AI Structured Summary
Not yet generated for this judgment
Judgment
O R D E R
Per: Justice Rakesh Kumar Jain (Oral)
06.08.2024: I.A. No. 187 & 188 of 2024 in Comp. App. (AT) (Ins) No. 59 & 60 of 2024:- This application is filed for seeking Condonation of Delay in filing the appeal. Notice is the application was issued on 24.01.2024. Counsel for Respondent No. 1 has submitted that he is not the contesting Respondent. Counsel for Respondent No. 2 who is the Contesting Respondent has submitted that he does not want to file any Reply to the said application. We have perused the application and found that sufficient reasons have been assigned for the purpose of condonation of delay, hence the application is hereby allowed and the delay is condoned.
This order shall dispose of two appeals bearing Company Appeal (AT) (Ins) No. 945-948 of 2023 titled as ‘M/s NBCC India Ltd. Vs. Ms. Mandeep Gujral & Ors. (hereinafter referred to as the first appeal) and Company Appeal (AT) (Ins) No. No. 59 & 60 of 2024 titled as ‘M/s NBCC India Ltd. Vs. Mr. Jalesh Kumar Grover & Anr.’ (hereinafter referred to as the second appeal) as the order passed in the first appeal is the basis of the order passed in the second appeal.
The first appeal is against the order dated 24.05.2023 passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench) by which four applications bearing I.A. Nos. 154/2021 & I.A. No. 652/2021, filed by Ms. Mandeep Gujral, I.A. No. 62/2021 filed by the State Bank of India and I.A. No. 642/2021 filed by the Suspended Director of the Corporate Director, namely, M/s Jaycon Infrastructure Ltd., have been dismissed. In the second appeal, the validity of the order dated 21.09.2023 passed by (National Company Law Tribunal, Chandigarh Bench) has been assailed by which status quo has been ordered regarding the invocation of the Bank Guarantee by the appellant.
The brief background of both the cases is that M/s Gangotri Steel Syndicate filed an application under Section 9 of the IBC, 2016 (in short ‘Code’) against M/s Jaycon Infrastructure Ltd. before the National Company Law Tribunal, Chandigarh bearing CP (IB) No. 218/Chd/Chd/2018 which was admitted on 17.10.2019. Ms. Mandeep Gujral was appointed as IRP and then RP. The resolution plan submitted by Rishabh Jain was approved by the Adjudicating Authority on 23.08.2023. However, Jalesh Kumar Grover was appointed as Monitoring Professional of the Monitoring Committee in the matter of the Corporate Debtor.
The appellant is a Public Sector Undertaking, appointed Corporate Debtor as a sub-contractor for carrying out certain projects, namely, National Institute of Design at 70-73 Kurukshetra, Haryana and Security Police Line at 74-77 Bapudham, Chanakyapuri, New Delhi.
The Corporate Debtor executed a Performance Bank Guarantee (PBG) in favour of the appellant in respect of both the projects.
Shorn of unnecessary details, I.A. Nos. 154/2021 and 652/2021 came to be filed by the resolution professional of the Corporate Debtor under Section 60 (5) before the Adjudicating Authority for issuance of a direction to M/s NBCC India Ltd. (appellant) not to invoke the performance guarantees issued by the Corporate Debtor. The other two applications, namely, I.A. No. 62/2021 and I.A. No. 642/2021 though filed by separate stakeholders but the prayer made was the same.
The Ld. Tribunal vide its order dated 24.05.2023 held that “the issue for adjudication is whether the moratorium will come in the way of invoking the bank guarantee given by the corporate debtor to respondent-NBCC. In this connection, reliance is placed on the decision of the Hon'ble NCLAT in the case of C&C Construction Limited (Supra) wherein, it is held that "Section 14 (3) (b) of the Code, states that the provisions of this section shall not apply to a surety in a contract of guarantee to a corporate debtor. We also note that Section 3(31) of the Code which defines security interest categorically excludes "performance guarantee".
It further held that “It is thus clear that, the respondent (NBCC) in the present case cannot be prevented from invoking the bank guarantee under the law provided there a violation of the provisions of the contract accepted by the corporate debtor by its letter dated 12.11.2016.”
The Ld. Tribunal after recording the aforesaid findings, recorded a finding in paragraph no. 24 & 25, which are reproduced as under:
“24.While recognizing the rights of the NBCC to invoke the provisions of the contract accepted by the corporate debtor by its letter dated 12.11.2016, we observe that this Tribunal is not the forum to adjudicate the contractual issues between the parties. The main concern of this Adjudicating Authority is to ensure that the CIRP is concluded smoothly without any disruption. In this context, we note that as per the admission of the respondent itself demand notice from the corporate debtor have been received and payments will be made to the corporate debtor after carrying out reconciliation of the demand notices with their accounts Sufficient time has elapsed in this regard. The respondent is directed to make the payments after reconciliation for the work done by the corporate debtor within three weeks of this order. so that the necessary funds are made available to the corporate debtor to expeditiously complete the projects undertaken.
25.After analyzing the factual matrix in its entirety, we noted that the respondent-NBCC has made practical offers to the corporate debtor for facilitating the execution of the project at Bapudham (The respondent-NBCC has already made partial compliance of the offers made in its letter to the Resolution Professional dated 31.05.2021. Both the parties are directed to comply with the terms of this letter within three weeks of this order and necessary payments in this regard be made by the corporate debtor to the respondent-NBCC, if not made so far and the performance bank guarantee of Baapudham be released as per the aforementioned terms.”
Aggrieved against the order of the Ld. Tribunal in this regard whereby it had directed the present appellant to make the payment after reconciliation of the work done by the corporate debtor, the first appeal has been filed.
In so far as the second appeal is concerned, two applications came to be filed bearing I.A. No. 2177 of 2023 by Mr. Rishabh Jain (SRA), I.A. No. 2178 of 2023 by Monitoring Professional against the present appellant in which it was alleged that the appellant has not carried out the conciliation in terms of the order passed on 24.05.2023 in respect of the work done by the Corporate Debtor within the period of three weeks as provided therein rather they have filed the appeal against the order dated 24.05.2023 before the Appellate Authority, therefore, the invocation of the PBG may be stayed.
Ld. Tribunal, as an interim order, directed that status quo regarding the invocation of the bank guarantee be maintained by the parties till the next date of hearing.
While arguing the first appeal, Sr. Counsel Sh. Anil Kumar Airi has submitted that the Tribunal has committed a patent error in issuing a direction to the appellant to make payment after conciliation of the work done by the Corporate Debtor within three weeks. It is submitted that on the one hand, the Tribunal has observed in Paragraphs 18 & 19 that the invocation of the PBG by the appellant cannot be prevented and on the other hand it has been made conditional by directing the appellant to make payment after conciliation of the work done by the Corporate Debtor is carried out within a particular period. He further submitted that neither the Corporate Debtor has given the running bill, much less the completion certificate of the work done partly or the final completion certificate, therefore, there is no question of reconciliation.
Sh. Abhishek Anand appearing on behalf of the Monitoring Professional has submitted that the contesting respondent in this appeal is the SRA for whom Sh. Achin Goel has put in appearance.
It is also submitted that on the representation made on behalf of the Corporate debtor the appellant made payment to various vendors on behalf of the Corporate Debtor. However, it is submitted that there is no question of reconciliation as this order could not have been passed by the Ld. Tribunal.
We have heard counsel for the parties in so far as the first appeal is concerned and after taking note of the aforesaid facts and circumstances, are of the considered opinion that Tribunal has committed a patent error in issuing the impugned direction mentioned hereinabove, therefore, the order passed by the Tribunal in this regard is hereby set aside.
After we have set aside the direction of the Tribunal passed in the order dated 24.05.2023 whereby reconciliation was ordered, we take up the second appeal which is predicated only on the basis of the said direction. The Tribunal in the second appeal, while passing the impugned order dated 21.09.2023 issued notice in the applications being I.A. No. 2177 of 2023 and I.A. No. 2178 of 2023 and directed the applicant therein to serve notice to the respondent (appellant herein) and in the meantime, passed the order of status quo regarding invocation of the bank guarantee.
Since we have already held in the first appeal that the direction issued by the Tribunal for reconciliation is unwarranted and set aside the said direction, therefore, the second appeal also succeeds and the impugned order dated 21.09.2023 of status quo cannot sustain because the order of reconciliation dated 24.05.2023 has been set aside. Accordingly, the second appeal also succeeds and the impugned order dated 21.09.2023 is also set aside.