SOMASEKHAR SUNDARESAN,J. - (1.)This is an Application filed by the Appellant not only seeking to withdraw Appeal No. 597 of 2016 but also seeking permission to withdraw the amount of Rs.20,00,000.00 that had been deposited in this Court pursuant to an interim order, along with accrued earnings thereon. For the reasons set out in this judgement, we have allowed such withdrawal of the Appeal, and of the deposited amounts along with earnings.
Factual Matrix:

(2.)The Applicant-Appellant is a "corporate debtor"(Defined in Sec. 3(8) of the IBC as a corporate person who owes a debt to any person) undergoing a Corporate Insolvency Resolution Process (" CIRP") under the Insolvency and Bankruptcy Code, 2016 ("IBC") since February 22, 2023. This Application has been filed at the behest of the Resolution Professional who is now in charge of running the affairs of the Applicant-Appellant under the oversight of the Committee of Creditors appointed under the IBC.
(3.)A quick overview of the following facts underlying the Appeal would be in order:-
a) Suit No. 2295 of 2002 was disposed of by a learned Single Judge of this Court by a judgment dated June 13, 2016 (" Impugned Judgment"), with a direction to the Appellant to pay to the Respondent, a sum of Rs.15,00,000.00 by way of damages along with interest at the rate of 24% per annum, from the date of institution of the suit until the date of realization;

b) In Appeal No. 597 of 2016, challenging the Impugned Judgement, an interim order dated February 15, 2016 came to be passed, the operative part of which reads as follows :

2. Appellants shall deposit Rs.20.00 lakhs in this Court and the balance amount shall be secured by giving security to the satisfaction of the Prothonotary and Senior Master.

[Emphasis Supplied]

c) To cut a long story short, the amount of Rs.20,00,000.00 was deposited in cash with this Court on April 2, 2016. For the balance amount, bank guarantee was issued by IDBI Bank on April 6, 2016. The bank guarantee was extended from time to time. Owing to disputes between the Appellant and a consortium of nationalised banks, the Appellant sought leave of this Court to replace the bank guarantee with a guarantee issued by either ICICI Bank or HDFC Bank. A Division Bench of this Court on January 3, 2020, refused to permit the bank guarantee to be substituted by either of the aforesaid banks, and insisted that the bank guarantee should only be from a nationalised bank, failing which the decretal amount along with interest should be deposited with the Registry on or before January 18, 2020. This refusal to permit substitution of a bank guarantee from a non-nationalised bank, led to Special Leave Petition No. 807 of 2020 being filed in the Supreme Court;

d) By an order dated January 17, 2020, the Supreme Court permitted the furnishing of a bank guarantee by either ICICI Bank or HDFC Bank within a period of two weeks, which led to a bank guarantee from ICICI Bank being provided on January 27, 2020 ("ICICI Guarantee");

e) Two years later, the provisions of the IBC were invoked by Indusind Bank which led to an order dated February 22, 2023, being passed by the "Adjudicating Authority" i.e. the National Company Law Tribunal, Mumbai ("NCLT"), initiating the CIRP, and thereby triggering the moratorium under Sec. 14 of the IBC;

f) On February 22, 2023, one Mr. Rohit Ramesh Mehra came to be appointed as the Resolution Professional in respect of the Applicant-Appellant;

g) Ms. Shilpi Asthana, one of the then directors of the Appellant, filed an appeal before the National Company Law Appellate Tribunal, New Delhi ("NCLAT") challenging the initiation of the CIRP. By an order dated March 7, 2023, the NCLAT stayed the initiation of the CIRP, thereby suspending the moratorium;

h) Eventually, on August 10, 2023, the NCLAT dismissed the appeal, which led to the moratorium being reinstated;

i) Challenging the order of the NCLAT, Ms. Asthana filed Civil Appeal No. 5340 of 2023 in the Supreme Court, which was dismissed on September 1, 2023. Since that date, the Company is without doubt, under CIRP, and the moratorium is firmly in place;

j) Meanwhile, the ICICI Guarantee, scheduled to expire on January 6, 2024, was extended for one more year and is now scheduled to expire on January 6, 2025;

k) The Applicant-Appellant filed Interim Application No. 7569 of 2024 before the Supreme Court seeking withdrawal of the Special Leave Petition No. 807 of 2020. The premise of such Interim Application was that the CIRP being underway, with the attendant moratorium, there is no scope at all left for the guarantee to be invoked since Sec. 14 of the IBC prohibits enforcement against any of the assets of a corporate debtor undergoing CIRP. It was submitted by the Applicant-Appellant to the Supreme Court that it is the duty of the Resolution Professional to take control and custody over all the assets of the corporate debtor, and the only option for the judgment creditor is to make his claims before the Committee of Creditors constituted under the IBC. It was submitted that the execution of a decree or judgment is explicitly prohibited under Sec. 14 of the IBC. Consequently, it was submitted, there was no question of renewing the bank guarantee, and it was prayed that the bank guarantee which was scheduled to expire on January 6, 2024 and had been extended for one more year, must be permitted to be withdrawn, along with liberty to withdraw the Special Leave Petition. The Applicant-Appellant gave an undertaking to also withdraw the present Appeal pending before this court against the Impugned Judgement;

l) The Respondent strongly opposed the aforesaid application before the Supreme Court, to resist the withdrawal of the Special Leave Petition and indeed, the revocation of the bank guarantee. The basis of the Respondent's opposition was that Sec. 14 of the IBC only prohibits proceedings against a corporate debtor and has no implication whatsoever for proceedings filed by the corporate debtor. It was argued that it is the corporate debtor that has filed the present Appeal against the Impugned Judgement, and the petition in the Supreme Court against an order passed in the course of the present Appeal. The argument of the Respondent was that the bank guarantee and the amount covered by it are in a nature of "custodia legis" and the Appellant has no control over the same, which, according to the Respondent, meant that the bank guarantee is not an asset of the corporate debtor;

m) The Appellant filed a rejoinder before the Supreme Court stating that the bank guarantee furnished by the Appellant was not in the nature of a performance bank guarantee but was a financial guarantee, which falls within the definition of the term, "security interest" under the IBC. According to the Appellant, since the bank guarantee is a security interest for enforcement against the corporate debtor under CIRP, and its object is to secure performance of the Impugned Judgment, invoking the same would constitute enforcement against the corporate debtor, which would be in direct conflict with Sec. 14 of the IBC. According to the Appellant, Sec. 14 prohibits enforcement against the corporate debtor for recovery of any past dues incurred prior to the commencement of the CIRP. Therefore, permitting the bank guarantee to be invoked, according to the Appellant, would lead to the Respondent stealing a march over other creditors, thereby vitiating the sequence of distribution of assets, should the CIRP fail and liquidation take place. Consequently, the Appellant, acting through the RP submitted that no useful purpose would be served in requiring the bank guarantee to be kept alive; and

n) Upon hearing the parties, the Supreme Court allowed Interim Application No. 7569 of 2024 seeking withdrawal of the Special Leave Petition and permitted the revocation of the ICICI Guarantee. The Supreme Court made the following Order:

I.A. No. 7569/2024, seeking withdrawal of the special leave petition, is allowed. The special leave petition is dismissed as withdrawn.

The bank guarantee(s) will stand revoked.

The respondent, Rajiv Suri, will be entitled to enforce his rights in accordance with law.

[Emphasis Supplied]

Contentions of the Parties: