# In the matter of Engineering Projects (India) Ltd. Vs. Mr. Ram Ratan Kanoongo,
Resolution Professional of
D. Thakker Construction Pvt. Ltd. Company Appeal (AT) (Insolvency) No. 263 of 2022

> NCLAT judgment dated 2022-05-06. Citation: TCN-2022-NCLAT-00497. Engineering Projects (India) Ltd. (Appellant) awarded a construction contract to D. Thakker…

- **Court:** NCLAT
- **Order date:** 6 May 2022
- **Citation:** TCN-2022-NCLAT-00497
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/engineering-projects-india-ltd-vs-mr-ram-ratan-kanoongo-resolution-professional-272f1c95

## Summary

### Background

Engineering Projects (India) Ltd. (Appellant) awarded a construction contract to D. Thakker Construction Pvt. Ltd. (Corporate Debtor). The Appellant provided bank guarantees, including a Performance Bank Guarantee and a Mobilisation Advance Bank Guarantee. The Corporate Debtor faced financial difficulties and could not complete the project. The Appellant invoked the bank guarantees. Subsequently, CIRP was initiated against the Corporate Debtor, and a moratorium was imposed under Section 14 of the Insolvency and Bankruptcy Code (IBC). The Resolution Professional (RP) sought a direction to the Appellant to refund the money equivalent to the bank guarantees invoked. The Adjudicating Authority (NCLT) allowed the RP's application, leading to the present appeal.

## Facts

Engineering Projects (India) Ltd. (Appellant), a Central Public Sector Enterprise, awarded a construction contract for 105 residential quarters to D. Thakker Construction Pvt. Ltd. (Corporate Debtor) for Rs. 17,32,34,561, with a completion period of 15 months from the Letter of Intent dated 18/05/2016. The Appellant provided a Performance Bank Guarantee (Rs. 15 Lakhs) and a Mobilisation Advance Bank Guarantee (Rs. 19,28,000), both issued by Union Bank of India. The Corporate Debtor requested direct payments to suppliers due to financial constraints. On 11/12/2018, the Corporate Debtor expressed its inability to complete the works. The Appellant invoked the bank guarantees on 26/12/2018 and 25/03/2019. CIRP was initiated against the Corporate Debtor, and a moratorium

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## Issues and analysis

### Issue 1: Whether a 'Performance Bank Guarantee' and/or 'Mobilisation Advance Bank Guarantee' can be invoked …

**Ratio:** A bank guarantee is an independent and distinct contract between the bank and the

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**Reasoning:** The Tribunal relied on several judgments, including ‘Ansal Engineering Projects Ltd.’Vs.

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**Interpretation:** Section 14 of the IBC imposes a moratorium on actions against the corporate

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**Application:** In this case, the bank guarantees were invoked on 25/03/2019, before the

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## Parties

- **Judges:** Ashok Bh…; Alok Sriv…; +2 more
- **Appellants:** Engineering…
- **Respondents:** D. Thakker…; Ram Ratan K…
- **Advocates:** Debarshi…; Shyam Ka…; +1 more

## Timeline

- **2016-05-18 — Letter of…**: Letter of Intent issued to D. Thakker Construction Pvt. Ltd. for construction of 105…
- **2017-10-11 — Bank Guarantee…**: Performance Bank Guarantee and Mobilisation Advance Bank Guarantee issued by Union Bank…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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