Tribunal rules SRA not liable for pre-"Transfer Date" bank guarantees per Resolution Plan terms

The tribunal held that the Successful Resolution Applicant (SRA) was not liable to pay for live bank guarantees invoked before the "Transfer Date" as per the Resolution Plan terms. The Resolution Plan specified that payment for invoked bank guarantees would only apply post "Transfer Date." The tribunal emphasized adherence to the Resolution Plan terms and defined dates. Citing relevant legal precedents, the tribunal dismissed the appeal, ruling the SRA was not obligated to pay the pre-"Transfer Date" invoked guarantees, stating surprise claims not in the Plan were not enforceable against the SRA. No costs were awarded.

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Issues Involved:
1. Entitlement of payment towards live bank guarantees invoked prior to the "Transfer Date" under the Resolution Plan.
2. Interpretation of the terms of the Resolution Plan regarding the payment of invoked bank guarantees.
3. Applicability of relevant legal precedents and judgments.

Issue-wise Detailed Analysis:

1. Entitlement of Payment Towards Live Bank Guarantees Invoked Prior to the "Transfer Date" Under the Resolution Plan:
The core issue in this appeal is whether the appellant (Bank of Maharashtra) and other consortium member banks are entitled to payment for live bank guarantees related to large projects that were invoked before the "Transfer Date" by the Successful Resolution Applicant (SRA). The appellant argued that the SRA undertook to pay 52.50% of the invoked bank guarantees as per the Resolution Plan approved by the Committee of Creditors (CoC) and the Adjudicating Authority. The appellant contended that since the bank guarantees were live at the time of submission and approval of the Resolution Plan, the SRA should honor its commitment to pay the invocation amounts.

2. Interpretation of the Terms of the Resolution Plan Regarding the Payment of Invoked Bank Guarantees:
The appellant referred to specific clauses in the Resolution Plan, particularly clause 3.5 relating to the "Source of Funds" and its "Utilisation," and clause 3.7 concerning the "Treatment under the Resolution Plan for the Financial Creditors." The appellant emphasized that the Resolution Plan included provisions for the payment of invoked bank guarantees and that the SRA was obligated to make such payments. The respondent, however, argued that the Resolution Plan clearly stipulated that the payment towards invoked bank guarantees would only be made if the invocation occurred subsequent to the "Transfer Date." The respondent highlighted that the "Closing Date" and "Transfer Date" were defined in the Resolution Plan, and the management/control of the corporate debtor would transfer to the SRA on the "Transfer Date." Since the invocation of the bank guarantees took place before this date, the SRA was not liable for the payment.

3. Applicability of Relevant Legal Precedents and Judgments:
The appellant relied on several judgments to support their contention, including Andhra Bank v. F.M. Hammerle Textile Ltd., Export Import Bank of India v. Resolution Professional JEKPL Private Ltd., and Canara Bank v. IVRCL Limited. Additionally, the appellant cited Supreme Court judgments in Enercon (India) Ltd. v. Enercon GMBH and Union of India v. D.N. Revri and Co. to argue for a purposive interpretation of contractual terms. The appellant also referred to Phoenix ARC Pvt. Ltd. v. Anush Finleash & Construction Pvt. Ltd. and Pragdas Mathuradas v. Jeewanlal (1929), Limited to assert that bank guarantees constitute independent contracts and are not subject to Section 14 of the IBC. The respondent countered by citing Supreme Court judgments in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, arguing that any claims not explicitly covered in the approved Resolution Plan would be extinguished.

Judgment:
The tribunal found that the Resolution Plan explicitly stated that payment for live bank guarantees would only be made if the invocation occurred after the "Transfer Date." Since the bank guarantees were invoked before this date, the SRA was not liable for the payment. The tribunal emphasized the importance of adhering to the specific terms of the Resolution Plan and the definitions of "Closing Date" and "Transfer Date." The tribunal also referenced the Supreme Court's judgments, which supported the view that the SRA could not be subjected to surprise claims not included in the Resolution Plan. Consequently, the appeal was dismissed, and the tribunal concluded that the purported liability falling on the SRA prior to the "Transfer Date" was not payable by the SRA. No order as to costs was made.

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