AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 1747
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....ct, 1956. The applicant is a sub-contractor of respondent No. 2 and had bank guarantees worth Rs. 1,86,00,000 (rupees one crore eighty six lakhs) issued in favour of respondent No. 2. (2) That the company petition bearing C. P. (IB) No. 111/7/HDB/2017 was admitted by this Tribunal vide order dated August 7, 2017 and appointed interim resolution professional who was later confirmed as the resolution professional. (3) It is the case of applicant that each Thermal Power Project has various components such as boiler, cooling tower, and transformer, etc. The said components require intake of treated water and thereafter generating electricity. The same components discharge various effluents, chemicals, oils, etc. It is with regard to the water intake and discharge that the Thermal Power Plants require : (a) Water Treatment Plant ("WTP") for treating raw water and sup plying treated water as intake to the components of the Thermal Power Plants. (b) Effluent Treatment Plant ("ETP") for treating the effluents, chemicals, oil, etc., discharged from the components of the Thermal Power Plants and thereby making the discharge suitable for reuse in the Power ....
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.... over of complete ETP and Ultra Filtration under the WTP for the 3 x 660 MW Koradi Project. The total order value of supplying and erecting ETP at the Koradi Project was Rs. 8,80,00,000 (rupees eight crores eighty lakhs only). It is also averred pursuant to the said contract for design, engineering, manufacture, inspection, testing, commission and handing over of complete ETP and Ultra Filtration of WTP for the Koradi Project, the applicant had to furnish bank guarantee to respondent No. 1. Consequently, Oriental Bank of Commerce ("OBC") issued 2 (two) bank guarantees in favour of respondent No. 2 : (a) Bank Guarantee No. 09370003915, amount - Rs. 81,38,200 (for ETP) (b) Bank Guarantee No. 03690009814, amount - Rs. 30,50,000 (for WTP) (6) The applicant avers that, it being a sub-contractor, the nature of work was of such that it could not have been completed unless the entire power project was functional and ready for operation. Therefore, the ETP could have been tested and commissioned by the applicant only upon completion of the power project, which was to be completed by respondent No. 2, through its other sub-contractors. Therefore, any delay on the p....
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....s and further alleges that the act of invoking the Moser Baer Thermal Project bank guarantee by respondent No. 2 is in complete violation of section 18 of the Insolvency and Bankruptcy Code, 2016. (12) The applicant further alleges that respondent No. 2 has even approached OBC for encashment/invocation of the 2 (two) Koradi Project bank guarantees issued by OBC in favour of respondent No. 2. It is averred applicant has already performed 95 per cent. of its obligations in the Koradi Project and has already designed, manufactured, supplied, tested, com missioned and handed over completed ETP and WTP and the same is evident from the fact that the Koradi Project has started generating electricity and respondent No. 2 has cleared around 95 per cent. of the same, i. e., total value of the work order (erection of ETP) and purchase order (supply of ETP) for the Koradi Project. Furthermore, the applicant had also received a letter from Mahagenco dated December 22, 2017 requesting the applicant to convey its readiness and willingness to continue the Koradi Project. (13) Thus, it prayed this Tribunal to grant the reliefs sought for by the applicant. 3. Written submissions....
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....issuing the bank guarantee and the beneficiary of the bank guarantee and not a contract where the promisor/applicant herein is even a party and relied on the judgment of the hon'ble Supreme Court in the matter of Gujarat Maritime Board v. Larsen and Toubro Infrastructure Development Projects Ltd. [2016] 10 SCC 46. (7) It is the contention of the liquidator that the application does not deal with any "question of priorities" or any "question of law or fact arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor and as such does not fall within the ambit of sec tion 60(5)(c) of the Code. (8) It is the case of the liquidator that in the instant case, there are ongoing disputes between the parties which have been raised in relation to performance of the contract and that such ongoing disputes do not in any way amount to fraud in the invocation of the PBG. Further, applicant is unable to establish that irretrievable harm or injustice would be caused if the bank guarantees are allowed to be invoked. (9) Further, liquidator contends that APBGS are not "assets" of the applicant as such invocation of APBGs ....
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.... of applicant, the corporate debtor issued a letter of intent in favour of applicant for design, engineering, manufacture, inspection, testing, commissioning and handing over of effluent treatment plant (ETP) and ultra-filtration under water treatment plant (WTP). The contention of applicant that it furnished two performance bank guarantees issued by Oriental Bank of Commerce. The contention of applicant that it had completed the project work. However, the corporate debtor is trying to invoke two bank guarantees issued by Oriental Bank of Commerce (OBC). The contention of the applicant, unless entire power project is completed, then only ETP can be put for testing and commissioning. The contention of the applicant that it has completed 95 per cent. of the work order at Koradi Project and that Koradi Project already started generating electricity and made payment. So there is no reason to invoke bank guarantees issued by OBC in connection with Koradi Project. 6. The contention of learned counsel for the liquidator that injunction cannot be granted against invocation of bank guarantees/encashment of bank guarantees and that injunction can be granted if it is proved there is a frau....
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....tter of (State of Orissa v. Madan Gopal Rungta), which is reproduced below : "An interim relief can only be given in aid of and as ancillary to the main relief which may be available to the party on final determination of rights and in a suit or proceeding . . . But when the court declined to decide on the rights of the parties and expressly held that they should be investigated more properly in a civil suit, it could not, for the purpose of facilitating the institution of such suit, issue directions in the nature of temporary injunctions, under article 226 of the Con stitution." 9. It is true interim relief can be granted only in aid of main relief which would be granted in favour of a party at the final disposal of the matter. Therefore interim relief cannot be granted to the applicant in the present case as there is no main relief for permanent injunction. 10. The next contention of counsel for liquidator the application does not fall within the provisions of section 60(5) of the IBC. The contention of learned counsel that the Adjudicating Authority has power to deal with matters falling under the Code. The proceedings before the Adjudicating Authority are summary....
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....ank from honouring its guarantee, this court (. . .) quoted with approval the observations (. . .) in Bolivinter Oil SA v. Chase Manhattan Bank NA [1984] 1 All ER 351(CA) at page 352) : 'the wholly exceptional case where an injunction can be granted is where it is proved that the bank knows that any demand for payment already made or which may thereafter be made will clearly be fraudulent. But the evidence must be clear both as to the fact of fraud and as to the bank's knowledge. It would certainly not formally be sufficient that this rests on the uncorroborated statement of the customer, for irreparable damage can be done to a bank's credit in the relatively brief time which must elapse between the granting of such injunction and an application by the bank to have it changed'. This court set aside an injunction granted by the High Court to restrain the realization of the bank guarantee." 14. Learned counsel for liquidator also relying on the decision of the hon'ble apex court reported in State Trading Corporation of India Ltd. v. Jainsons Clothing Corporation [1994] 6 SCC 597 ; [1996] 85 Comp Cas 470 (SC) held as follows (page 477 of 85 Comp Cas) : ....