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2020 (7) TMI 757 - Tri - Insolvency and BankruptcyInvocation/encashment of Bank Guarantee - within the scope of Moratorium or not - HELD THAT:- The recital of guarantee clearly provides that the guarantee in question is a bank guarantee and not a performance guarantee as contended by the counsel for the applicant. In the case on hand the bank guarantee is offered to the seller, (the Applicant) on account of purchasing goods by the borrower viz., CD on credit and the bank viz., the non- Applicant No. 2 hand given a bank guarantee to the effect that it will pay certain unsettled sum on behalf of the buyer (CD) to the seller i.e. the Applicant. Once this position becomes clear then the bank guarantee does not fall within the purview of the proviso to Section 3(31) of IBC 2016, because a bank guarantee cannot be described as performance bank guarantee. Therefore, the contention of the counsel for the applicant that the guarantee is a performance bank guarantee stands rejected. Whether the bank guarantee in question can be invoked during the moratorium declared under Section 14(1) of IBC 2016? - HELD THAT:- As per section 14(1)(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is prohibited. It is well settled position that the bank guarantee falls within the purview of the definition of "Security interest" as defined under Section 3(31) of the IBC, which is already quoted. Therefore, during the moratorium the bank guarantee cannot be invoked as the same is prohibited under Section 14(1)(c) of the IBC. Application dismissed.
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