# In the matter of Veda BIofuel Limited IA No. 71-2020 in TCP (IB) No. 41-9-AMR-2019

> NCLT judgment dated 2020-06-08. Citation: TCN-2020-NCLT-01228. The case involves an application seeking the release of a Performance Bank Guarantee. The…

- **Court:** NCLT
- **Order date:** 8 Jun 2020
- **Citation:** TCN-2020-NCLT-01228
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/veda-biofuel-limited-ia-no-71-2020-in-tcp-ib-no-41-9-amr-2019-57f5188f

## Summary

### Background

The case involves an application seeking the release of a Performance Bank Guarantee. The Operational Creditor, M/s Priya Trading Company, initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s Veda Biofuel Limited, due to alleged default in payment. The NCLT Hyderabad Bench admitted the petition and appointed an Interim Resolution Professional (IRP). The matter was then transferred to the NCLT Amaravati Bench. The applicant furnished a performance bank guarantee. Subsequently, a restructuring plan was submitted, but the NCLT rejected the Resolution Plan/Restructuring Plan.

## Facts

M/s Priya Trading Company, an Operational Creditor, initiated Corporate Insolvency Resolution Process (CIRP) against M/s Veda Biofuel Limited due to payment defaults. The NCLT Hyderabad Bench admitted the petition on 2019-02-12 and appointed an Interim Resolution Professional (IRP). The case was transferred to NCLT Amaravati Bench on 2019-07-29. Mr. Sisir Kumar Appikatla was appointed as the Resolution Professional (RP) on 2019-09-27. The Applicant furnished a performance bank guarantee of Rs. 5,00,00,000/- on 2019-12-24. A restructuring plan was submitted by the Applicant in collaboration with Mr. P. Vijay Kumar, former promoter of the Corporate Debtor, and approved by the Committee of Creditors (CoC) on 2020-03-03. The Resolution Professional filed IA No. 64 of 2020

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## Issues and analysis

### Issue 1: Whether the application for release of the Performance Bank Guarantee should be allowed given the …

**Ratio:** When a Resolution Plan/Restructuring Plan is rejected, there is no legal basis to

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**Reasoning:** The court reasoned that the Bank Guarantee was furnished in connection with the

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**Interpretation:** This interprets Section 33(1)(b) of the Insolvency and Bankruptcy Code, which

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**Application:** The ratio and reasoning were applied to the specific facts of the case, where

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## Parties

- **Judges:** Janab Mohammed…
- **Appellants:** Madhusudhan Raju…
- **Respondents:** Veda Biofuel…
- **Advocates:** Duvva Pavan…; Shraddha…; +2 more

## Timeline

- **2019-02-12 — Petition Ad…**: NCLT Hyderabad Bench admitted the petition filed by M/s Priya Trading Company against M/s…
- **2019-07-29 — Case Tra…**: The matter was transferred…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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