BGs can be invoked during moratorium period; customs authorities can utilize them. FDR return rejected.

The appeal filed by the Liquidator challenging the rejection of the return of Bank Guarantees (BGs) and Fixed Deposit Receipts (FDRs) was dismissed. The Tribunal affirmed that BGs can be invoked during the moratorium period under Section 14 of the Insolvency and Bankruptcy Code. The decision emphasized that BGs are not assets of the corporate debtor and can be utilized by customs authorities. The Tribunal held that customs authorities' claims should be addressed within the liquidation process as per Section 53 of the IBC, implicitly rejecting the return of FDRs.

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Issues Involved:
1. Return of Bank Guarantees (BGs) and Fixed Deposit Receipts (FDRs) to the Corporate Debtor/Liquidator.
2. Invocation of BGs during the moratorium period under Section 14 of IBC.
3. Treatment of claims filed by Customs Authorities during the liquidation process.

Summary:

Issue 1: Return of BGs and FDRs to the Corporate Debtor/Liquidator
The appeal was filed by the Liquidator of Lance Vidarbha Thermal Power Limited under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), challenging the order of the Adjudicating Authority (NCLT, Hyderabad Bench) which rejected the application for the return of BGs and FDRs. The Appellant argued that these securities, provided in lieu of customs duties for imported materials, should be returned to maximize the value of the corporate debtor's assets for the benefit of all stakeholders. However, the Tribunal noted that the Adjudicating Authority did not explicitly adjudicate on the return of FDRs, implying a rejection of this prayer.

Issue 2: Invocation of BGs during Moratorium Period
The Tribunal referenced the judgment of the Hon'ble Supreme Court in the case of State Bank of India vs. V. Ramakrishnan & Anr., affirming that Section 14(3)(b) of IBC allows for the invocation of BGs even during the moratorium period. The Tribunal emphasized that BGs are not considered assets of the corporate debtor and can be invoked by the customs authorities. This position was supported by the judgment in Bharat Aluminium Co. Ltd. vs. M/s. J.P. Engineers Pvt. Ltd. & Anr., which held that BGs, being irrevocable and unconditional, can be invoked during the moratorium period.

Issue 3: Treatment of Claims by Customs Authorities
The Appellant cited the Supreme Court judgment in ABG Shipyard vs. Central Board of Indirect Taxes and Customs, arguing that customs authorities can only assess or reassess duties but cannot initiate recovery during the moratorium. However, the Tribunal distinguished this case, noting that the issue was not about recovery but the invocation of BGs and FDRs, which are permissible under Section 14(3)(b) of IBC. The Tribunal concluded that the customs authorities' claims should be addressed within the liquidation process as per Section 53 of IBC.

Conclusion:
The appeal was dismissed, affirming the Adjudicating Authority's decision to allow the invocation of BGs and implicitly rejecting the return of FDRs. The Tribunal held that BGs are not protected by the moratorium and can be invoked by customs authorities, and any claims by these authorities should be processed under the liquidation framework of IBC.

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