2022 (5) TMI 1474 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - existence of debt and dispute or not - Whether Applicant Bank neither can itself invoke the Personal Guarantee or can maintain the application under Section 95 against personal guarantor? - HELD THAT - The deed of personal guarantee is given at pages 598-617 (Annexure A-12 of Volume-IV of the application). Perusal of the same shows that the deed of personal guarantee is executed by Mr. Manoj Gaur as Guarantor for JIL(as Borrower) in favour of the IDBI Trusteeship Services Limited(as the Security Trustee). Apparently, a trustee is appointed to hold the trust property for the benefit of the beneficiaries of the trust, who have a beneficial interest in the trust property. Where, there are multiple beneficiaries, the trustee is bound to execute the trust for the benefit of all the beneficiaries in accordance with the Trust Deed only after taking consent of other co-lenders. This clause was apparently incorporated with an intent to save the guarantor from being harassed at the hands of unscrupulous individual lender. In the matter in hand, there were other banks which extended loan facilities to corporate debtor apart from the applicant bank although it was having major share in comparison to other co-lenders. The security agreement clearly lays down Lenders shall mean collectively the refinancing lenders and the RTL facility Lenders - word lender herein cannot be interpreted to be used as plural, once all the lenders to be taken as collectively. Hence, all the bankers must decide together to revoke the guarantee. In the absence of the same, an individual Beneficiary (such as the Applicant Bank) was under obligation to take consent of co-lenders/beneficiaries. No doubt, the deed of personal Guarantee has been executed by Mr. Manoj Gaur, (the Respondent) in favour of IDBI Trusteeship Services Limited as the Security Trustee, but we are unable to agree with the contention raised by the Applicant Bank that IDBI can act on behalf of all the Lenders without obtaining their formal consent and it can act in place of the Security Trustee. The invocation of Personal Guarantee and the application under Section 95 can be maintained by Security Trustee as per the clause laid down in the deed of Personal Guarantee dated May, 25, 2015. The Applicant Bank neither can itself invoke the Personal Guarantee, accordingly, nor can maintain the application under Section 95 against personal guarantor Mr. Manoj Gaur - the present application under Section 95 on behalf of the applicant bank is not maintainable, accordingly, the same stands dismissed, with no order as to costs.

Summary

Issues Involved:

1. Maintainability of the application under Section 95 of the Insolvency and Bankruptcy Code (IBC) by the Applicant Bank.
2. Locus standi of the Applicant Bank to file the application.
3. Role and authority of the Security Trustee under the Security Trustee Agreement.
4. Interpretation of the Security Trustee Agreement and its provisions regarding enforcement of the personal guarantee.

Issue-wise Detailed Analysis:

1. Maintainability of the application under Section 95 of the IBC by the Applicant Bank:

The application was filed by IDBI Bank Limited under Section 95 of the IBC against Mr. Manoj Gaur, the personal guarantor of Jaypee Infratech Ltd. The Tribunal examined whether the application was maintainable, given the specific provisions of the Security Trustee Agreement and the role of the Security Trustee.

2. Locus standi of the Applicant Bank to file the application:

The Respondent challenged the application on the grounds of maintainability, arguing that IDBI Bank had no locus standi to file the application. The Respondent contended that the Security Trustee, IDBI Trusteeship Services Limited, was the appropriate entity to enforce the personal guarantee, not the Applicant Bank. The Tribunal noted that the Security Trustee Agreement required unanimous written instructions from all lenders to enforce the security, and the Applicant Bank could not act independently without such consent.

3. Role and authority of the Security Trustee under the Security Trustee Agreement:

The Tribunal reviewed the Security Trustee Agreement, which outlined the duties and obligations of the Security Trustee. It was established that the Security Trustee was appointed to act on behalf of all lenders and hold the security created pursuant to the Financing Documents. The Security Trustee Agreement stipulated that enforcement actions required unanimous instructions from all lenders, and the Security Trustee could not act on conflicting instructions without such unanimity.

4. Interpretation of the Security Trustee Agreement and its provisions regarding enforcement of the personal guarantee:

The Tribunal analyzed key provisions of the Security Trustee Agreement, including:

- Para 3.4 Enforcement of Security: This clause required unanimous written instructions from all lenders for the Security Trustee to enforce the security.
- Para 8.5 Performance by the Lenders: This clause allowed the Security Trustee's duties to be performed by the lenders, but it did not authorize individual lenders to act independently.
- Definition of 'Lenders': The Agreement defined 'Lenders' collectively, indicating that actions should be taken collectively by all lenders.

The Tribunal concluded that the Applicant Bank could not unilaterally enforce the personal guarantee without the consent of other co-lenders. The Security Trustee was the appropriate entity to enforce the guarantee, and the Applicant Bank's interpretation of the Agreement to act independently was not supported.

Judgment:

The Tribunal held that the application under Section 95 of the IBC by the Applicant Bank was not maintainable. The Tribunal emphasized that the Security Trustee was the designated entity to enforce the personal guarantee, and the Applicant Bank could not act in place of the Security Trustee without obtaining formal consent from all co-lenders. Consequently, the application was dismissed with no order as to costs, and the file was consigned to records.