TMI Blog2019 (2) TMI 1453X X X X Extracts X X X X X X X X Extracts X X X X ..... as been wasted and wastage of which time may ultimately result in the possibility of Castex and ARGL Limited being restructured ceasing to exist and being inevitably required to be liquidated, all at the cost of the creditors thereof and wastage of the stressed assets of the said two companies. The loss caused by such conduct of the plaintiff is thus mammoth, having adverse consequences on all the creditors and shareholders of the said two companies and also on the economy of the country and to remedy which, the code was enacted. The NCLT is best equipped to also deal with apportionment of the amount of the BBGs in proper account. The present case thus also falls in the category of cases envisaged in SAW Pipes Ltd. [2003 (4) TMI 438 - SUPREME COURT OF INDIA] where loss caused on account of delays in construction of say, a public road, though does not cause loss to any individual or person or company in particular but causes loss to the residents of the country and which is unmeasurable and in which regard a pre-estimate is permitted to be forfeited without proof of any loss. The loss likely to be caused by the conduct of the plaintiff similarly, is to the country as a whole an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n instructions of the plaintiff; (ii) Barclays from remitting the amounts under the said BG and from transmitting the amount under the Counter Guarantee; and, (b) declaration that the notice of Demand/Invocation dated 20th November, 2018 addressed by SBI to Barclays is invalid, illegal and band in law, pleading:- (i) Castex Technologies Limited (Castex) is a part of Amtek Group of Companies. Castex was unable to meet its financial obligations and Corporate Insolvency Resolution Process (CIR Process) of Castex was put into motion by the SBI under Section 7 of the Insolvency and Bankruptcy Code, 2016 (Code). The National Company Law Tribunal (NCLT) Chandigarh, on 20th December, 2017 admitted the said application and the defendant no.4 Mr. Dinkar T. Venkatasubramanian was confirmed by the Committee of Creditors (CoC) as the Resolution Professional (RP) of Castex. (ii) The RP prepared and floated a Process Memorandum dated 30th March, 2018 for consideration and selection of resolution plans from prospective resolution applicants. (iii) The Process Memorandum required the prospective resolution applicants to submit a Bid Bond Guarantee (BBG) and the plaintiff, in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invocation dated 17th July, 2018 of the said BG, pleading:- (a) ARGL Limited is a part of Amtek Group of Companies and since was unable to meet its financial obligations, by order dated 16th March, 2018 of the NCLT, Chandigarh, CIR Process of ARGL Limited was commenced and Mr. Dinkar T. Venkatasubramanian confirmed by the CoC as the RP. (b) An Expression of Interest, calling for resolution plans of ARGL Limited was issued and the plaintiff expressed its interest and was shortlisted for submission of a binding financial offer. (c) The RP issued a Process Note for submission of financial bids and binding resolution plans by prospective resolution applicants and the plaintiff submitted its financial bid and resolution plan, which was approved by the CoC and a LoI dated 30th August, 2018 issued declaring the plaintiff as the successful resolution applicant and the RP filed an application under Section 30(6) of the Code before the NCLT, Chandigarh for approval of the resolution plan and which application on the date of institution of the suit was pending consideration. (d) As per the Process Note the plaintiff was to furnish a PBG in the sum of ₹ 60,00,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive. 5. SBI has filed its replies and to which rejoinders have been filed by the plaintiff. The counsels were heard on 6th December, 2018, 7th December, 2018, 10th December, 2018, 11th December, 2018, 12th December, 2018, 17th December, 2018, 14th January, 2019 and 21st January, 2019 and orders reserved on the applications for interim relief as well as on the aspect of jurisdiction of this Court to entertain the suits. 6. Vide order dated 7th December, 2018 it was clarified that there was no order in the suits staying any further proceedings under the Code. 7. Vide order dated 10th December, 2018, CS(COMM) No.1245/2018 was disposed of (as the bank which had issued the BBG subject matter thereof itself found the invocation to be not in terms of the BBG, and refused payment thereunder) with liberty to the plaintiff therein to sue again if the BBG was invoked afresh or if the need for seeking return of BBG arose. 8. Vide order dated 11th December, 2018 it was proposed that the applications for interim injunction be decided on a demurrer qua jurisdiction of the Civil Court, reserving the order on the issue of jurisdiction. However the senior counsels for the defendants cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he resolution plan submitted by such successful resolution applicant being treated as non-responsive and invocation of BBG; admittedly PBG had not been submitted. (h) The plaintiff was aware of the requirement of submission of PBG but instead of furnishing PBG offered conversion of the BBG into PBG for part of the requisite amount and furnishing of Escrow Account for the balance. (i) The BBG is unconditional and there can be no interference therewith in terms of Himadri Chemicals Industries Limited Vs. Coal Tar Refining Co. (2007) 8 SCC 110 and National Highway Authority of India Vs. Ganga Enterprises (2003) 7 SCC 410 and no fraud or irretrievable damage has been pleaded, on which grounds alone the Court can interfere with the BG. 10. The RP, in its reply to the application for interim relief in CS(COMM) No.1247/2018, besides taking the same pleas as taken aforesaid with respect to jurisdiction of the Civil Court and law relating to interference with BG and the terms of the Process Note, has pleaded:- (I) that the requirement for submission of PBG was at no time waived by the CoC or the RP. The approval of the resolution plan and furnishing of PBG are two sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiff and approved by the CoC has been withdrawn and NCLT, by the same also has been divested of any jurisdiction; (viii) neither the SBI nor the RP, themselves sought any relief before the NCLT qua the BGs, knowing that the BGs submitted by the plaintiff are outside the ambit and jurisdiction of NCLT; (ix) the cause of action which has accrued to the plaintiff is not a part, either of the moratorium or of the appointment of the RP or of the approval of the resolution plan, jurisdiction in which respect only is vested with the NCLT; (x) exclusion of jurisdiction of the Civil Court is not to be readily inferred; reliance is placed on Secretary of State Vs. Mask and Company AIR 1940 Privy Counsel 105; (xi) the plaintiff is not seeking any injunction in respect of any action taken or to be taken in pursuance to any order of the NCLT and thus Section 231 of the Code is wrongly invoked; (xii) Section 231 of the Code is akin to Section 34 of the SARFAESI Act and in relation whereto in Mardia Chemicals Ltd. supra it was held that the parties have liberty to seek redressal of their grievances on account of breach of contract or otherwise, taking recourse to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the invitation, in response to which the plaintiffs had submitted the resolution plans, was issued thereunder; (iii) the said invitation, in terms and conditions thereof provided for forfeiture of the BBG on non-submission of PBG; (iv) the Code emphasises time bound resolution; (v) forfeiture of the BBG has been prescribed because all the steps to be taken under the Code are time bound and to provide a deterrent to non-serious submission of resolution plan; the Code demands a deeper commitment; (vi) the plaintiff has acted contrary thereto and has blocked the said time schedules; (vii) the plaintiff, though got its resolution plans approved from the CoC, but is not acting in furtherance thereto; (viii) Section 60 titled Adjudicating Authority for Corporate Persons , in sub Section 5 thereof, while vesting jurisdiction in the NCLT, confers jurisdiction to entertain or dispose of any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under the Code; the question as has arisen in this suit, of encashment of BBG subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt with therein; and, (e) the Code is a Parliamentary law i.e. an exhaustive Code on the subject matter of insolvency in relation to corporate entities; (xiii) reliance is also placed on Arcelormittal India Private Limited Vs. Satish Kumar Gupta (2019) 2 SCC1 , also holding that speed is the essence and timelines are to be observed and yet further holding that non-obstante clause in Section 60(5) is designed to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings; (xiv) if it were to be held that the Civil Court also has jurisdiction, the same would introduce manipulations to frustrate the resolution process; reliance is placed on Eureka Forbes Limited Vs. Allahabad Bank (2010) 6 SCC 193 holding, though in the context of DRT Act that the word debt is incapable of being given a restricted or narrow meaning and includes any amount which is due to the bank on account of business activity undertaken by the bank and applying the principle of interpretation, of av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that if conflicting orders were passed by the Civil Court and by the NCLT, the same would be detrimental to the resolution process. A copy of the order dated 5th December, 2013 of the NCLT in CA No.1220(PB)/2018 in (IB)-531(PB)/2017 recording, that the plaintiff was dragging its feet and reluctant to proceed with the resolution process and holding, (i) that the PBG was a sine qua non and non-submission of PBG by the successful resolution applicant would lead to rendering a resolution plan by such successful applicant as non-responsive, as the RP would be entitled to reject the resolution plan and cancel the LoI; (ii) that the plaintiff was under obligation to fulfill the terms of the Process Note and under which the plaintiff was under an obligation to furnish the PBG; (iii) that the plaintiff had refused to proceed with the resolution plan inspite of CoC having relaxed the condition for furnishing PBG within ten days of the LoI; and, (iv) the somersault taken by the plaintiff after being declared as the successful resolution applicant had put the whole CIR Process and machinery to quandary and such an unsavoury stance of the plaintiff would only attrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of his own wrong by not allowing forfeiture. It must be remembered that, particularly in government contracts, such a term is always included in order to ensure that only a genuine party makes a bid. If such a bid was not there even a person who does not have the capacity or a person who has no intention of entering into the contract will make a bid. The whole purpose of such a clause i.e. to see that only genuine bids are received would be lost if forfeiture was not permitted. The Bid security was given to meet a specific contingency viz. non-withdrawal of the offer within 120 days. The contingency having arisen, Appellants were entitled to forfeit 18. The counsels for the defendants further argued that the cost of CIR Process is high and the said cost would be wasted if there were to be no forfeiture also of BBGs inspite of the resolution applicant withdrawing the resolution plan. 19. It was thus argued that Kailash Nath Associates is not applicable to the present controversy. 20. The senior counsel for the plaintiff, in rejoinder, on the aspect of jurisdiction contended, (i) that subject matter jurisdiction is not waivable; (ii) that there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gust, 2017; (xvii) Section 25(2)(h) was amended on 23rd November, 2017; (xviii) BBG nowhere provided that the same could be invoked for non-processing of PBG; (xix) that on non-furnishing of resolution plan without the PBG, the resolution plan should have been rejected; (xx) that till the resolution plan is approved by the NCLT and which is still pending approval before the NCLT, there is no binding contract and in the absence of a binding contract, there can be no forfeiture; (xxi) between the stage prescribed in Section 14 of the Code i.e. of declaring a moratorium and the stage provided in Section 19 of the Code i.e. of approval of the resolution plan, NCLT has no role and thus NCLT cannot have any jurisdiction over the forfeiture effected prior to the approval of the resolution plan; (xxii) the jurisdiction of the NCLT before the approval of the resolution plan is limited i.e. to appoint the RP and to declare the moratorium; (xxiii) the jurisdiction with respect to the disputes arising from the BBG has been contractually conferred on this Court; (xxiv) BG is an independent contract; (xxv) as per Arcelormittal India Private Limited s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he civil law of contracts/guarantees/forfeitures of earnest money/security. D. I have wondered that if such civil law were to be applied to invocation of BG and forfeiture of amount thereof by SBI, whether SBI will at all be entitled to justify forfeiture. SBI has merely granted credit to Castex Ltd. and ARGL Ltd. and its right is only to realise its dues or such part of dues as may prorata fall in its chare on liquidation of the said companies. Applying the civil law aforesaid, SBI does not have any privity of contract with the plaintiff and on account of breach by plaintiff of which agreement SBI could suffer any loss. The senior counsel for the plaintiff has himself argued that even the resolution plan submitted by the plaintiff, inspite of approval by CoC of which SBI is a member, has no binding value till approval by the NCLT. The resolution plans were invited by the RP of the Castex Ltd. and ARGL Ltd., and were also submitted to the RP albeit along with BBGs in favour of SBI. SBI thus does not have a chance even under the civil law of contracts and guarantees of justifying the forfeiture and once it is so, the forfeiture of the amount of BBGs has necessarily to be held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich National Company Law Tribunal . has jurisdiction under this Code . Since the questions raised in these suits arise out of or in relation to insolvency resolution and the NCLT has jurisdiction to entertain the same. The jurisdiction of this Court will also be barred by Section 231 of the Code which provides that No civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority is empowered, by or under, this Code to pass any order . . H. The jurisdiction f this Court is thus expressly barred over the subject matter of these suits, by aforesaid provisions of the Code. I. Considering further from paragraph E above, if this Court were to have jurisdiction and apply, instead of the civil law of contracts and guarantees, the Code, for judging forfeiture, the senior counsels for the defendants are correct in contending that there is likely to arise a situation of conflicting orders of this Court and of NCLT. NCLT, in its order dated 5th December, 2018, copy of which was handed over, has unequivocally held (i) A perusal of the aforesaid Clauses do not leave any manner of doubt that the Liberty House was under obligation to furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a code a particular branch of law, is to be interpreted by inquiring how the law previously stood and then assuming that it was probably intended to leave unaltered, the utility of the statute will be almost entirely destroyed and the very object with which it was enacted will be frustrated. In Innoventive Industries Ltd. supra it was further held that the Court, in interpreting a statute, must therefor proceed without seeking to add words which are not to be found in the statute and that it is not permissible in interpreting a statute which codifies a branch of the law, to start with the assumption that it was not intended to alter the pre-existing law or to add words which are not to be found in the statute, or for which authority is not found in the statute. K. Constitution Bench of the Supreme Court in Dhulabhai supra held that where the statute gives a finality to the orders of the special tribunals, the civil court's jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit; only where a particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illeg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of estates and conferring rights on a class of citizens, should be complete codes by themselves; with that object in view, forums were created under the Acts themselves, where grievances could be entertained on behalf of the persons aggrieved; provisions were also made for appeals and revision to higher authorities; (iv) where however the liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it, the statute must be followed. In Rajasthan State Road Transport Corporation Vs. Krishna Kant (1995) 5 SCC 75 , again in the context of Industrial Disputes Act it was held that where the dispute involves recognition, observance or enforcement of any rights or obligations created by the Industrial Disputes Act, the only remedy is to approach the forums created by the said Act and it cannot be said that the remedies provided under the Industrial Disputes Act are not equally effective. In the context of Sick Industrial Companies (Special Provisions) Act, 1985, finding that the said Act contained non-obstante clause and was a special statute and a complete Code in itself, it was held in NGEF Ltd. Vs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of its resolution plan by the NCLT, can be in many forms. The said disputes can also take the form of the readiness and willingness of the RP and compliance of other terms and conditions of the Process Memorandum and/or the resolution plans. If it were to be held that NCLT does not have jurisdiction over the resolution applicant till approves the resolution plan, as is contended by the senior counsel for the plaintiff, the jurisdiction with respect to all such disputes would be in the Civil Court and the exercise of jurisdiction by the Civil Court over such disputes will undoubtedly interfere with the CIR Process and amount to indirectly injuncting action by NCLT. P. Reference in this regard can also be made to Rule 11 of National Company Law Tribunal Rules, 2016 providing that nothing confined therein shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such order as may be necessary for meetings the ends of justice or to prevent abuse of process of the Tribunal. NCLT thus has inherent powers to pass orders in relation to the insolvency resolution, as may be necessary from time to time, even in the absence of any specific power. The cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if we are to bring financing patterns back on track with the global norm, we must create a legal framework to make debt contracts credible channels of financing; speed is of essence for the working of the bankruptcy code - the longer the delay, the more likely it is that liquidation will be the only answer, with the liquidation value going down with time as many assets suffer from a high economic rate of depreciation; (v) there was thus a need to bring the insolvency law in India under a single unified umbrella with the object of speeding up of the insolvency process; laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc.; the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula and this is particularly true in case of legislation dealing with economic matters; in the matter of economic laws, the Court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation, than in other areas where fundamental human ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a collective proceeding, is a proceeding in rem and being a proceeding in rem, it is necessary that the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim; (xvi) till the CoC is constituted, a party can approach the NCLT directly, which may, in exercise of its inherent powers under Rule 11 of the NCLT Rules, allow or disallow an application for withdrawal or settlement; this will however be decided after hearing all the concerned parties; (xvii) vide Section 60 of the Code, the CoC does not have the last word on the subject of withdrawal; if the CoC arbitrarily rejects a just settlement and/or withdrawal claim, the NCLT, and thereafter, the NCLAT can always set aside such decision under Section 60 of the Code; (xviii) the RP has no adjudicatory powers; the RP cannot act in a number of matters without the approval of the CoC and which in turn decides by two-thirds majority; the RP is really a facilitator of the resolution process, whose administrative functions are overseen by the CoC and by the Adjudicating Authority; (xix) the Statement of Objects and Reasons of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am not required to render any findings on the claim of the plaintiff to interim injunction but since the said rejection is subject to the right of the plaintiff to prefer appeal to the Division Bench of this Court, following the law of procedure requiring findings on all aspects to be returned, to avoid remand for hearing application for interim relief in the event of the Division Bench holding the suits to be maintainable, I proceed to render findings on the entitlement of the plaintiff to interim injunction in the event of this Court having subject jurisdiction to entertain the suit. 27. Interim injunction sought is interference with payment under BGs. The law in this respect is well settled. Reference if any required can be made to Ashoka Paper Products Vs. Govt. of India 2015 SCC OnLine Del 14063, order dated 20th December, 2016 in CS(COMM) 1327/2016 titled Universal Energies Ltd. Vs. Indraprastha Gas Ltd. and Pete Hammond Power Solutions Pvt. Ltd. Vs. Flowmore Ltd. 2017 SCC OnLine Del 8164 wherein I have dealt in detail with the subject and the need to repeat is not felt. The settled position of law is that in the case of unconditional BGs, no interim injunction restra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NNER SET OUT IN PARAGRAPH 6 HEREOF, ANY AMOUNT UP TO AND NOT EXCEEDING INR 400,000,000.00 (FOUR HUNDRED MILLION INDIAN RUPEE) ON BEHALF OF THE APPLICANT ( BANK GUARANTEE ). 3. THE LIABILITY OF THE GUARANTOR BANK UNDER THIS BANK GUARANTEE IS RESTRICTED TO INR 400,000,000.00 (FOUR HUNDRED MILLION INDIAN RUPEE) ONLY. IN THE EVENT THE APPLICANT IS DECLARED AS THE SUCCESSFUL APPLICANT AND THE APPLICANT HAS SIGNED THE LETTER OF INTENT (AS DEFINED IN THE PROCESS MEMORANDUM) (BASED ON THE TERMS OF THE APPLICANT RESOLUTION PLAN (IN FORM AND SUBSTANCE SATISFACTORY TO THE SUCCESSFUL APPLICANT) AND ALREADY AGREED IN WRITING BY THE SUCCESSFUL APPLICANT) ISSUED TO IT BY THE COMMITTEE OF CREDITORS OF CASTEX TECHNOLOGIES LIMITED, WITHIN THE TIME LIMIT STATED IN THE LETTER OF INTENT, THEN THIS GUARANTEED AMOUNT IS LIABLE TO BE FORFEITED ( EVENT OF FORFEITURE ) IF THE SUCCESSFUL APPLICANT (A) FAILS TO EXTEND THE VALIDITY OF BANK GUARANTEE AS REQUIRED BY THE RESOLUTION PROFESSIONAL, IN THE MANNER PRESCRIBED IN CLAUSE 4 OF THE BANK GUARANTEE, (B) IS FOUND TO HAVE SUBMITTED A FALSE, MISLEADING OR INCOMPLETE DECLARATION OF ELIGIBILITY UNDER SECTION 29A OF THE IBC OR SUBMITS A FALSE OR MISLEADING DE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is quite evident that the BGs subject matter of these suits are unconditional. 33. Appendix 1 to the BG, referred to in clause 5 supra of the BG, is as under:- APPENDIX I NOTICE OF DEMAND TO: (INSERT GUARANTOR BANK) DATE: (INSERT) BANK GUARANTEE NO.(INSERT) DATED (INSERT) ( BANK GUARANTEE ) WE REFER TO THE BANK GUARANTEE. TERMS DEFINED IN THE BANK GUARANTEE SHALL HAVE THE SAME MEANINGS WHEN USED HEREIN. WE CONFIRM THAT: (A) THE APPLICANT HAS BEEN DECLARED THE SUCCESSFUL APPLICANT BY THE RESOLUTION PROFESSIONAL AND THE APPLICANT HAS SIGNED THE LETTER OF INTENT ISSUED TO IT BY THE COMMITTEE OF CREDITOR OF CASTEX TECHNOLOGIES LIMITED, WITHIN THE TIME LIMIT STATED IN THE LETTER OF INTENT, AND (B) THERE IS AN EVENT OF FORFEITURE CONTINUING AND OUTSTANDING. WE HEREBY DEMAND THE PAYMENT OF THE SUM OF (INSERT). PAYMENT SHOULD BE MADE TO THE CREDIT OF OUR ACCOUNT WITH THE FOLLOWING DETAILS: (INSERT DETAILS) FOR AND ON BEHALF OF STATE BANK OF INDIA 34. Notice of Demand dated 21st November, 2018 issued by the SBI to Barclays, invoking the BG, is as under:- NOTICE OF DEMAND TO, BARCLAYS BANK PLC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter of Demand/invocation sent by the SBI did not even mention which of the event of forfeiture had taken place/happened and which the SBI was obligated to state; (vii) reliance is placed on Harparshad Co. Vs. Sudarshan Steel Mill AIR 1980 Del 174, again to contend that the liability of the bank to pay is strictly in terms of the BG; (viii) the Letter of Demand/invocation issued by the SBI does not even disclose any cause and merely stating that event of default has occurred is not sufficient; (ix) the SBI cannot be held entitled to invoke the BG without complying with the terms thereof; (x) the stand of the defendants that failure of the plaintiff to furnish PBG in terms of LoI amounts to an event of forfeiture is not inconsonance with the BG; (xi) in Hindustan Steel Construction Limited Vs. Tarapore Co. (1996) 5 SCC 34 it has been held that a demand may become fraudulent, not because of any fraud committed by the beneficiary while executing the underlying contract, but because of subsequent events of circumstances; (xii) that the decision of the CoC rejecting the resolution plan of the plaintiff in fact is an event of releasing of BG; (xiii) the Process Memorandum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not felt. 39. As far as the fraud of an egregious nature, on finding whereof also the Court is empowered to interfere with payments under the BG, the same has to be in the underlying contract. In the present case the underlying contract in consideration whereof the BG at the insistence of the plaintiff was furnished, is the offer of the plaintiff to restructure Castex in CS(COMM) No.1246/2018, and ARGL Limited in CS(COMM) No.1247/2018 with respect to both of which CIR Process was under way under the Code. The senior counsels for the defendants are right in contending that there is not a whisper in the plaint of any fraud having been committed in inviting resolution applicants for Castex and ARGL Limited. Pleas of fraud in the matter of invocation of the BG do not constitute a ground to interfere with payment under the BG. 40. As far as the argument of the senior counsel for the plaintiff, of forfeiture being penal in nature and reliance on Kailash Nath Associates to which I only during the hearing had drawn attention, is concerned, on further consideration I find the said questions to be not applicable in the present controversy. I say so because Supreme Court in para 43.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43. It cannot also be lost sight of that in the whole process, considerable time, out of the time bound schedule in terms of the Code for the resolution process, has been wasted and wastage of which time may ultimately result in the possibility of Castex and ARGL Limited being restructured ceasing to exist and being inevitably required to be liquidated, all at the cost of the creditors thereof and wastage of the stressed assets of the said two companies. The loss caused by such conduct of the plaintiff is thus mammoth, having adverse consequences on all the creditors and shareholders of the said two companies and also on the economy of the country and to remedy which, the code was enacted. The NCLT is best equipped to also deal with apportionment of the amount of the BBGs in proper account. 44. The present case thus also falls in the category of cases envisaged in SAW Pipes Ltd. supra i.e. where loss caused on account of delays in construction of say, a public road, though does not cause loss to any individual or person or company in particular but causes loss to the residents of the country and which is unmeasurable and in which regard a pre-estimate is permitted to be forfeit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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