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TMI Blog2020 (4) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... Code and for other reliefs. The respondent/non-applicant has filed a reply to this application on 19.03.2019 and no rejoinder thereto has been filed by the applicant. 3. IA No.182/2020 filed by the applicant/Resolution Professional seeking urgent hearing of CA No.95/2019 was disposed of on 27.04.2020 through video conferencing as the Tribunal was closed due to lockdown declared by the Government of India in view of Novel COVID-19. In pursuance of the orders passed in IA No.182/2020, filed by the Resolution Professional, CA No.95/2019 is taken up for hearing by way of video conferencing and both the parties were permitted to file the written submissions. 4. At the outset, Mr. Atul V. Sood, learned counsel appearing for the applicant has taken serious objection about the statement made in the written submission of the respondent/non-applicant, wherein it was stated that "there is a serious allegation of fraud were leveled by the answering respondent against the applicant/resolution professional", and submits that there were no pleadings on record in support of the said contention. However, Mr. Rakesh Gupta, learned counsel appearing for the respondent/non-applicant fairly submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent/non-applicant reversed the said transaction and after adding the interest, created a fresh fixed deposit on 24.12.2018 for Rs. 1,00,00,031/- and a fresh charge has been created against the same. 9. With regard to Item No.5, the respondent/non-applicant stated that the said amount was kept as a margin money for the bank guarantee issued by the respondent/non-applicant on behalf of the corporate debtor. The said bank guarantee was invoked after the moratorium was declared and the respondent/non-applicant has encashed the said fixed deposit against the same. However, after receipt of letter from the Interim Resolution Professional, the respondent/non-applicant has created a fresh fixed deposit on 27.12.2018 for the total amount of Rs. 51,27,591/-. 10. The learned counsel appearing for the applicant submits that the respondent/non-applicant cannot retain the said fixed deposits once the Corporate Insolvency Resolution Process against the corporate debtor is initiated and moratorium is declared. The said fixed deposits should be cancelled and credited to the account of the corporate debtor to enable it to utilize the same in accordance with the Code and the Regulations made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. [Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;] (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. [(2-A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btor vis-à-vis the moratorium on the assets of the corporate debtor, it has been recommended to clarify by way of an explanation that all assets of such guarantors to the corporate debtor shall be outside scope of moratorium imposed under the Code;" (emphasis supplied) 32. The Committee insofar as the moratorium under Section 14 is concerned, went on to find: "5.5. Section 14 provides for a moratorium or a stay on institution or continuation of proceeding, suits, etc. against the corporate debtor and its assets. There have been contradicting views on the scope of moratorium regarding its application to third parties affected by the debt of the corporate debtor, like guarantors or sureties. While some courts have taken the view that Section 14 may be interpreted literally to mean that it only restricts actions against the assets of the corporate debtor, a few others have taken an interpretation that the stay applies on enforcement of guarantee as well, if a CIRP is going on against the corporate debtor." *** "5.7. The Allahabad High Court subsequently took a differing view in Sanjeev Shriya v. SBI [Sanjeev Shriya v. SBI, 2017 SCC OnLine All 2717 : (2018) 2 All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... co-extensive and is joint and several (Bank of Bihar Ltd. v. Damodar Prasad [Bank of Bihar Ltd. v. Damodar Prasad, AIR 1969 SC 297]). The Committee noted that this characteristic of such contracts i.e. of having remedy against both the surety and the corporate debtor, without the obligation to exhaust the remedy against one of the parties before proceeding against the other, is of utmost importance for the creditor and is the hallmark of a guarantee contract, and the availability of such remedy is in most cases the basis on which the loan may have been extended. 5.10. The Committee further noted that a literal interpretation of Section 14 is prudent, and a broader interpretation may not be necessary in the above context. The assets of the surety are separate from those of the corporate debtor, and proceedings against the corporate debtor may not be seriously impacted by the actions against assets of third parties like sureties. Additionally, enforcement of guarantee may not have a significant impact on the debt of the corporate debtor as the right of the creditor against the principal debtor is merely shifted to the surety, to the extent of payment by the surety. Thus, contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oordinate Bench decision in Pankaj Khaitan, RP Versus Allahabad Bank, passed on 22.02.2019 in CA No.169/C-IV/ND/2018 in CP CIV(IB)-275/(ND)/2018 by the National Company Law Tribunal, New Delhi. 17. In Pankaj Khaitan's case (supra), the National Company Law Tribunal, New Delhi, in identical circumstances, held that respondent therein cannot retain the fixed deposit kept as margin money for issuance of a bank guarantee and the same is liable to be released to the corporate debtor for utilization of the said money in accordance with the Code and the Regulations made thereunder. The submissions made by the respondent/non-applicant's counsel, distinguishing the said decision, are untenable. 18. In the circumstances and for the aforesaid reasons, the instant CA is partly allowed as under:- i. The respondent/non-applicant shall release the amounts in Item Nos.2, 5, 6, 7, 8 and 9, of the table mentioned above, alongwith interest accrued, if any, to the account of the corporate debtor to enable it to utilize in accordance with the Code and the Regulations made thereunder; ii. The applicant/Resolution Professional is directed to file a detailed affidavit before this Tribunal with regar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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