ORDER

1. This is an application filed to pass an order directing Respondent to release Bank Guarantees of Rs. 3.42 Crores return of security deposit of Rs. 63.75 Crores and to lodge their claim with Applicant which will be dealt as per the waterfall mechanism prescribed in Insolvency and Bankruptcy Code, 2016.

2. Facts of the Case

2.1 A Petition was filed by Punjab National Bank against M/s. Lanco Vidarbha Thermal Power Limited (herein after referred as ‘Corporate Debtor’) under Section 7 of The Insolvency and Bankruptcy Code, 2016 (hereinafter referred as IBC) read with Rule 4 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 vide C.P (IB) No. 529/7/HDB/2018 for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate debtor and the same was admitted by this Tribunal.

2.2 This Tribunal vide IA No. 1185/2020 in C.P (IB) No. 529/7/HDB/2018, admitted the Corporate Debtor into liquidation by an order dated 30.06.2021 and appointed the Applicant herein as the Liquidator of the Corporate Debtor.

2.3 It was stated that the Corporate Debtor entered into an agreement dated 29.07.2010 (Annexure 2) with Vidarbha Irrigation Development Corporation (hereinafter referred as ‘VIDC’), represented by its Executive Engineer, for construction of pumping station at upstream of the Lower Wardha Dam for drawing water of 40.2 Mm³ from Lower Wardha Dam annually. In accordance with these terms, the Corporate Debtor deposited an amount of Rs. 3.42 Crores as a security deposit equivalent to two months’ probable annual water charges to be drawn by the Corporate Debtor.

3. Contentions of Applicant:

3.1 In accordance with the terms of Agreement dated 29.07.2010, Corporate Debtor was to pay Rs. 95.75 Crores towards expenditure for restoration of the common area and accordingly, an amount of Rs. 63.75 Crores was paid by way of instalments (Annexure 4). It was also stated that only minimum work relating to the excavation was done and no other work related to the pumping system or drawal of water was started as the Corporate Debtor ran into crisis.

3.2 It was stated that the Liquidator informed the Respondent herein about the Liquidation of the Corporate Debtor by way of a letter dated 17.08.2021 (Annexure 5). It was stated that as no water has been drawn from the source as per the agreement, the Applicant-Liquidator by way of a letters dated 19.02.2022 and 12.07.2022 (Annexures 6 & 7) requested the Respondent to release the Bank Guarantee of Rs. 3,42,00,000/- and Rs. 63,75,00,000/- paid towards expenditure for restoration of command area. It was stated that as the thermal power project for which the agreement dated 29.07.2010 was entered into would not be implemented, the said amount forms part of Liquidation amount and hence, the above request was made. It was also stated that the Respondent was made aware to file its claim, if any, before the Liquidator.

3.3 The Applicant hereby sought for the release of the said amount of Rs.67,17,00,000/- (Bank Guarantee + Security Deposit) from the Respondent so that it can be distributed to the stakeholders as part of Liquidation of the Corporate Debtor.

4. Contentions of Respondent:

4.1 The Respondent objected the instant application by stating that Executive Director of the Respondent is a necessary party and hence, the application is liable to be dismissed for his non-joinder. It was stated that all the decisions and receiving amounts as per the agreement and the policies of Government, Executive Director is the competent and decision making authority and hence, needs to be heard by making the executive Director as a party to the present application.

4.2 It was stated that the amount of Rs. 63.75 Crores (paid by Corporate Debtor for Rs.95.75 Crores) is not a security deposit but a non-refundable payment towards the allocation of command area lost due to allocation of 40.20 Mm³ of water per year to the Corporate Debtor in terms of agreement dated 29.07.2010. It was also s