The Supreme Court has held that the adjustment of the Personal Bank Guarantee was impermissible under the terms of the Resolution Plan read with Regulation 36B(4A) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
The consortium contended that the National Company Law Appellate Tribunal’s order rightly recognized that Regulation 36B(4A) of the 2016 Regulations only provides for the PBG requirement for the purposes of the Request for Resolution Plan, and the Successful Resolution Applicant has complied with it.
The court found that an adjustment of the PBG against the first tranche payment would also violate Regulation 36B(4A) of the 2016 Regulations which was inserted by Notification dated January 24, 2019. “This judgment emphasizes that the payments made by the Jalan-Kalrock Consortium, the SRA, towards the PBG are distinct and separate from the payments made towards the Resolution Plan itself,” said Abhijith Christopher, Advocate at the Madras High Court.
While the NCLT and the NCLAT had allowed the adjustment of the PBG towards the first tranche payment towards the resolution plan, the Supreme Court rightly held that such an adjustment was impermissible in view of Regulation 36(B)(4A).Abhijith Christopher, Advocate at the Madras High Court
The court observed that the NCLAT’s order reflected that the NCLAT had itself conceded to the position that the Appellants have a right to invoke the PBG in a situation where the SRA had failed to implement the Resolution Plan.
These appeals were in the aftermath of the NCLAT dismissing the appeal and upholding the order passed by the NCLT.
The NCLAT further issued several directions including a direction that the Performance Bank Guarantee of ₹150 Crore could be adjusted towards the first tranche payment of ₹350 Crore which was to be made by the respondent.
The NCLT held that the respondent had fulfilled all the Conditions Precedent as stipulated in the Resolution Plan.
