Section 14 of IBC in no manner impact invocation of Bank Guarantee during pendency of the Moratorium – Mitsubishi Heavy Industries Ltd. Vs. Punj Lloyd Ltd. and Ors. – NCLAT New Delhi
Hon’ble NCLAT held that the issue as to invocation of Performance Bank Guarantee during the period of Moratorium is now well settled. It is useful to refer to definition of Section 3(31) which define “Security Interest”. The proviso of Section 3(31) makes it clear that “Security Interest” shall not include Performance Bank Guarantee. Section 14(3) was amended by Act 26/2018 with effect from 06.06.2018. Section 14(3) clearly excluded security in a Contract of Guarantee to Corporate Debtor from the Application of Section 14(1). It is well settled that Section 14 in no manner impact the right of the Appellant to invoke the Bank Guarantee during pendency of the Moratorium. The dispute between the beneficiary and the party at whose instance the Bank has given the Guarantee is immaterial and is of no consequence.