TaxTMI 
TaxTMI 
2026 (4) TMI 534
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....D 2413 OF 2025 IN WRIT PETITION NO. 2874 OF 2012 Heard Mr. Akshay Doctor, learned Counsel for the petitioners, and Mr. Simil Purohit, learned Senior Counsel for respondent no. 3. None for respondent nos. 1 and 2. 2] The facts necessary to decide the petition and the applications are as under : 3] Petitioner no. 1 (formerly knows as 'Morarjee Brembana Limited) issued a work order to respondent no. 3 for weaving clothes/fabrics in accordance with the conditions set out therein. Petitioner no. 2 is Head - Finance and Accounts of petitioner no. 1. The parties entered into an agreement. The work commenced. Later on, there occurred dispute between the parties. Respondent no. 3 filed a claim being Reference No. 25/2010 against petitioner no. 1 before respondent no. 2 under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (for short "MSME Act"). Petitioner no. 1 filed its reply to respondent no. 3's claim, and also filed counter claim. Respondent no. 2 passed the impugned award dated 20/3/2012 allowing respondent no. 3's claim, and directed petitioner no. 1 to pay an amount of Rs. 13,44,32,898/-. Accordingly, the petition came to be filed. 4] On 5....
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.... and in November 2024, the judgment has been reserved which is not pronounced till date. 8. This Court vide order dated 28th September, 2012 granted stay to the appellant(s) subject to furnishing a bank guarantee which has been accordingly furnished by the appellant(s). The Registry of this Court is directed to encash the said bank guarantee furnished by the appellant(s) forthwith and transfer the amount of proceeds to the High Court of Judicature at Bombay, Nagpur Bench. As the judgment has been reserved by the High Court, we direct the Registrar (Judicial) of the High Court of Judicature at Bombay, Nagpur Bench, to bring this order to the notice of the concerned Bench and the fact that the amount of bank guarantee has been transferred to the High Court. This will enable the High Court to pass appropriate order regarding disbursement/withdrawal of the bank guarantee amount after hearing the parties. Till the time the High Court deals with the issue of disbursement/withdrawal of bank guarantee amount, the bank guarantee amount shall be invested by the High Court in an interest bearing fixed deposit with any nationalised bank." 5] Thus, the Supreme Court observed that ef....
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.... time. Accordingly, we heard the matter afresh. 8] In the meantime, the Axis Bank Limited, having registered Office at Ahmedabad, approached the National Company Law Tribunal, Mumbai Bench (NCLT), under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short "IBC") for initiating Corporate Insolvency Resolution Process (CIRP) in respect of the petitioner - Company arising out of the term loan granted to the petitioner - Company. On 9/2/2024, the NCLT admitted the application filed under Section 7, and declared moratorium under Section 14 of IBC with consequential directions, which, amongst others, prohibit institution of suits or continuation of pending suits or proceedings against the corporate debtor, i.e., the petitioners herein, including execution of any judgment, decree or order in any Court of law, Tribunal, Arbitration Panel or other authorities. Mr. Ravi Sethia has been appointed as an Interim Resolution Professional (IRP) of the corporate debtor. Thereafter, a meeting of Committee of Creditors was held on 15/5/2024, and it was resolved to reappoint IRP as Resolution Professional (RP). Consequently, the Management of Affairs of the petitioner - Company (corp....
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....ge of this Court held that moratorium under Section 14(1) of IBC does not prevent encashment of bank guarantee. The Court highlighted Section 14(3)(b) of IBC, which explicitly exempts surety in a contract of guarantee to a corporate debtor from moratorium provisions. The Court held that this statutory provision underscores that the guarantor (bank) is not subject to moratorium in the same manner as the corporate debtor. According to the learned Single Judge, an application to encash bank guarantee and release funds does not fall within the ambit of moratorium restrictions. 14] These findings were rendered in an application moved by the applicant therein requesting to encash the bank guarantee and secure release of funds. Such request was made despite imposition of moratorium under Section 14(1) of IBC. The order of NCLT, however, was challenged before the Hon'ble Supreme Court, which had stayed the order passed by NCLT. Further, the bank guarantee was issued in accordance with a consent order. The respondents therein, who was facing insolvency proceedings, contested encashment ascertaining that the moratorium would bar such action. The learned Single Judge held that application ....
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....CIRP. That, in fact, is the reason why respondent no. 3 has submitted it's claim before RP. 19] In any case, for the reasons noted above, we are of the considered view that the directions issued by the Supreme Court to encash the bank guarantee is to comply order passed by this Court directing the petitioners to deposit the amount as a pre-deposit to entertain the petition. The amount so deposited would belong to corporate debtor (petitioner - Company), and therefore, is it's asset. 20] We may consider here the judgment relied upon by RP in the case of Siti Networks Ltd. Vs. Rajiv Suri [2024 SC Online Bombay 6665]. The Division Bench of this Court at Principal Seat held that the money deposited by corporate debtor in a Court as security pursuant to a Court order prior to commencement of CIRP do not cease to be an asset of the corporate debtor merely because they are in the possession of the Court. The Court clarified that such deposit serves as security for a potential dismissal of an appeal rather than constituting a transfer of title to the judgment creditor. 21] Thus, the law as it stands today is clear. While it is true that the bank guarantee per se is not the asset o....