# In the matter of Indian Pulp & Paper Pvt. Ltd.

> NCLT judgment dated 2024-07-24. Citation: TCN-2024-NCLT-00965. The case involves an application filed by West Bengal State Electricity Distribution Company…

- **Court:** NCLT
- **Order date:** 24 Jul 2024
- **Citation:** TCN-2024-NCLT-00965
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/indian-pulp-paper-pvt-ltd-a53bbd4c

## Summary

### Background

The case involves an application filed by West Bengal State Electricity Distribution Company Limited (WBSEDCL) against Punjab National Bank & Others, seeking the release of a bank guarantee. WBSEDCL claims to be an operational creditor to whom the Corporate Debtor owes dues for electricity. The Corporate Debtor was admitted into CIRP, and a moratorium was declared. WBSEDCL invoked a bank guarantee of Rs. 3,00,00,000/- due to non-payment of dues. The bank refused to disburse the guarantee, citing the moratorium and the acceptance of WBSEDCL's claim by the Resolution Professional (RP).

## Facts

West Bengal State Electricity Distribution Company Limited (WBSEDCL) is an operational creditor to a Corporate Debtor. A Memorandum of Agreement (MoA) was executed between WBSEDCL's predecessor and the Corporate Debtor on 07.10.2004. As per the MoA, a Bank Guarantee was executed by the Corporate Debtor as a security deposit, which was renewed to Rs. 3 crore and valid until June 17, 2023. The Corporate Debtor was admitted into CIRP on 22.07.2022, resulting in a moratorium under Section 14 of IBC, 2016. The Corporate Debtor defaulted on electricity payments since February 2022, leading WBSEDCL to disconnect the connection on 09.09.2022 after serving a disconnection notice under Section 56 of the Electricity Act, 2003. As of 21.07.2022, Rs. 3,20,12,379/- was due and

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## Issues and analysis

### Issue 1: Whether the bank guarantee can be invoked during the moratorium period under Section 14 of the IBC, …

**Ratio:** Section 14(3)(b) of the IBC, 2016, states that the moratorium under Section 14(1) does

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**Reasoning:** The court relied on precedents, including judgments from the NCLAT and the Supreme Court,

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**Interpretation:** Section 14(3)(b) is interpreted to mean that the moratorium imposed on the

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**Application:** The court applied this ratio to the facts of the case, noting that the bank

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## Parties

- **Judges:** BIDISHA BA…; Balraj…
- **Appellants:** West Bengal State…
- **Respondents:** Punjab National…

## Timeline

- **2004-10-07 — Execution of Memorandum…**: A Memorandum of Agreement (MoA) was executed between WBSEB (predecessor-in-interest) and…
- **2012-06-25 — Bank Guarante…**: Respondent No.1 issued a Bank Guarantee for…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(20) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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