The adjustment of a Performance Bank Guarantee against a required cash payment under a Resolution Plan is impermissible, and failure to comply with payment obligations leads to liquidation under the IBC.

Digitally signed by SANJAY KUMAR Date: 2024.11.07 17:08:41 IST Reason:

Signature Not Verified J.B. PARDIWALA, J. :- For convenience of exposition, this judgment is divided into the following parts: -

INDEX A. FACTUAL MATRIX ................................................................................ 3 B. SUBMISSIONS ON BEHALF OF THE APPELLANTS ...................... 42 i. Issue No.1: Adjustment of PBG of Rs. 150 Crore towards the first tranche payment ........................................................................................................ 44 ii. Issue No. 2: Non-payment of Airport dues ............................................... 53 iii. Issue No. 3: Non- payment of Workmen and Employees’ dues ............... 56 iv. Issue No. 4: Achievement of Effective Date .............................................. 57 v. Issue No. 5: Non-fulfilment of Conditions Precedent ............................... 59 C. SUBMISSIONS ON BEHALF OF THE RESPONDENTS ................... 63 D. ISSUES FOR DETERMINATION ......................................................... 76 E. ANALYSIS ............................................................................................... 77 i. Whether the Performance Bank Guarantee (PBG) could have been adjusted against the first tranche payment which was to be made under the Resolution Plan, within 180 days from the Effective Date in contravention of the order of this Court dated 18.01.2024, the terms of the Resolution Plan and the provisions of law? ........................................ 85 a. Whether the Conditions Precedent were fulfilled by Respondent No.1/SRA and the Effective Date was fixed at 20.05.2022?.................. 85 b. Whether the NCLAT could have directed the Performance Bank Guarantee (PBG) to be adjusted against the first tranche payment which was to be made within 180 days of the Effective Date? ......................... 93 I. The adjustment of the PBG was impermissible under the terms of the Resolution Plan read with Regulation 36B(4A) of the 2016 Regulations ....................................................................................... 94 II. The Lender’s Affidavit dated 16.08.2023 did not impose conditions which were different from the terms of the Resolution Plan. ... Error! Bookmark not defined.

ii. Whether the non-implementation of the Resolution Plan by the SRA necessarily leads to the consequence of liquidation as under Section 33(3) of the IBC, 2016? ....................................................................................... 117 a. Whether Respondent No.1/SRA had failed to implement the Resolution Plan on non-payment of the Airport Dues as per the terms of the Resolution Plan? ................................................................................... 118 b. Whether Respondent No.1/SRA could be said to have failed to implement the Resolution Plan on account of the non-payment of workmen and employees’ dues as per the terms of the Resolution Plan and the order of the NCLT dated 21.10.2022 which was confirmed y the order dated 31.01.2023 of this Court? ...................................................................... 124 c. Whether there were sufficient grounds before the NCLAT to hold that Respondent No.1/SRA had contravened the terms of the approved Resolution Plan and that the Corporate Debtor must be directed to be liquidated under Section 33(3) of the IBC, 2016? ................................ 131 iii. Whether the timely implementation of the Resolution Plan is also one of the objectives of the IBC, 2016? ............................................................... 139 F. SHORTCOMINGS AND SUGGESTIONS TO THE IBC, 2016. ....... 150 G. CONCLUSION ...................................................................................... 167 1. These appeals arise from the judgment and order dated 12.03.2024 passed by the National Company Law Appellate Tribunal (hereinafter, the “ NCLAT ”) in Company Appeal (AT) (INS)