Wapcos Ltd vs D. Thakkar Construction Pvt Ltd
- CitationComp. App. (AT) (Ins) No. 110 of 2023
Ratio decidendi
The rule this decision rests on
A bank guarantee given against a mobilisation advance, which is invoked and encashed during the corporate insolvency resolution process, is not hit by the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, in view of the amendment to Section 14, and the bar on invocation of performance bank guarantees does not extend to such guarantees, as laid down in Bharat Aluminium Company Ltd. v. Jaypee Engineers (Company Appeal (AT) (Insolvency) No. 759 of 2020). An adjudicating authority that directs refund of an amount encashed under such a guarantee, relying on Section 14(1)(c), acts contrary to that law and cannot sustain its direction.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE MATTER OF: WAPCOS Ltd. ...Appellants Versus D. Thakkar Constructions Pvt. Ltd. ...Respondents Through Ram Ratan Kanoongo
Present: For Appellant : Mr. Subash Bhat, Ms. Parvati Sharma, Mr. Arsh Kaul and Ms. Protibha Singh, Advocates. For Respondents : Mr. Abhijeet Sinha Sr. Advocate with Mr. Ayush Rajani and Mr. Saikat Sarkar, Advocates for RP.
ORDER
(Hybrid Mode)
20.12.2024: Heard counsel for the parties.
This appeal has been filed against the order dated 20.01.2022 passed by
the National Company Law Tribunal, Special Bench Mumbai in IA No. 2122 of
2022. The application was filed by Resolution Professional seeking direction
from the Tribunal to the appellant to refund the money equivalent to the bank
guarantee against mobilisation advance which has been invoked and encashed
during the CIRP. Adjudicating Authority by the impugned order relying on
Section 14(1)(c) of the IBC has allowed the application and directed the
appellant to refund the amount of Rs.11,95,41,056/-. Counsel for the
appellant challenging the order submits that in view of the amendment made
in Section 14 of the IBC there was no restrain on invocation on the
performance bank guarantee during currency of the CIRP. It is submitted that
the bank guarantee was not hit by moratorium which is law settled by this Tribunal in its judgment Bharat Aluminium Company Ltd. Vs. Jaypee
Engineers CA(AT) (Ins) No. 759 of 2020 decided on 26.02.2021.
2. Ld. Counsel for the respondent does not dispute the legal position. He
however submits that the arbitration proceeding which have been initiated may
be decided uninfluenced by orders passed in this appeal.
3. We have considered the submissions of the parties and perused the
records. In view of the law laid down by this Tribunal in Bharat Aluminium the
order impugned cannot be sustained. We set aside the order dated 20.01.2022
and allow the appeal accordingly.
4. We make it clear that the present order is confined to directions issued
by Adjudicating Authority and shall not influence any other proceeding in
accordance with law.
With these observations appeal is disposed of.
[Justice Ashok Bhushan] Chairperson
[Barun Mitra] Member (Technical) harleen/NN
Comp. App. (AT) (Ins) No. 110 of 2023 & I.A. No. 444 of 2023, 5259 of 2024 2 of 2
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