# 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-01232. The case involves an application seeking the release of a Performance Bank Guarantee in favor…

- **Court:** NCLT
- **Order date:** 8 Jun 2020
- **Citation:** TCN-2020-NCLT-01232
- **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-a12168ad

## Summary

### Background

The case involves an application seeking the release of a Performance Bank Guarantee in favor of the applicant. 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 of an operational debt. The NCLT Hyderabad Bench admitted the petition and appointed an Interim Resolution Professional (IRP). The matter was later transferred to the Amaravati Bench. The applicant furnished a performance bank guarantee. Subsequently, the applicant, in collaboration with a former promoter of the Corporate Debtor, submitted a restructuring plan, which was initially approved by the Committee of Creditors (CoC).

## Facts

M/s Priya Trading Company, an Operational Creditor, initiated CIRP against M/s Veda Biofuel Limited due to default in payment. The NCLT Hyderabad Bench admitted the petition on 2019-02-12 and appointed an IRP. The case was transferred to NCLT Amaravati Bench on 2019-07-29. Mr. Sisir Kumar Appikatla was appointed as the Resolution Professional on 2019-09-27. The Applicant furnished a performance bank guarantee of Rs. 5,00,00,000/- on 2019-12-24. The Applicant, along with Mr. P. Vijay Kumar, submitted a restructuring plan, approved by the CoC on 2020-03-03. The NCLT Amaravati Bench rejected the Resolution Plan/Restructuring Plan on 2020-05-26 and ordered liquidation. The Applicant sought release of the Bank Guarantee, which was contested by the Resolution Professional.

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## Issues and analysis

### Issue 1: Whether the Performance Bank Guarantee should be released to the Applicant given the rejection of …

**Ratio:** When a Resolution Plan/Restructuring Plan is rejected, the basis for holding a Bank

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**Reasoning:** The court reasoned that since the Resolution Plan/Restructuring Plan was rejected, there

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**Interpretation:** The interpretation is that a Bank Guarantee provided in the context of a

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**Application:** In this case, the rejection of the Resolution Plan meant that the Bank

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## Parties

- **Judges:** Janab Mohammed…
- **Appellants:** Madhusudhan Raju…
- **Respondents:** Veda Biofuel…

## Timeline

- **2019-02-12 — Petition Ad…**: NCLT Hyderabad Bench…
- **2019-07-29 — Case Trans…**: 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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