NCLAT dismisses appeals finding that the matter could not be decided by it on account of the order of liquidation of the Corporate Debtor already passed by the AA; directs the appellants to file their claims in front of the Liquidator.
In the present matter, the Appellants (KSB Shanghai Pump Co Ltd, M/s TLT-Tourbo (Sichuan) Co Ltd and M/s Beijing Power Equipment Group Co Ltd) had filed separate applications under Section 60(5) of the I&B Code seeking direction to Resolution Professional to restrain from invoking/encashing Performance Bank Guarantee (PBG) not to pay any amount to the Bank of M/s Lanco Infratech Ltd (Corporate Debtor) and to return to the applicant any amounts paid out upon encashment of the PBG. The Adjudicating Authority by similar order all dated 5th March, 2019 taking into consideration the fact that the applicants/appellants have filed their respective claim before the Resolution Professional arising out of their respective contract, and the Resolution Professional has not accepted their claim, held that the applicants/appellant cannot seek injunction against Corporate Debtor for refraining it from invoking the ‘Corporate Performance Bank Guarantee’s (CPBG).
Appellants submitted that Corporate Debtor through the Resolution Professional had fraudulently invoked the ‘Performance Bank Guarantee’ with a view to deprive the appellant of its monies and to make wrongful gain. Appellants further contended that the Bank Guarantee was issued towards timely completion and the faithful performance of the Contract in accordance with the terms and conditions specified in the Contract. Therefore, the Professional/Liquidator does not have the power under IBC to invoke the Performance Bank Guarantee. Resolution Professional/Liquidator submitted that the performance bank guarantee is a separate contract which is unconditional and irrevocable. It was also submitted that the performance bank guarantee is an irrevocable and unconditional bank guarantee where under the Guarantor Bank has undertaken to make payment on first demand by the Corporate Debtor without any conditions/restrictions or any further proof. The performance bank guarantee clearly provides that any such demand made by the Corporate Debtor shall be conclusive and binding notwithstanding any dispute pending before any court, tribunal, arbitrator or any other authority and the Corporate Debtor is well within its right to invoke the Performance Bank Guarantee without any reference to the terms of the underlying contract. It was submitted that the Appellants were in breach of the contracts by not extending the Advance Bank Guarantee and also not supplying the goods to the Corporate Debtor.
NCLAT observes that it is not inclined to decide the claim and counter claim as has been made by the parties in view of the fact that the Adjudicating Authority has already passed order of liquidation of the Corporate Debtor. NCLAT further observes that in all the cases the appellants have sought direction to Liquidator to restrain from invoking or encashing the Bank Guarantee. However, the Bank Guarantees were invoked. Though it is not clear as to whether the amount have been realised by the Corporate Debtor on invocation of aforesaid Performance Bank Guarantees or not, which was to be released by the Bank of China. NCLAT thus finds that the direction as sought for by Appellants to direct not to pay any amount to the Corporate Debtor, cannot be ordered. NCLAT further notes that in case the Performance Bank Guarantees have been invoked, and the Corporate Debtor has received the amount out of the Performance Bank Guarantees, in such case NCLAT is of the view that the Appellants can file their respective claim before Liquidator who may decide the claim in terms of Section 40 of I&B Code. NCLAT thus, disposes of the appeals and gives liberty to the Appellants to move before the Appropriate Forum for appropriate relief.