Can invocation of Bank Guarantee issued by Corporate Debtor be treated as Preferential Transaction under Section 43 of IBC? – West Bengal State Electricity Distribution Company Ltd. (WBSEDCL) Vs. Punjab National Bank and Ors. – NCLT Kolkata Bench
Hon’ble Kolkata NCLT held that one of the necessary conditions for any transaction to be labelled as a Preferential transaction relates to the assets of the Corporate Debtor, so to say that any transaction done in the relevant time by the Corporate debtor would be eligible for being called so only if done by the Corporate debtor i.e. out is its assets. However, since the Bank guarantee is a separate contract and the encashment thereof is not relatable to the assets of the Corporate Debtor, the encashment cannot be termed as Preferential transaction.
Hon’ble Bench also held that Electricity Distribution Company/the applicant has the right to invoke Bank Guarantee and the Bank should not come in the way of invoking the same. It shall not amount to dual claim as the amount recovered by invoking such Bank Guarantee can be adjusted and the admitted claim shall be revised accordingly.
