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TMI Blog2020 (7) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Debtor' besides appointing the 'Interim Resolution Professional'. The impugned order is challenged primarily on the ground that the admission of application by the Adjudicating Authority has unjustly tilted the balance in favour of the 'Financial Creditor' to the detriment of all other stakeholders which is designed to defeat the object of the 'I&B Code'. 2. For appreciating the issue raised in this appeal, a brief reference to the factual matrix of the case is inevitable. The 'Financial Creditor'-'Bank of India' approached the Adjudicating Authority with an application under section 7 of the 'I&B Code' seeking initiation of the 'Corporate Insolvency Resolution Process' on the ground that the 'Corporate Debtor' committed default on 16th July, 2019 to the extent of Rs. 21,68,44,477/-. It was asserted in the application that the 'Corporate Debtor' is a Special Purpose Vehicle setup by 'Reliance Infrastructure Limited' for the purpose of executing the project awarded to it by 'National Highways Authority of India' for four laning of Trichy-Dindigul Road in Tamil Nadu. The 'Corporate De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 407" in passing the impugned order. The Adjudicating Authority further observed that Section 238 of the 'I&B Code' provides overriding effect to the provisions of the Code and the 'Inter-Creditor Agreement' entered between the consortium members would not stand in the way of admission of the application under section 7 of the 'I&B Code'. It further observed that by consenting to and executing the 'Inter-Creditor Agreement' with other Creditors, the 'Financial Creditor' i.e., the 'Bank of India' had not waived its statutory rights by a contractual agreement, but only envisaged a mechanism/procedure to jointly enforce the loan as a consortium. Thus, having been satisfied that there was a financial debt and the 'Corporate Debtor' had committed default in respect of such debt payable under law, the Adjudicating Authority admitted the application in terms of the impugned order. 3. The limited issue arising for consideration is whether the 'Inter-Creditor Agreement' devising a mechanism for enforcement of rights qua the 'Corporate Debtor' would bar an individual Creditor from triggering 'Corporate Insolvency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... single 'Financial Creditor' to initiate 'Corporate Insolvency Resolution Process', for which consent of other 'Financial Creditors' is not required. It is submitted that since the factum of debt and default has not been disputed, the independent right of 'Bank of India' as individual lender to enforce its rights and seek triggering of 'Corporate Insolvency Resolution Process' is not affected by the terms of CLA. 7. It is further submitted by the 'Financial Creditor' that the 'Corporate Debtor' is not a party to ICA and cannot derive any benefit therefrom. 8. The consortium of lenders has sought intervention. Written submissions have been filed to buttress the point that the 'Inter-Creditor Agreement' governs the inter se rights and duties of the consortium lenders and none of the consortium members have objected to filing of the Section 7 petition against the 'Corporate Debtor'. The Intervenors submit that the Appellant has no locus to raise an objection in this regard. 9. Having heard learned counsel for the parties including the Intervenors, we find that existence of financial debt and its default on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts by the 'Bank of India' in regard to the financial debt payable to it and to the extent of its interest. 10. The statutory right across the ambit of Section 7 of the 'I&B Code' cannot be curtailed or made subservient to any 'Inter-Creditor Agreement'. The contractual rights, unless recognised by the statute as a permissible mode, would not override the statutory mechanism and right created and enforceable under statute. This legal proposition appears to have been recognised in clause 2.2 of the 'Common Rupee Loan Agreement', which is reproduced under: "2.2. Nature of Rights and Obligations of Rupee Lenders- The rights of each Rupee Lender under the Finance Documents are separate and independent. Any Rupee Lender may separately enforce any of its rights arising out of any Finance Documents. This Agreement will govern the right and obligation of the Rupee Lenders and the Borrower and not the inter-se relationship among the Rupee Lenders. The obligations of each of the Rupee Lenders hereunder are several. No Rupee Lender shall be responsible for the obligations of any other Rupee Lender." 11. The language employed in this clause is eloquent en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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