. The Appellant is entitled to claim the past dues.

The fact that the Appellant demobilize the worksite on 21st September, 2018

Company Appeal (AT) (Insolvency) No. 176 of 2019 4

is on record. If 'Corporate Debtor' invoked the Bank Guarantee fault cannot

be found. We further find that the claim of the Appellant has been admitted

by the Resolution Professional, who can derive the benefit of the 'Operational

Creditor' after the process is completed.

10. The Appellant has claimed Rs. 60.65 Lacs which is much higher than

the Bank Guarantee.

11. In the case of 'Himadri Chemicals Industries Ltd. vs. Coal Tar

Refining Company' (AIR 2007 SC 2798), the Hon'ble supreme Court held

that the beneficiary is entitled to realize a Bank Guarantee in terms thereof

irrespective of any pending dispute relating to the terms of the contract.

12. In the present case, as the 'corporate insolvency resolution process' was

continuing since 31st August, 2018 till the date of the impugned order was

passed, we hold that the question of grant of any relief as sought for does not

arise and the Adjudicating Authority has rightly rejected the application.

The appeal is dismissed. No costs.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice A.I.S. Cheema ] Member (Judicial)

[ Kanthi Narahari ] Member (Technical)

New Delhi 20th December, 2019 /ns/

Company Appeal (AT) (Insolvency) No. 176 of 2019