TaxTMI 
TaxTMI 
2026 (4) TMI 532
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....n Sethi was appointed as the Interim Resolution Professional (IRP). 2. M/s Vardhaman Builtech Pvt. Ltd. (Principal Borrower) approached the Financial Creditor (herein after referred to as the Bank) in the year 2014 for availing credit facility in the form of performance bank guarantee for an amount of Rs. 11,00,00,000/-. The principal borrower (in joint venture i.e. Jai Krishan JV) undertook a work contract (construction project) for development of a township with the Director of Town and Country Planning Department, Govt. of Haryana. In order to execute the construction project, bank guarantee of around 11 Cr. was to be submitted by M/s Vardhaman Buildtech Pvt. Ltd. in favour of the Director of Town and Country Planning Department, Haryana. 3. The principal borrower was not having any secured asset/property to secure the bank guarantees but the CD was the original allottee of the Industrial Plot No. 12A, Sector KP-03, Greater Noida, Industrial Development Area, Gautam Budh Nagar, UP. The Principal borrower and the Corporate Debtor had the same shareholders and directors. The CD agreed to become a Corporate Guarantor for the principal borrower and agreed to mortgage its prope....
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....Delhi vide I.A No. 1161 of 2018, under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993. The CD contested the encashment of BGs before the DRT, principally on the ground that there was no invocation of BGs in time, therefore, the same had expired and in this regard, filed SA No. 232 of 2018. The CD filed the application for stay with SA (Securitization Application) but the DRT, by way of detailed order dated 24.10.2018, dismissed the application of stay holding that the BGs were invoked vide letter dated 22.05.2017 and 24.05.2017 well before the expiry dates of respective BGs. The order dated 24.10.2018 is also reproduced as under:- 11. The aforesaid order dated 24.10.2018 passed by the DRT was never challenged by the CD in appeal before the DRAT and it attained finality. 12. After the above order, the CD started negotiating with the Bank for a One time Settlement ( for short ''Settlement') and in this regard, wrote a letter dated 21.08.2019 which is reproduced as under:- 13. The bank responded to the request of the settlement positively but out of total outstanding amount of Rs. 9.89 Cr., the CD paid only Rs. 2.25 Cr. and rest of the amount was not paid. As a ....
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....e first BG and the second BG. It is also submitted that the Bank may recover the amount which has been given to DTCP by any other mode, which is allegedly wrongfully released under the expired bank guarantees. Counsel for the Appellant has also submitted that the application under Section 7 can be invoked if there is debt and default. It is also submitted that one time settlement by the CD on 03.09.2019 cannot be made the basis for the present proceedings as the same had been executed by the CD under duress. Lastly, it is submitted that interim order dated 24.10.2018 cannot operate as res-judicata because it was only an interim order. 19. On the other hand, Counsel for the Respondent (Bank) has vehemently argued that in the face of admission of the fact that the borrower had availed non-fund based loan facility from the bank and that the CD had mortgaged its immovable property and also executed two bank guarantees and that the BGs were not being extended by the CD despite reminders, the beneficiary had rightly invoked the BG alleging that if the said BGs were not renewed/ extended before the date of expiry then letter dated 22.05.2017 and 24.05.2017 shall be considered for the p....
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....ing are hereby closed. ============= Document 1 -/Typed Copy/- (PageNo-20) Directorate of Town & Country Planning, Haryana, SCO No. 71-175, Sector-17C, Chandigarh, website- www.lepharyana.gov.in Memo No. DGTCP/AO(III)/2017 Dated: 22/05/17 To Bank of Barodha Permanent Street, Connaught Place, New Delhi Subject: Renewal of bank guarantee This office is in receipt of the following Bank Guarantee issued by the bank in favour of the licenses mentioned in law. LC No. Colonier License No. and year B.G. No. Original B.G amount (in Rs. Lac) Valid upto BG Type 860 Jain Krishna 1277- 1280/2006 [Ineligible] 56.47 07.07.2017 IDW Since the above mentioned Bank Guarantors are going to expire in the month of July, 2017. You are, therefore requested to get the said bank guarantee extended for a further 2 years with extra 3 months claim period from the concerned at the earliest and not to discharge the Document 2 license from its financial commitments covered under the said bank guarantee. It may please be considered or written confirmation for the purpose encashment/revocation of the said bank guarantee if the same is not renewal before its expiry. Please a....
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..../O Director General, Town & country Planning Haryana, Chandigarh Document 4 Directorate of Town & Country Planning, Haryana, Chandigarh SCO No. 71-75, Sector-17.C, Chandigarh, website www.tcpharyana.mr.m Phone 0172.259349. 2545475. 2549851 E-mail: tcpharyana@@@gmail.com To The Mariager. Bank of Baroda, 16, Parliament Street, Main Branch New Delhi-110001 .. Memo No.LC-960/A0-1/2017/1167 Dated: - 24.11.2017 Subject: - Encashment/revocation of Bank Guarantees of EDC & IDW submitted against the Licence No. 1277-1280 of 2006 granted to the Jai Krishna JV. Kindly refer to this office letter No.DGTCP/AO(II)/2017/486, 22.05.2017, No.DGTCP*AD(61)/2017/497, 24.05.2017 and your letter No.BR/PARLIA/ADV/2017-18, dated 07.10.2017 on the subject cited above. In continuation of this office letters referred above it has been decided that following Bank Guarantee Issued by your bank on account of EDC & IDW in respect of license No. 1277-1280 of 2006 granted to Jai Krishna JV may be encashed/revoked in favour of the beneficiary I.e. Director, Town & Country Planning Department Haryana, Chandigarh due to non-extension, The details of Pank Guarantees which are being encashed/re....
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.... copy is forwarded to Sh. Mahesh Kumar, Clerk and directed to visit the Bank of Baroda, 16. Parliament Street. Main Branch, New Delhi-110001to submit the original Bank Guarantees and to collect the Demand Drafts. Som Chief Accounts Officer, for Director, Town & Country Planning, Haryana, Chandigarh. Document 6 24.10.2018 Item no. 71 Today the matter is listed for orders on interim relief application. 1. By way of the present interim relief application in the SA filed, the applicant prayed to restrain the Respondent No, 1 bank from proceeding further under section 13 (4) of rge SARFAESI Act or otherwise and further restrain from taking possession of the property bearing no .: Plot No. 12, A KP-3, Greater Noida Industrial Development Authority, District Gautam Budh Nagar (UP) till pendency of the present application. 2. Ld. Counsel for the applicant contends that applicant has been served with a possession notice dated 16.10.2018 issued by the applicant bank for taking physical possession on 24.10.2018, of its property at Industrial Plot No. 12A, admeasuring 38014.54 sq. meters, Sector-Knowledge Park - 03, situated at Greater Noida Industrial Development Authority,....
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....of expiry and sent a letter dated 26.12.107 to the applicant company, demanding the sum due and threatening action against the property purported to have been mortgaged as security for the issuance of the expired BGs. 4. The Ld. Counsel for the respondent no. 1/bank has refused all the arguments made by the applicant's counsel and submitted that the applicant company was Corporate Guarantor to the issuance of BGs and had created equitable mortgage by deposit of title-deeds of the property in question. He also submitted that the applicant company is a major shareholder of respondent no.4 - the borrower company and the Directors named are common in both the companies. The cross-resignations suggested by the applicant's counsel were never brought to the knowledge of the respondent no. 1/bank. It was also informed that the respondent no. 2 - the beneficiary of the BGs had vide two separate letters dated 22.05.2017 and 24.05.2017, invoked the said BGs. The language of the letter relevant to this issue was quoted as under "It may please be considered as written confirmation for the purpose of encashment/revocation of the said bank guarantee if the same is not renewed before its exp....
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....e and the beneficiary thereof does not have an iota of effect non the liability of the issuing Bank. The issuing bank is not privy to the underlying contract between both the said parties, but merely assumes financial liability in case of non-performance or failure to meet a financial commitment on the part of its client. A notice by the beneficiary within the validity period or extended actionable claim period triggers the liability of the issuing bank. 7. In the instant case, it is clear that the respondent no. 2 had invoked the BGs vide their letters dated 22.05.2017 & 24.05.2017, well before the expiry dates of the respective BGs even in terms of the restrictive cause no. 6 of the said BGs, it was proper notice to the issuer of the irrevocable BGs issued i.e. the respondent no. 1, in accommodating its client - the respondent no. 4, was in the normal course of business to allow them to get renewed/revalidated. However, the passage of time did not render the notice in writing of invocation of the BGs as invalid or improper and they all through remained as deemed to have been revoked. The late remittance to beneficiary i.e. respondent no. 2 was on account of seeking the origina....