Pre-CIRP bank guarantee invocation cannot be reopened in insolvency, and fraud-related IBC prayers must follow statutory standing rules.

A pre-CIRP invocation of performance bank guarantees made strictly in accordance with their terms could not be reopened in insolvency proceedings, so the request to preserve and refund the encashed proceeds was rejected. The Tribunal noted that the guarantees permitted payment on written demand without inquiry into underlying disputes, and prior interim restraint had lost effect once the invocation had already occurred. Prayers seeking cognizance under sections 66, 70, 73 and 74 of the Insolvency and Bankruptcy Code were also held not maintainable because such relief had to conform to the Code's statutory scheme, be brought by the proper applicant, and involve necessary parties. The interim protection was vacated on disposal.

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Issues: (i) Whether the invocation of the performance bank guarantees by the corporate debtor could be interfered with and the encashed proceeds directed to be preserved and refunded. (ii) Whether the applicant could maintain prayers seeking cognizance under sections 66, 70, 73 and 74 of the Insolvency and Bankruptcy Code, 2016 against the respondents.

Issue (i): Whether the invocation of the performance bank guarantees by the corporate debtor could be interfered with and the encashed proceeds directed to be preserved and refunded.

Analysis: The bank guarantees had been invoked before the commencement of the corporate insolvency resolution process. Their invocation was found to be in accordance with the guarantee terms, which permitted payment on the corporate debtor's written demand without inquiry into underlying disputes. The prior civil court restraint was noted to be ineffective as the guarantees had already been invoked, and the High Court had set aside the interim protection. In these circumstances, the Adjudicating Authority held that it could not reopen the invocation or direct refund merely because the matter was later placed before it during CIRP.

Conclusion: The challenge to the invocation failed and the prayer for preservation and refund of the guarantee proceeds was rejected.

Issue (ii): Whether the applicant could maintain prayers seeking cognizance under sections 66, 70, 73 and 74 of the Insolvency and Bankruptcy Code, 2016 against the respondents.

Analysis: Section 66 empowers the resolution professional to move such an application, and the other alleged contraventions were sought against persons who were not impleaded as necessary parties. The prayers were also not aligned with the statutory scheme invoked by the applicant under section 60(5). On that basis, the Tribunal held that the applicant was not entitled to seek the requested cognizance in the present proceedings.

Conclusion: The prayers under sections 66, 70, 73 and 74 were not maintainable and were declined.

Final Conclusion: The applications were not granted on merits, and the interim protection earlier operating in favour of the applicant was vacated as the proceedings were disposed of.

Ratio Decidendi: A pre-CIRP invocation of an irrevocable bank guarantee made strictly in accordance with its terms cannot be reopened in insolvency proceedings, and statutory applications seeking fraud-related or penal relief must conform to the Code's locus and party-impleadment requirements.

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