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DELHI HIGH COURT
Rajiv Sahai Endlaw, J.
Liberty House Group PTE Ltd. —Plaintiff
versus
State Bank of India and Ors. —Defendants
CS (COMM) 1246 of 2018 and IAs No.16056 of 2018 (u/O XXXIX R-1&2 CPC) & 16060/2018 (u/O II R-2 CPC)
CS(COMM) 1247 of 2018 & IAs No.16061 of 2018 (u/O XXXIX R-1&2 CPC) & 16065/2018 (u/O II R-2 CPC)
Decided on 22.2.2019
For the Plaintiff:Mr. A.S. Chandhiok, Sr. Advocate with Mr. Krishendu Datta, Ms. Sweta Kabra, Mr. Aly Mirza and Ms. Priya Agarwal, Advocates
For the Defendant Nos.1 and 4:Mr. Sandeep Sethi, Sr. Advocate with Mr. Sanjay Bhatt and Mr. Sumit Nagpal, Advocates
For the Defendants:Mr. Abhinav Vasisht, Sr. Advocate with Ms. Misha, Mr. Vaijayant Paliwal and Ms. Charu Bansal, Advocates
Headnote:Insolvency and Bankruptcy Code, 2016 – Sections 60(5)(c) and 231 – National Company Law Tribunal Rules, 2016 – Rule 11 – Invocation of Bank Guarantee – Suits for interim injunction – When a statute, as per preamble whereof is enacted to consolidate and amend law relating to a particular subject, as preamble of Code provides, rights and liabilities created by said statute or in working and implementation thereof, have to be adjudicated in consonance with objective and scheme of said statue and by Adjudicating Authority created under said statute and not applying principles of ordinary law and not by ordinary civil courts – Interim injunction sought is interference with payment under Bank Guarantees – Once Bank Guarantees as appendix thereto annexed format of Letter of Demand/invocation, on submission whereof by beneficiary SBI, guarantor bank had undertaken to make payment under guarantee, it is not open to plaintiff to contend that though Letter of Demand/invocation is in terms of said appendix to Bank Guaranteesbut claim therein of beneficiary SBI is not correct – Plaintiff is not entitled to a restraint against encashment/payment under Bank Guarantees – Plaint in both suits rejected with costs of Rs.25,00,000/- in each suit. (Paras 21, 27, 38, 44 to 48)
Result: Suits dismissed.
Rajiv Sahai Endlaw, J.—The application of the plaintiff in both the suits, for interim injunction restraining encashment of Bank Guarantees (BGs) and the objection of the defendants to the subject jurisdiction of this Court to entertain these suits, are for consideration.
2. CS(COMM) No.1246/2018 has been filed against (a) State Bank of India (SBI); (b) Barclays Bank PLC (Barclays), Nehru Place; (c) Barclays Bank PLC, United Kingdom; and, (d) Mr. Dinkar T. Venkatasubramanian, for (a) permanent injunction restraining (i) SBI from invoking and/or encashing and/or seeking remittance under BG No.BARCBG2018145 dated 10th May, 2018 for Rs.40,00,00,000/- issued by Barclays in favour of SBI on instructions of the plaintiff; (ii) Barclays from remitting the amounts under the said BG and from transmitting the amount under the Counter Guarantee; and, (b) declaration that the notice of Demand/Invocation dated 20th November, 2018 addressed by SBI to Barclays is invalid, illegal and band in law, pleading:—
(i) Castex Technologies Limited (Castex) is a part of Amtek Group of Companies. Castex was unable to meet its financial obligations and Corporate Insolvency Resolution Process (CIR Process) of Castex was put into motion by the SBI under Section 7 of the Insolvency and Bankruptcy Code, 2016 (Code). The National Company Law Tribunal (NCLT) Chandigarh, on 20th December, 2017 admitted the said application and the defendant no.4 Mr. Dinkar T. Venkatasubramanian was confirmed by the Committee of Creditors (CoC) as the Resolution Professional (RP) of Castex.
(ii) The RP prepared and floated a Process Memorandum dated 30th March, 2018 for consideration and selection of resolution plans from prospective resolution applicants.
(iii) The Process Memorandum required the prospective resolution applicants to submit a Bid Bond Guarantee (BBG) and the plaintiff, in accordance therewith submitted the BBG of Rs.40,00,00,000/- in favour of SBI, by furnishing a Counter Guarantee in favour of Barclays.
(iv) The resolution plan submitted by the plaintiff was accepted by the CoC on 30th August, 2018 and a Letter of Intent (LoI) of the said date was issued in favour of the plaintiff and which was accepted by the plaintiff vide its letter dated 3rd September, 2018 to the RP.
(v) The RP filed an application under Section 30(6) read with Sections 31 and 60 (5) of the Code for approval by the NCLT of the said resolution plan submitted by the plaintiff and approved by the CoC.
(vi) The plaintiff, as per the terms of the LoI, was required to within ten days thereof submit a Performance Bank Guarantee (PBG) of the value of Rs.100,00,00,000/- and the RP, vide its letter dated 10th September, 2018 asked the plaintiff to submit the PBG by 17th September, 2018. The plaintiff, vide its letter dated 15th September, 2018 offered conversion of the existing BBG for Rs.40,00,00,000/- into a PBG and creating an Overseas Escrow Account of Rs.60,00,00,000/-. The RP, vide its letter dated 21st September, 2018 communicated to the plaintiff rejection by the CoC of the said offer and requested PBG of the entire Rs.100 crores in the form of a BG from a scheduled commercial bank in India.
(vii) While negotiations between the plaintiff and the RP with respect to PBG were still under way, the RP vide its e-mail dated 4th October, 2018 called upon the plaintiff to extend the BBG up to 15th January, 2019 and which was done by the plaintiff.
(viii) The SBI, vide its letter dated 21st November, 2018 invoked the BBG; such invocation was not in terms thereof.
(ix) The plaintiff is the resolution applicant not only of Amtek but also of ARGL Limited, another company in the Amtek Group of Companies.
3. CS(COMM) No.1247/2018 has been filed against (i) SBI; (ii) ARGL Limited, through its RP Mr. Dinkar T. Venkatasubramanian; (iii) Bank of Baroda (BoB), for (a) permanent injunction (i) restraining SBI and RP from invoking and/or encashing and/or seeking remittance under BG No.2910IGPER
