TaxTMI 
TaxTMI 
2020 (4) TMI 897
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....ant in violation of the provisions of the Code and for other reliefs. The respondent/non-applicant has filed a reply to this application on 19.03.2019 and no rejoinder thereto has been filed by the applicant. 3. IA No.182/2020 filed by the applicant/Resolution Professional seeking urgent hearing of CA No.95/2019 was disposed of on 27.04.2020 through video conferencing as the Tribunal was closed due to lockdown declared by the Government of India in view of Novel COVID-19. In pursuance of the orders passed in IA No.182/2020, filed by the Resolution Professional, CA No.95/2019 is taken up for hearing by way of video conferencing and both the parties were permitted to file the written submissions. 4. At the outset, Mr. Atul V. Sood, learned counsel appearing for the applicant has taken serious objection about the statement made in the written submission of the respondent/non-applicant, wherein it was stated that "there is a serious allegation of fraud were leveled by the answering respondent against the applicant/resolution professional", and submits that there were no pleadings on record in support of the said contention. However, Mr. Rakesh Gupta, learned counsel appearing for....
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....ion of moratorium and commencement of Corporate Insolvency Resolution Process was brought to the notice of the respondent/non-applicant, the respondent/non-applicant reversed the said transaction and after adding the interest, created a fresh fixed deposit on 24.12.2018 for Rs. 1,00,00,031/- and a fresh charge has been created against the same. 9. With regard to Item No.5, the respondent/non-applicant stated that the said amount was kept as a margin money for the bank guarantee issued by the respondent/non-applicant on behalf of the corporate debtor. The said bank guarantee was invoked after the moratorium was declared and the respondent/non-applicant has encashed the said fixed deposit against the same. However, after receipt of letter from the Interim Resolution Professional, the respondent/non-applicant has created a fresh fixed deposit on 27.12.2018 for the total amount of Rs. 51,27,591/-. 10. The learned counsel appearing for the applicant submits that the respondent/non-applicant cannot retain the said fixed deposits once the Corporate Insolvency Resolution Process against the corporate debtor is initiated and moratorium is declared. The said fixed deposits should be ca....
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....porate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. [Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;] (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or sus....
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....or." 31. The Insolvency Law Committee, appointed by the Ministry of Corporate Affairs, by its Report dated 26-3-2018, made certain key recommendations, one of which was: "(iv) to clear the confusion regarding treatment of assets of guarantors of the corporate debtor vis-à-vis the moratorium on the assets of the corporate debtor, it has been recommended to clarify by way of an explanation that all assets of such guarantors to the corporate debtor shall be outside scope of moratorium imposed under the Code;" (emphasis supplied) 32. The Committee insofar as the moratorium under Section 14 is concerned, went on to find: "5.5. Section 14 provides for a moratorium or a stay on institution or continuation of proceeding, suits, etc. against the corporate debtor and its assets. There have been contradicting views on the scope of moratorium regarding its application to third parties affected by the debt of the corporate debtor, like guarantors or sureties. While some courts have taken the view that Section 14 may be interpreted literally to mean that it only restricts actions against the assets of the corporate debtor, a few others have tak....
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....nce (Chokalinga Chettiar v. Dandayuthapani Chettiar [Chokalinga Chettiar v. Dandayuthapani Chettiar, 1928 SCC OnLine Mad 236 : AIR 1928 Mad 1262] ). Though this may be limited by the terms of the contract of guarantee, the general principle of such contracts is that the liability of the principal debtor and the surety is co-extensive and is joint and several (Bank of Bihar Ltd. v. Damodar Prasad [Bank of Bihar Ltd. v. Damodar Prasad, AIR 1969 SC 297]). The Committee noted that this characteristic of such contracts i.e. of having remedy against both the surety and the corporate debtor, without the obligation to exhaust the remedy against one of the parties before proceeding against the other, is of utmost importance for the creditor and is the hallmark of a guarantee contract, and the availability of such remedy is in most cases the basis on which the loan may have been extended. 5.10. The Committee further noted that a literal interpretation of Section 14 is prudent, and a broader interpretation may not be necessary in the above context. The assets of the surety are separate from those of the corporate debtor, and proceedings against the corporate debtor may not be serious....