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TMI Blog2019 (7) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... s been preferred by an alleged Financial Creditor, ICICI Bank Limited ("Applicant") under section 42 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code") challenging the order dated 12.09.2018 passed by the Liquidator rejecting the claim of Rs.570,806,489.91/- submitted by the Applicant as a Financial Creditor under Regulation 18 read with Form-D of the IBBI (Liquidation Process) Regulations, 2016. 3. Section 42 of the I&B Code reads as follows: "Appeal against the decision of liquidator: A creditor may appeal to the Adjudicating Authority against the decision of the liquidator rejecting the claims within fourteen days of the receipt of such decision." 4. The present Application in hand should have been filed within 14 days of the decision of the Liquidator. However, the same is filed after a delay of 18 days. Hence, it is also prayed by the Applicant that this delay be condoned given Section 238A of the I&B Code r/w Section 5 of the Limitation Act, 1963. 5. The Applicant submits that certain Financial Facilities were executed by and amongst Varun Resources Limited (after this referred to as "Borrower") and the Applicant's Hong Kong Branch as A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All the queries were addressed, and supporting documents were delivered to the Liquidator on 24.08.2018. The Liquidator finally on 29.08.2018 issued a notice to the Applicant to show reasons for not rejecting the claim within seven days from that place. The notice was duly replied to by the Applicant drawing reference to the indemnity obligations of the Corporate Debtor which, as per the Applicant, squarely falls within the definition of the 'financial debt under section 5(8)(a) r/w section 5(8)(i) of the I&B Code. 11. Despite the same, the Liquidator rejected the Applicant's claim vide email dated 12.09.2018 saying that the Corporate Debtor performed its part of the pledge agreement dated 02.08.2016, i.e. it has already pledged the equity shares of the Borrower held by it in favour of M/s SBICAP Trustee Company Ltd., the Security Trustee. 12. The Applicant submits that the right of the applicant to recover the debt is concurrent to the right of the Applicant to retain the pledged shares under section 176 of the Contract act, 1872. The Applicant is placing reliance on the decision of NCLT, Mumbai Bench in the matter of SREI Infrastructure Finance Ltd. V. Sterling International ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, claims, demands, costs, charges and expenses (including legal and other fees on full indemnity basis) and all goods and services, value added or other similar tax which may be incurred, sustained or which may arise in or on the non-performance or non-observance of any of the undertaking and agreements on the part of the pledgers and/or the borrower, herein contained or under any document delivered hereunder in respect of any matter or thing done or omitted relating in any way whatsoever to this Deed or such document or any of the pledged shares. All sums necessary to effect the indemnity and all sums payable by the pledgers shall form part of the secured obligations and shall constitute a charge on the pledged shares." (emphasis supplied) 15. This clause as reproduced above casts an obligation on the Corporate Debtor to indemnify the Applicant for the 'event of default' by the borrower. Clause 11 of the said pledge agreement does not state about the 'event of default'. It is further stated that the Corporate Debtor is not even a party to the Master Restructuring JLF Agreement dated 31.03.2015 as amended on 29.06.2015. Hence, without quid-pro-quo, the Corporate Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e delay in filing this application. Hence, I at this moment condone the delay in filing this application by the provisions of the code. 19. Coming onto the merits of the case, it is clear that the Loan Agreements are executed between Applicant & the Borrower. It is worth to notice that the Corporate Debtor is not a party to the Loan agreement. It is also noticed that under Master Restructuring JLF Agreement dated 29.06.2015, the Pledge Agreement dated 02.08.2016 was executed, among other things, by Varun Corporation Limited in favour of SBICAP Trustee Company Limited, a Security Trustee, acting as agent and security trustee for various lenders including for ICICI Bank Ltd. (Applicant). The Corporate Debtor has not undertaken any counter-indemnity obligation by the said Pledge Agreement dated 02.08.2016 in respect of any guarantee, indemnity, bond, documentary letter of credit or any other instrument given/issued by ICICI Bank. As per liquidator, ICICI Bank has also confirmed that there is no guarantee given by the Corporate Debtor. 20. The Corporate Debtor has only given security in the form of a pledge of shares of Borrower for the loan facilities granted by the Applicant to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (8) of Section 5 as suggested by the learned counsel for the Appellant.
11. So far as Section 176 of the Contract Act is concerned, we hold that the creditors have the right to file a suit but that does not mean that all the creditors who are not the 'Financial Creditors' or the 'Operational Creditors' have the right to file an application under Section 7 or Section 9 of the 'I&B Code'."
23. Therefore, we are of the conscientious view, that Liquidator has rightly rejected the claim of the Applicant on the ground that the Applicant is not a Financial Creditor of the Corporate Debtor and the liability of the Corporate Debtor is restricted to the pledge of shares only which has already been meted with.
24. Hence, MA 1199 of 2018 in CP 725/NCLT/MB/MAH/2017 deserves to be dismissed.
ORDER
Miscellaneous Application filed by the Applicant, ICICI Bank Limited under section 42 of the Insolvency &Bankruptcy Code, 2016 challenging the order dated 12.09.2018 passed by the Liquidator rejecting the claim of Rs.570,806,489.91/- submitted by the Applicant as a Financial Creditor, under Regulation 18 read with Form-D of the IBBI (Liquidation Process) Regulations, 2016 is rejected. X X X X Extracts X X X X X X X X Extracts X X X X
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