TaxTMI 
TaxTMI 
2021 (6) TMI 348
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....tor provided to IOCL with respect to EPC (Engineering, Procurement and Construction) Contract entered into with the Corporate Debtor with EPCC-2 package of "Aishwarya" project of IOCL (R1) Haldia Refinery, West Bengal ("Haldia Project"). 2. This application in brief is that the Corporate Insolvency Resolution Process (CIRP) was initiated against Punj Lloyd Limited (the "Corporate Debtor") by an order dated 08.03.2019 appointing the present Applicant Mr. Ashwini Mehra as the Resolution Professional whereby he has filed this application on receipt of intimation on 11.04.2020 from Central Bank of India (R2) and IDBI Bank Limited (R3) stating that IOCL (R1) invoked the bank guarantees furnished by R2 and R3 by stating that 99.92% work of the Haldia Project was already completed, in the event these bank guarantees are encashed, it will impair the progress of the CIRP. 3. RP submits that IOCL on 26.12.2014 invited a bid for Haldia Project, in response to the said invitation, upon the submission of a bid offer by the CD on 26.02.2015, IOCL on 28.08.2015 accepted CD bid for the work pertaining to the Haldia Project. 4. As per clause 2.1.0.0 of the General Conditions of Contract (G....
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....amount shall be reduced proportionate to the payments already done through running bills paid towards the work reflected in the contract. The Banks Counsel submits that the Corporate Debtor on 05.12.2017 issued a letter asking IOCL for additional advances assuring that the Corporate Debtor will not proportionally reduce the advance bank guarantee (ABG) amount against the advances recovered and the advance bank guarantee against supply payment as required under the agreement and it has also promised to keep the said bank guarantee alive for full value to be considered guarantee for additional financial support. 11. As to this letter, the Banks Counsel submits that CD has not taken any concurrence from the Banks with regard to keeping bank guarantees alive for full value in order to get additional financial support from IOCL. The Banks Counsel further submits that the advance bank guarantee issued by R2 and R3 banks have been wrongly utilized by IOCL contrary to the terms of the bank guarantee furnished by R2 and R3 banks. 12. The Banks Counsel submits that the advance bank guarantees are not the same as performance bank guarantees and therefore they are not covered under excep....
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....count of delay and failure in performance of work/Project, etc. 16. The Counsel submits that the dues have not been paid, the guarantees for an amount of Rs. 93.66 Crore from three bank guarantees have been invoked, which are subject matter of this application. As to Writ Petition filed before the Hon'ble High Court of Delhi, the stay granted was vacated on 08.06.2020, as such the RP himself having filed this instant application before this Bench, there is no bar against encashment of bank guarantees. 17. The Solicitor General of India appearing on behalf of IOCL submits that independent bank guarantees created by 3rd parties are beyond the scope of moratorium under Section 14 of the Code. The bank guarantees are independent contracts between IOCL and the Respondent Banks which are unconditionally payable. The Respondents' Banks can deny encashment only on limited ground of fraud and irretrievable injustice which is admittedly not in the instant case, therefore this application shall be dismissed. 18. Upon perusal of the facts aforementioned and legal preposition raised by the either side, the point for consideration is, as to whether IOCL can invoke and encash the....
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.... be seen as something different from performance bank guarantee. In the performance bank guarantee, guarantee will be taken without even providing any advance. In the case of advance bank guarantee, for the sake of performance for the contract, 10% advance is provided to ensure that work is done without any impediment. As long as bank guarantee amount is not changed, bank guarantee contract terms cannot be construed as changed and Bank cannot question about further undertaking given by the Corporate Debtor. It is not an agreement with the Bank that guarantee amount would be reduced proportionate to the running bills released. If at all the Bank feels it is aggrieved of the action of the corporate debtor, it is at liberty to proceed against the corporate debtor because as to IOCL, it has given bank guarantee on behalf of the corporate debtor with an unconditional undertaking that IOCL could invoke and encash bank guarantees as an when it feels that money is not paid in full by the debtor. It is not the case that the debtor has paid in full inspite of it IOCL making an attempt to encash guarantees. 24. If bank guarantee is beyond the mentioned amount in the bank guarantee, if the ....