TMI Blog2023 (8) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Supreme court in the matter of STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [ 2018 (8) TMI 837 - SUPREME COURT] is noted, wherein Hon ble Supreme Court has noticed the observations in the report dated 26.03.2018 of the Insolvency Law Committee appointed by the Ministry of Corporate Affairs, holding that to clear the confusion regarding treatment of assets of guarantors of the corporate debtor vis-a-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 Appellant placed reliance upon the judgment of Hon ble Supreme Court in the matter of SUNDARESH BHATT, LIQUIDATOR OF ABG SHIPYARD VERSUS CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS [ 2022 (8) TMI 1161 - SUPREME COURT] . A perusal of this judgment shows that the customs authorities can assess/reassess customs/import duty, but are not allowed to recover such amounts, which should be claimed as part of the resolution process under IBC by the debtor. This judgment is distinguished on the basis that in the present case, the customs au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended to 120 months, within which the project company had to execute long term Power Purchase Agreement (PPA). It was also stipulated that after obtaining the Final Mega Power Project status within the stipulated period, the securities submitted in the form of Bank Guarantee (BG) and Fixed Deposit will be returned to the corporate debtor and the corporate debtor was accorded the status of Provisional Mega Power Project on 21.11.2011, which was valid till 21.11.2021. 3. The Appellant has further stated that the bond of Rs. 2160 crores and a BG of Rs. 10 crores issued by the Punjab National Bank were executed for the purpose of registering the contract in terms of the Project Import Regulations, 1986 and Customs Tariff Act, 1975 with the customs authorities. Later BGs were also issued by the banks when the imported materials were released from Customs Private Bonded Warehouse without payment of requisite import/customs duty. He has further stated that the BGs which were issued by the bank carry a clause that they will renew the same on their own till the bank guarantee is fully discharged by the Deputy Commissioner of Customs, Nhava Sheva/Mumbai. 4. While explaining various as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,709 MT of material was released and shifted to the plant site. He has added that for the balance material, FDs and BGs were furnished by the corporate debtor in favour of Deputy Commissioner of Customs, Mumbai for release and lifting of materials amounting to 12,617 MT by the corporate debtor. The Appellant has stated that R-3 has also not filed his claims till date before the liquidator. 7. The Appellant has further stated that on direction of the Stakeholder Consultation Committee, he filed IA No. 636/2022 against the Respondents with the prayer for release/delivery of the material instead of joint sale of the material held in Custom Private Bonded Warehouse in consonance with the judgment of Hon ble Supreme Court in the matter of ABG Shipyard vs. Central Board of Indirect Taxes and Customs (Civil Appeal No. 7667/2022). Another application bearing no. 781/2023 was filed in IA No. 636/2022 by R-1 with the prayer to set aside the ex-parte order against R-1 and to take his counter on record, which was allowed and the counter of R-1 was taken on record, but R-2 and R-3 remained ex-parte. In IA No. 636/2022, the Impugned Order dated 15.6.2023 came to be passed by which the relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d so that these amounts could be used while for the benefit of all the stakeholders, including the Respondents, while paying of their dues. He has further argued that the objective of the IBC is maximization of value of the corporate debtor and therefore, with the return of BGs and FDRs held by R-1, R-2 and R-3, these amounts would go into the kitty to be used for paying of the debts of the corporate debtor. He has argued that the value maximization of the corporate debtor is the underlying theme of IBC, which cannot be ignored and the same should accrue to the benefit of all stakeholders and creditors of the corporate debtor. 11. The Learned Counsel for Appellant has cited the judgment of Hon ble Supreme Court in the matter of ABG Shipyard vs. Central Board of Indirect Taxes and Customs (supra), wherein it is clearly held that the claims can be assessed by the customs authorities, but no recovery can be undertaken by them and the proper course for them is to file their claims in the liquidation process which after due consideration shall be distributed in accordance with the provisions of section 53 of IBC. The relevant portion of the judgment is as under:- 44 Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate debtor and not by the corporate debtor itself. The Learned Counsel for Appellant has reiterated that R-1 has filed its claim before the Liquidator and therefore, is now not entitled for return of BG amount and could only avail whatever would be the distributed amount consequent to its claim under the waterfall mechanism of section 53 of IBC. The Learned Counsel for Appellant has also claimed that the Appellant s prayer regarding return of FDRs has not been adjudicated in the Impugned Order and the FDRs and the BGs both should be returned to the Liquidator/corporate debtor as argued earlier. 14. The Learned Counsel for Appellant has relied on the judgment in the matter of ABG Shipyard vs. Central Board of Indirect Taxes and Customs (supra) to claim that the BG and the FDRs cannot be invoked by Deputy Commissioner of Customs at Nagpur, Nhava Sheva and Mumbai. He has placed reliance on paras 44 and 45 of the above-mentioned judgment to content that the customs authorities could only initiate assessment or re-assessment of the duties and other levies, but cannot proceed to initiate recovery in violation of Section 14 or 33(5) of the IBC. 15. We note that in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent and co-extensive liability to pay off the entire outstanding debt, which is why section 14 of the IBC is not applied to them. Also held that contract of guarantee is between the creditor and principal debtor and the surety whereunder the creditor has a remedy in relation to his debt against both the principal debtor and surety. As per Section 128 of the Contract Act, 1872 the liability of surety is coextensive with that of principal debtor and the creditor may go against either principal debtor or surety or both in no particular sequence. 33. We have considered whether the bank guarantee is an asset of Respondent No. 1 (Corporate Debtor). 34. Ld. Counsel for the Appellant has placed reliance on the Judgment of Hon ble AP High Court in the case of Haryana Telecom Ltd. (Supra) held that: The bank guarantee cannot be said to be the property of the first Respondent (Buyer) simply because it is indirectly going to be affected by enforcement of the said bank guarantee by the writ Appellant . 35. Ld. Counsel for the Appellant also cited the Judgment of Hon ble Supreme Court in the Case of UP State Sugar Corporation (Supra)in which it is held that: When ir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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