Tribunal Denies Relief in IBC Case

The Tribunal denied the preservation and refund of moneys realized under the Performance Bank Guarantees (PBGs) as the invocation was in accordance with agreed terms. The prayer for relief under Section 66 of the Insolvency and Bankruptcy Code (IBC) for fraud and wrongful trading was dismissed due to lack of authority. Relief under Sections 70, 73, and 74 of the IBC regarding misconduct during Corporate Insolvency Resolution Process (CIRP), false representation to creditors, and contravention of moratorium was not granted due to non-joinder of necessary parties. The applications were dismissed, interim orders vacated, and some closed as infructuous.

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Issues Involved:
1. Preservation and refund of the moneys realized under the Performance Bank Guarantees (PBGs).
2. Fraud and wrongful trading under Section 66 of the Insolvency and Bankruptcy Code (IBC).
3. Misconduct during Corporate Insolvency Resolution Process (CIRP) under Section 70 of the IBC.
4. False representation to creditors under Section 73 of the IBC.
5. Contravention of moratorium and continuation of an appeal of suit under Section 74 of the IBC.

Issue-wise Detailed Analysis:

1. Preservation and Refund of the Moneys Realized Under the PBGs:
The Tribunal observed that the PBGs were invoked by Meenakshi Energy Limited (MEL) on 18.10.2019, prior to the initiation of CIRP against MEL on 07.11.2019. The PBGs were irrevocable, and the Civil Court had already determined that there was no element of fraud in their invocation. Clause 2 of the PBGs clearly stated that the bank must effect payments to MEL without any delay or inquiry upon MEL's written request. Therefore, the invocation of the PBGs was in accordance with the agreed terms. The Tribunal concluded that it could not interfere with the already invoked PBGs, and the prayer for preservation and refund of the moneys was denied.

2. Fraud and Wrongful Trading Under Section 66 of the IBC:
Section 66 of the IBC empowers the Interim Resolution Professional (IRP) or Resolution Professional (RP) to file an application against the erstwhile management of the Corporate Debtor for fraudulent trading. The Tribunal noted that the applicant (Siemens Limited) was not vested with the authority to seek relief under Section 66. Therefore, the prayer to take cognizance of fraud and wrongful trading was dismissed.

3. Misconduct During CIRP Under Section 70 of the IBC:
The Tribunal observed that the prayers under Sections 70, 73, and 74 of the IBC were sought against the erstwhile management of MEL. However, the key managerial personnel of the erstwhile management were not made parties to the application. Consequently, the reliefs sought for misconduct during CIRP, false representation to creditors, and contravention of moratorium could not be granted due to non-joinder of necessary parties.

4. False Representation to Creditors Under Section 73 of the IBC:
As mentioned above, the Tribunal could not grant relief for false representation to creditors under Section 73 due to non-joinder of necessary parties.

5. Contravention of Moratorium and Continuation of an Appeal of Suit Under Section 74 of the IBC:
Similarly, the Tribunal could not grant relief for contravention of moratorium under Section 74 due to non-joinder of necessary parties.

Conclusion:
The Tribunal dismissed the applications bearing IA Nos. 77, 237, and 238/2020. Interim orders, if any, were vacated. The relief sought in IA No. 77/2020 had already been granted and extended from time to time, and the prayer in IA No. 237/2020 was covered in the prayers made in IA No. 238/2020. Therefore, IA Nos. 77/2020 and 237/2020 were closed as infructuous.

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