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2022 (9) TMI 1129 - AT - Insolvency and BankruptcyInvocation and encashment of Performance Bank Guarantee(s) (PBG) granted by the Appellant - surety in a contract of guarantee to a ‘Corporate Debtor’ - Scope of section 14 of IBC - whether fraud or irretrievable injustice has been done? - HELD THAT:- Section 14(3)(b) states that a surety in a contract of guarantee to a ‘Corporate Debtor’ is not covered under Section 14 - Section 3(31) Describe Security Interest and states that Security Interest shall not include a Performance Bank Guarantees. A Performance Bank Guarantee does not enjoy the benefits of a moratorium under Section 14 of the Code. It is pertinent to mention that the CIRP commenced on 07.11.2019 and notices for invocation were sent prior to the commencement on 18.10.2019. The actual disbursement took place pursuant to the Order of the Hon’ble High Court of Telangana. Having regard to the fact that the Bank Guarantees stood invoked vide letter dated 18.10.2019 by the ‘Corporate Debtor’ on the ground that the Appellant has failed to perform its obligations in terms of the Agreements, read with Clause 2 of the Bank Guarantees and also keeping in view that there are no material on record with respect to any fraud, we do not find any illegality or infirmity in the Order of the Impugned Order. The question of fraud has been dealt with by the City Civil Court, which held that there was ‘no element of fraud’ involved. It is the case of the Resolution Professional that the amount of Rs.2,50,16,972/- be released and permitted to be utilised against the overall outstanding amount of Rs.13,06,30,410/- to ensure that the plant of the ‘Corporate Debtor’ is kept running as a ‘Going Concern’ - the amount may be utilised for the functioning of the ‘Corporate Debtor’ as a Going Concern. Appeal dismissed.
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