TMI Blog2020 (9) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... December 2018. Given Section 14(3) of the I B Code, 2016 invocation of the said guarantee could not be stopped by the Bank. The Security Interest does not include the Performance Bank Guarantee . The Performance Bank Guarantee is not covered by Section 14 of the Code - It is pertinent to mention that the margin money is not a security as has been argued by the Respondent and does not require any registration of charge. Only the assets gave by the Company as securities are required to be registered under Section 77 of the Companies Act, 2013. In this case, Bank Guarantee was invoked on 27th December 2018 by the beneficiary M/s Tata Steel Processing Distribution Limited, and the margin money amount was used towards the payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... margin money of the irrevocable Bank Guarantee, which was already invoked during the Moratorium period, issued U/S 14 of the Code. The Parties are represented by their original status in the Company Petition for the sake of convenience. 2. These brief facts of the case are as follows: The Appellant, Indian Overseas Bank, is one of the Financial Creditors of the Corporate Debtor M/s Richa Industries Limited from whom the Corporate Debtor had availed various loan facilities including an irrevocable Bank Guarantee. The Corporate Debtor deposited margin money of ₹ 40,50,000/- in the form of FDR to secure the said Bank Guarantee. One of the Operational Creditor M/s Tata Blue Steel Limited initiated the CIRP against the Corporate Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g CA No. 95 of 2019 in CP (IB) No. 80/CHD/HRY/2018, filed under Section 60 (5) read with Section 74(2) of the Code, seeking direction against the Appellant, i.e. Indian Overseas Bank to release all the funds of the Corporate Debtor, which were retained by the Appellant bank in violation of the Code. The Adjudicating Authority/NCLT Chandigarh Bench passed the impugned order dated 29th April 2020 and ordered the Appellant Bank to release of the margin money amount, which is under challenge before us. 6. The Appellant contends that the margin money was adjusted towards the payment on account of the invocation of the Bank Guarantee during the Moratorium. It is contended that this Appellate Tribunal in the case of Gail (India) Limited Vs. Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strar of Companies. Thus, it is contended that the adjustment of margin money, against payments made on the invocation of Bank Guarantee, was blatantly illegal and against the explicit provisions of the Code. 8. We have heard the arguments of the Learned Counsel for the parties and perused the records. 9. Admittedly, ₹ 51,27,591/- was the margin money, while was deposited by the Corporate Debtor to secure Bank Guarantee in favour of M/s Tata Steel Processing Distribution Limited for an amount of ₹ 4,01,94,954/-. The said Bank Guarantee was invoked during the moratorium period, i.e. on 27th December 2018. Given Section 14(3) of the I B Code, 2016 invocation of the said guarantee could not be stopped by the Bank. 10. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment or performance of any obligation of any person: Provided that security interest shall not include a performance guarantee 6. From sub-section (31) of Section 3, it is clear that the security interest do not include the Performance Bank Guarantee , therefore, we hold that the security interest mentioned in clause (c) of Section 14(1) do not include the Performance Bank Guarantee . Thereby the Performance Bank Guarantee given by the Corporate Debtor in favour of the Appellant- GAIL (India) Ltd. is not covered by Section 14. The Appellant- GAIL (India) Ltd. is entitled to invoke its Performance Bank Guarantee in full or in part. (emphasis supplied) 11. Thus, it is clear that Security Interest doe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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