Tribunal Protects Bank Guarantee in Insolvency Moratorium

The Tribunal ruled in favor of the Resolution Professional, preventing the State Bank of India from invoking a Performance Bank Guarantee during the moratorium period declared under the Insolvency Code for the Corporate Debtor, M/S. Petron Engineering Construction Limited. The Tribunal held that the revocation of the Bank Guarantee would contravene the provisions of the Insolvency Code and prohibited any alienation of assets during the moratorium. The judgment granted the Miscellaneous Application, directing urgent issuance of a Certified Copy to safeguard the stakeholders' rights.

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Issues:
1. Invocation of Performance Bank Guarantee during the moratorium period.
2. Estoppel against State Bank of India for releasing payment of Bank Guarantee.
3. Compliance with the Insolvency Code provisions regarding asset alienation during moratorium.

Analysis:
1. The judgment pertains to a Miscellaneous Application filed by the Resolution Professional seeking to prevent the invocation of a Performance Bank Guarantee by the State Bank of India during the moratorium period declared under the Insolvency Code for the Corporate Debtor, M/S. Petron Engineering Construction Limited. The Resolution Professional argued that the completion of work by the Corporate Debtor and the issuance of a Completion Certificate by GAIL India Limited should prevent the revocation of the Bank Guarantee.

2. The Resolution Professional drew attention to a previous interim order involving Axis Bank, where the bank was estopped from revoking a Performance Bank Guarantee. The Resolution Professional requested a similar injunction against the State Bank of India to protect the interests of the stakeholders of the Corporate Debtor. The Tribunal, considering the facts of the case and the ongoing moratorium, found that the revocation of the Bank Guarantee by the State Bank of India would be against the provisions of the Insolvency Code.

3. The Tribunal held that since the moratorium was already in effect, any alienation of assets or recovery from the Corporate Debtor's property was prohibited. Therefore, the State Bank of India was estopped from revoking the Bank Guarantee or discharging it in favor of any party, including GAIL India Limited. The judgment allowed the Miscellaneous Application, directing the Registry to issue a Certified Copy urgently to enforce the decision and protect the rights of the stakeholders of the Corporate Debtor.

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