2023 (1) TMI 548 - AT - Insolvency & Bankruptcy

Seeking encashment of the Bank Guarantees issued by the Appellant and Central Bank of India, during moratorium under Section 14 of IBC - It is contended that the Corporate Debtor has illegally promised to keep the BG’s issued by the Appellant alive for full value on its own, without any concurrence from the Appellant Bank - HELD THAT:- Having regard to the findings in the Arbitration Award referring to the same BGs and encashment thereof and the observation of the Hon’ble Arbitral Tribunal that there was no reason to interfere with the encashment of ABGs by IOCL and that there was no injustice or harm caused to it by the encashment, we do not see any substantial ground to delve into the issue of any breach of terms of the contract or any alleged fraud between IOCL and the Corporate Debtor - It is also pertinent to note that the Appellant Bank had not taken any action with respect to the issue of fraud raised by them.

Bank Guarantees are outside the scope of the moratorium under Section 14 of the Code and Section 3 (31) specifically excludes Performance Bank Guarantees (PBGs).

The Hon’ble Supreme Court in M/S. DYNEPRO PRIVATE LIMITED VERSUS V. NAGARAJAN [2019 (3) TMI 2013 - SC ORDER], upholding the decision of this tribunal has held that NCLT has no jurisdiction to decide the question of disputes and claims/counter claims.

Thus, an irrevocable and unconditional Bank Guarantee can be invoked even during moratorium period in view of the amended provision under Section 14 (3) (b) of the Code - appeal dismissed.