NCLAT Rules Performance Bank Guarantee Invocation Legal During Moratorium, Upholds Adjudicating Authority's Decision.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....The NCLAT upheld the legality of invoking a Performance Bank Guarantee (PBG) by the Nominated Authority during the moratorium period. It relied on the Supreme Court's judgment in Standard Chartered Bank vs. Heavy Engineering Corporation Limited, which established that a bank is obligated to honor an unconditional and irrevocable bank guarantee, subject to exceptions like fraud or irretrievable harm. In the present case, the Corporate Debtor's default was established, and the Nominated Authority followed due process by issuing a show cause notice, considering the Scrutiny Committee's recommendation, and invoking the PBG as per the agreement's terms. The NCLAT found no error in the Adjudicating Authority's refusal to set aside the invocation .........