# In the matter of Vijay Kumar Garg vs. Deputy Commissioner of Customs & Ors.

> NCLAT judgment dated 2023-08-18. Citation: TCN-2023-NCLAT-00267. The appeal was filed by the Liquidator of Lance Vidarbha Thermal Power Limited, the Corporate…

- **Court:** NCLAT
- **Order date:** 18 Aug 2023
- **Citation:** TCN-2023-NCLAT-00267
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/vijay-kumar-garg-vs-deputy-commissioner-of-customs-ors-022b684e

## Summary

### Background

The appeal was filed by the Liquidator of Lance Vidarbha Thermal Power Limited, the Corporate Debtor, under Section 61 of the Insolvency and Bankruptcy Code (IBC) of 2016, challenging an order dated 15.06.2023 by the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench). The Adjudicating Authority had rejected the Liquidator's application and allowed the invocation of a Bank Guarantee (BG) during the moratorium period under Section 14 of the IBC. The Corporate Debtor was establishing a power project in Wardha, Maharashtra, and imported materials from China. The project was granted Provisional Mega Power Project status. The Ministry of Power allowed the import of equipment at zero import duty, contingent upon the Corporate Debtor furnishing security in

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## Facts

Lance Vidarbha Thermal Power Limited, the Corporate Debtor, was setting up a power project of 2x660 MW in Wardha, Maharashtra, and imported materials from China. The project was accorded Provisional Mega Power Project status, allowing import of equipment at zero import duty, subject to furnishing security in the form of Fixed Deposit Receipts (FDR) equal to the customs/excise duty payable. A bond of Rs. 2160 crores and a BG of Rs. 10 crores were executed. The Corporate Debtor imported 32,786 MT of material through Nhava Sheva Port, out of which 8454 MT was shifted to the Customs Private Bonded Warehouse in Wardha. 4722 MT of materials was released and lifted by the Corporate Debtor by furnishing BG of Rs. 17,44,76,012. 3732 MT was still lying in the Customs Private

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## Issues and analysis

### Issue 1: Whether the BGs and FDRs that were deposited by the corporate debtor in view of various materials …

**Ratio:** Section 14(3)(b) of the IBC allows for the invocation of Bank Guarantees (BGs) even

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**Reasoning:** The court relied on the judgment of the Hon'ble Supreme Court in the matter of State Bank

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**Interpretation:** The interpretation of Section 14(3)(b) of the IBC clarifies that the moratorium

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**Application:** The court applied the ratio to the present case, stating that the invocation of

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## Parties

- **Judges:** M. Venu…; Alok Sriv…
- **Appellants:** Vijay Kuma…
- **Respondents:** Lance Vidarbha…; Deputy Commissione…
- **Advocates:** A. Abdul…; Anbarasi Ra…; +1 more

## Timeline

- **2011-11-21 — Corporate Debtor accorded Provisional Mega…**: The corporate debtor was accorded the status of Provisional Mega Power Project, which was…
- **2019-05-14 — Auction by Mumbai Port…**: 7069 MT of material pertaining to Mumbai Customs was auctioned by Mumbai Port Trust due…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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