June 15, 2024 In Uncategorized


The Hon’ble National Company Law Appellate Tribunal, Principal Bench, New Delhi (NCLAT) has recently passed a Judgment dated 29-05-2024 in Peter Beck und Partner vs Sharon Bio Medicine Limited and Ors. Company Appeal (AT) (Insolvency) No. 371 of 2024 and upheld the legal validity of forfeiture of bank guarantee by the Committee of Creditors (COC) led by the State Bank of India (SBI) owing to the non-compliance of Resolution Plan by the Appellant- Resolution Applicant.


i) In the present case, the Appellant, Peter Beck und Partner, Germany, had emerged as the Successful Resolution Applicant (SRA) for the Corporate Debtor, Sharon Bio Medicine Limited (Corporate Debtor). The Resolution Plan submitted by the Appellant was approved by the Ld. National Company Law Tribunal, Mumbai Bench (NCLT), vide Order dated 28-02-2018.

ii) As per the approved Resolution Plan, the Appellant had to furnish Rs. 10 Crores bank guarantee, valid from the date of Plan’s approval till the date the Appellant would be allotted all equity shares of the Corporate Debtor. Accordingly, the Appellant provided a Bank Guarantee issued by Banque De Luxembourg on 19-02-2017, which was subsequently renewed.

iii) Later, the COC made a demand of an upfront payment of Rs. 35 Crores beyond the terms of the Resolution Plan. But the Appellant, in a bonafide effort to comply COC’s demands, deposited INR 10 Crores in the Corporate Debtor’s account at Abhyudaya Cooperative Bank on 27-08-2019, in accordance with the COC’s instructions and requested for further deposit of Rs. 5 Crores, as it could not arrange for the additional funds.

iv) However, the Appellant claimed that the COC did not provide proper bank account details to the Appellant, thereby, obstructing the deposit of the remaining INR 5 Crores and thus preventing the allotment of shares as stipulated in the Resolution Plan.

v) Thereafter, SBI and other Creditors filed Applications before NCLT seeking re-filing of Applications for initiation of Corporate Insolvency Resolution Process (CIRP) as the Appellant failed to implement the Resolution Plan. But the NCLT, vide Order dated 02-02-2021, directed the Appellant to infuse Rs. 10 Crores for CIRP costs and share allotment and held that there would be no use invoking the Bank Guarantee.

vi) But the SBI and other Creditors continued to obstruct the smooth process of resolution of Corporate Debtor and such non-compliance was noted by NCLT in its Order dated 19-02-2021.

vii) The NCLAT, in the Appeal filed by the Appellant, directed the latter to deposit Rs. 10 Crores and make overdue payments within the stipulated timelines. The NCLAT also allowed for adjustment or refund of the previously deposited Rs. 10 Crores.

viii) The Hon’ble Supreme Court dismissed the Civil Appeal 1304-1305 of 2022 filed by the Appellant, vide Order dated 28-02-2022, granting liberty to initiate a fresh CIRP.

ix) But the Appellant failed to make deposit of valid bank guarantee worth Rs. 10 Crores in the internationally acceptable SWIFT format. Hence, the COC forfeited the amount of Rs. 10 Crores that the Appellant had previously deposited.

x) Aggrieved, the Appellant approached the NCLT in IA No.1360 of 2022 and IA No. 2989 of 2023 in CP (IB) No. 246/NCLT/MB/2017. The NCLT, vide Order dated 12-12-2023, dismissed the Applications filed by the Appellant, seeking refund of Rs. 10 Crores previously deposited with Abhyudaya Cooperative Bank, which was subsequently forfeited by COC led by SBI.

NCLAT Observations

Aggrieved by the NCLT Order dated 12-12-2023, the Appellant filed Company Appeal (AT) (Insolvency) No. 371 of 2024 before the NCLAT. The NCLAT, vide Order dated 29-05-2024, made the following observations:

1) That the NCLT, NCLAT and the Apex Court had in the previous orders concerning the SRA had come to a similar conclusion that the SRA had to pay the security deposit / enforceable bank guarantee of Rs. 10 Crores and had even granted extension of time on multiple occasions. But the Appellant failed to deposit such amount. Hence, the NCLAT observed that COC rightly forfeited Rs. 10 Crores amount previously deposited by the Appellant and held as follows:

The Appellant’s failure to provide valid bank guarantees in the internationally acceptable SWIFT format and the inability to meet the financial commitments as stipulated in the Resolution Plan constitute a clear violation of the terms agreed upon. Despite multiple extensions and opportunities provided by the CoC, NCLT and the NCLAT, the Appellant did not fulfil its obligations. This non-compliance justifies the forfeiture of the deposited amount under the provisions of the Resolution Plan and the CIRP Regulations.”

2) Further, the Appellant failed to prove that the COC restrained the implementation of the Resolution Plan and moreover, the Appellant always had the bank details available for making the additional deposit and the same is clearly established from the fact that using such details, the Appellant had deposited Rs. 10 Crores on 27-08-2019. Thus, the Appellant’s claims proved to be contradictory.

3) Further, the COC also extended the deadline for depositing the additional Rs. 5 Crores, hence, there could not have been any possibility of non-cooperation by COC.


Thus, based on the aforesaid observations, the NCLAT held that the forfeiture of Rs. 10 Crores by COC, as approved by NCLT, was lawful and in accordance with the Resolution Plan. Further, the Appellant’s failure to comply with the terms of the Resolution Plan including the submission of valid and effective bank guarantees etc had warranted such forfeiture. Therefore, the NCLAT dismissed the Appeal filed by the Appellant and upheld the NCLT Order dated 12-12-2023 dismissing the Applications filed by the Appellant, seeking refund of Rs. 10 Crores.


Harini Daliparthy

Lead Senior Associate

The Indian Lawyer & Allied Services


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