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2021 (6) TMI 348 - Tri - Insolvency and BankruptcySeeking invocation and encashment of Bank Guarantees during CIRP period - scope of moratorium u/s 14 of IBC - HELD THAT:- When the guarantee given by a Guarantor does not fall within the ambit of Security Interest provided by the Corporate Debtor, the moratorium that comes into force by Section 14 of the Code is not applicable not only to the bank guarantees, but also to the Surety given to the Corporate Debtor by a guarantor - It is evident that Section 14(1)(c) applies only to the Security Interest created by the Corporate Debtor but not to the guarantee created by third party in favour of the creditor on behalf of the Corporate debtor. It is a well settled preposition that the bank guarantees constitute an independent contract between the Respondent Banks and the Applicant and therefore the Respondent Banks are under obligation to honour the request made by the IOCL, unless and until the transaction is hit by Section 14 of the Code, therefore CIRP cannot be a ground to deny encashment of the bank guarantees. It is evident on record that neither the Corporate Debtor indulged in fraud nor the IOCL had indulged in fraud giving scope to the bankers to raise objections against the bank guarantees because the Banks are under obligation to permit IOCL to encash the bank guarantees. In case, any issue is pending between the banks and the Corporate Debtor, it has to be dealt with the Corporate Debtor, but not with IOCL to whom the guarantee has been given - It is evident on record that work is not complete, so long as work is not complete, the Contractor is at liberty to encash the guarantee because mobilization advance is given so as to facilitate the corporate debtor Contractor to accomplish the work without any impediment, advance bank guarantee cannot be seen as something different from performance bank guarantee. In the performance bank guarantee, guarantee will be taken without even providing any advance. If bank guarantee is beyond the mentioned amount in the bank guarantee, if the bank guarantee is encashed by indulging into fraud behind the back of the Banks, then it could be understood that this Contract is vitiated the fraud, but in this case, the bank guarantees have remained same and the Corporate Debtor has taken additional financial support to accomplish the contract work. Such availing additional financial support cannot mean that Banks are absolved from the obligation of discharging their part of contract - The Corporate Debtor taking an additional financial support or IOCL not reducing the advance amount from the running bills will not tantamount to indulge in fraud, therefore IOCL is at liberty to encash the bank guarantees. Application dismissed.
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