NATIONAL COMPANY LAW APPELLATE TRIBUNAL

Thermax Limited Vs. Viswa Infrastructures Services Private Limited and Ors.

MANU/NL/0647/2019

20.12.2019

Insolvency

Beneficiary is entitled to realize a Bank Guarantee in terms thereof irrespective of any pending dispute relating to the terms of the contract

In the 'Corporate Insolvency Resolution Process' of 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') 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, by impugned order dismissed the application.

The case of the Appellant (Operational Creditor) is that, the Appellant had given Bank Guarantee 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.

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 is on record. If 'Corporate Debtor' invoked the Bank Guarantee, fault cannot be found. 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. The Appellant has claimed Rs. 60.65 Lacs which is much higher than the Bank Guarantee.

In the case of 'Himadri Chemicals Industries Ltd. vs. Coal Tar Refining Company', 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.

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, 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.

Relevant

'Himadri Chemicals Industries Ltd. vs. Coal Tar Refining Company' MANU/SC/3256/2007

Tags : Bank Guarantee Encashment

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