# In the matter of Punjab National Bank vs. West Bengal State Electricity Distribution Company Ltd. & Ors.

> NCLAT judgment dated 2024-12-04. Citation: TCN-2024-NCLAT-00048. The case involves an appeal against an order dated 24.07.2024 passed by the Adjudicating…

- **Court:** NCLAT
- **Order date:** 4 Dec 2024
- **Citation:** TCN-2024-NCLAT-00048
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/punjab-national-bank-vs-west-bengal-state-electricity-distribution-company-ltd-o-0a3eade1

## Summary

### Background

The case involves an appeal against an order dated 24.07.2024 passed by the Adjudicating Authority in IA No.699/KB/2023. The IA was filed by the Respondent seeking the release of payment of a Bank Guarantee. The Adjudicating Authority held that the Applicant (Respondent in this appeal) is right in invoking the bank guarantee and the Respondent (Appellant in this appeal) should not obstruct its invocation.

## Facts

A bank guarantee amounting to Rs. 3 Crores was issued to the Corporate Debtor. The Adjudicating Authority allowed the invocation of the bank guarantee. The Appellant (Punjab National Bank) filed an appeal against this order, arguing that the invocation would adversely affect the Financial Creditor's claim under Section 53 of the IBC and put an additional financial burden on them. The Respondent (West Bengal State Electricity Distribution Company Ltd.) had filed a claim in the CIRP. The IRP had sent an email on 22.12.2022 stating that if any amount is recovered by invoking the bank guarantee, the claim should be revised. The key fact is the invocation of the bank guarantee and its potential impact on the CIRP process and the claims of financial creditors.

## Issues and analysis

### Issue 1: Whether the Adjudicating Authority erred in …

**Ratio:** Irrevocable and unconditional bank guarantees can be invoked even during the moratorium

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**Reasoning:** The court relied on previous judgments of the Hon'ble Apex Court and the Tribunal, which

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**Interpretation:** The interpretation of Section 14 of the IBC, specifically the amended provision

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**Application:** The court applied this principle to the present case, finding that the

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## Parties

- **Judges:** Ashok Bh…; Arun Ba…
- **Appellants:** Punjab National…
- **Respondents:** Indian Pulp &…; West Bengal State…

## Timeline

- **2022-12-22 — IRP Emai…**: The IRP sent an email stating that if any amount is recovered by invoking the bank…
- **2024-07-24 — Adjudicating Authority…**: The Adjudicating Authority passed an order in IA No.699/KB/2023 allowing the invocation…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 53 — Distribution of assets](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-53)

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