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TMI Blog2021 (6) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... en disbursed on 28.03.2014. The Corporate Debtor provided Corporate Guarantee in relation to such loan amount. Corporate Guarantee was executed on 27.03.2014. The original Financial Creditor got merged into the present Financial Creditor. The Corporate Debtor defaulted in repayment of loan as per the terms and conditions of loan agreement. Several demand notices were issued to both Principal borrower as well as Corporate Debtor from time to time. Winding up proceedings were also initiated which were withdrawn due to amendment agreement entered into between financial creditor and principal borrower on 04.05.2017. Subsequently, due to non-payment of loan as per revised schedule recall notice had been given on 29.10.2018. Second letter was issued on 08.02.2019. In both these letters, Principal Borrower as well as Corporate Debtor were the addressee. Subsequently, settlement talks were also initiated between the parties. Correspondences also happened in that regard. However, the same remained without any success. Ultimately, this application under Section 7 of the Insolvency & Bankruptcy Code, 2016 was filed on 21.01.2020. Contentions of the Financial Creditor: 3. Learned Senior Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Financial Creditor had admittedly issued written demand notices to the Corporate Debtor on 24.11.2014, 02.12.2014, 12.12.2014, 22.12.2014 and 27.01.2015. It was also contended that the Financial Creditor had issued winding up notices under Section 433 & 434 of the Companies Act, 1956 with regard to the Corporate Guarantee on 16.03.2015, which was withdrawn on 21.03.2017 without seeking any liberty to file a fresh including liberty to approach this Authority which had come into existence by that time. Thus, period of limitation ended over on 24.11.2017 and as per the Section 9 of the Limitation Act, 1963 such period continued to run irrespective of any subsequent disability or inability to institute necessary proceedings. Our attention was also drawn to the provision of Section 9 of the Limitation Act, 1963 in support of such legal claims Accordingly, it was claimed that period of limitation i.e. three years expired on 24.11.2017. 6. It was also pleaded that material information as regards to the sequence of evidence as pointed out hereinbefore and commencement of limitation were not disclosed in Section 7 application, which amounted to material suppression of facts and for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the said date of acknowledgement. In the present case, admittedly the oral mortgage deed is in March 1893. If the period of limitation for filing suit for redemption is 60 years then limitation for filing a suit would expire in the year 1953. Thus, by the execution of this document dated 11th January 1960 it cannot be held by virtue of Section 18 that the period of limitation is revived afresh from this date. Accordingly, he summed up his arguments on this aspect by stating that there was no merit in the claims made by the Financial Creditor as regards to the claims made by Principal Borrower had acknowledged the date of default dated 04.05.2017 to 13.09.2019, which mainly constituted amendments to the facility agreement between the Principal Borrower and the Financial Creditor executed without corporate guarantor (corporate debtor) involvement or knowledge. Hence, such proposals/acknowledgment between the Financial Creditor and Principal Borrower had no bearing on the rights/liabilities of the Corporate Debtor, which was an independent entity. 8. For the proposition the date of default would not change on the basis of unilateral actions of the Financial Creditor and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uant to amalgamation order and, therefore, no other documents were required to be executed. 12. Learned Senior Counsel for the Financial Creditor submitted that winding up proceeding initiated by the L & T against the Corporate debtor had been withdrawn on the basis of amendment agreement dated 04.05.2017 and E-mail Dated 07.03.2017 which had been issued by the Financial Creditor to the borrower, wherein, the Corporate debtor had also been copied and default took place qua the Principal borrower in the year 2018 pursuant to recall notice dated 29.10.2018 issued by the Financial Creditor to the borrower and the Corporate Debtor and thereafter pursuant to invocation of guarantee vide its letter dated 29.10.2019 and considering the fact that Corporate debtor had acknowledged its liabilities on 13.09.2019 after the invocation notice, the debt was not barred by limitation. As regards to the aspect of variance of the facility agreement, it was contended that the corporate debtor had expressly admitted its liability vide letter dated 13.09.2019 and as per the terms and conditions of the guarantee also, the Corporate debtor was not absolved due to any settlement or modification of arrange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings against individuals under Section 179 of the Code, as the said Section has not yet been brought into force. Also, we have seen that Section 249, dealing with the consequential amendment of the Recovery of Debts Act to empower Debt Recovery Tribunals to try such proceedings, has also not been brought into force. It is thus clear that Section 2, which was brought into force on 23.11.2017 would, when it refers to the application of the Code to a personal guarantor of a corporate debtor, apply only for the limited purpose contained in Section 60(2) and (3), as stated hereinabove. This is what is meant by strengthening the Corporate Insolvency Resolution Process in the Statement of Objects of the Amendment Act, 2018." Findings: 14. We have considered the submissions made by both the parties and material on record. After reserving the matter for order a controversy arose regarding E-mail dated 07.03.2017 as the Corporate Debtor submitted that this was an additional document submitted with the short notes of arguments submitted by the Financial Creditor and the main problem was that in the short notes it had been stated that the Corporate Debtor had been copied this e-mail which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason that as per the facility, agreement itself lender includes its successor for title and as a consequence of amalgamation the current applicant is the Successor of Original Financial Lender and not an assignee. Having dealt with the technical points raised by the Corporate Debtor, in our view, it would not out of place to mention that we are dealing with an economic legislation, where parties, who are liable to repay the loan takes such pleas just to avoid their obligation and such practice could not be allowed to succeeded except when there is a some fundamental principles of law such as debt being barred by limitation is involved or there exists some deficiency which is fatal to the jurisdiction of this Authority or where such application has been filed with malicious intent. None of these factors exists for the present application. 16. Now, we move forward to look into the aspect relating to the liability of the Corporate Debtor as Guarantor in terms of provisions of Guarantee executed by the Corporate Debtor. It is noted that, both facility agreement between the Principal Borrower as well as Corporate Guarantee by the Corporate Debtor for and on behalf of the borrower have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for this provision have the effect of so releasing the Guarantor AND the Guarantor hereby waives In favour of the Lender so far as may be necessary to give effect to any of the provisions of this Guarantee, all the surety ship and other rights which the Guarantor might otherwise be entitled to enforce. Clause-8 This Guarantee shall be enforceable against the Guarantor notwithstanding that any security or securities comprised in any Instruments) executed or to be executed by the Borrower In favour of the Lender shall, at the time when the proceedings are taken against the Guarantor under this Guarantee, be outstanding or unrealized or lost". 17. From perusal of the above clauses it is noted that no concurrence of the Guarantor is required in case of terms and conditions of the facility agreement are modified or payment/performance schedule is revised. 18. Further, Clause-10 states that Guarantor had agreed for the conditions that Principal Borrower could avail further financial assistance or other facilities and even in that situation the subject guarantee would not be affected or vitiated in any way but will remain in force and binding on the Guarantor (Corporate Debtor) 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms and conditions of the guarantee, we need to look into significant relevant terms and conditions of facility agreement. 25. It is noted that pursuant to facility agreement in regards to the part financing against Securitization of receivable of 3 land based drilling rigs of Rs. 69.20 Crores were disbursed as per the terms and conditions of the Facility Agreement. Repayment period of such loan is as under: Interest becomes due and payable as per this agreement Immediately and is governed by following clauses: 6. Thus, from the above terms and conditions, it is evident that amount due and payable is spread over five financial years. The interest liability accrues and becomes due and payable on each month basis. Accordingly, first instalment of interests has been debited on 1st May, 2014. 27. The statement of account of Principal Borrower is enclosed at page No. 8 to 13 of the paper book. From perusal of the same, it is abundantly clear that, the interest has been debited on each month starting from 1st May, 2014. The Principal amount has become due for payment after moratorium period of 12 months. As per the statement as on 27th December, 2019 Principal overdue amount stands a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kapil Kalra-Business Head Subject : Settlement Agreement between OGD Services Limited and L & T Finance Limited Dear Sir, We refer to the Rupee Term Loan (RTL) Facility of Rs. 70 Crores availed by OGD Services Limited formerly known as Essar Oilfield Services India Limited) (OGDSL) under the Facility Agreement dated March 27, 2014 and read alongwith Amendment Agreement dated May 4, 2017. We Essar Shipping Limited (ESL) agree and acknowledge the Settlement Agreement dated September 13, 2019 between the OGDSL and L & T Finance Limited (LTF) for the full and final Settlement of entire outstanding dues of OGDSL at Rs. 34 Crores under the aforementioned Facility Agreement. Thanking you For Essar Shipping Limited sd/- Ketan Shah Chief Financial Officer We also consider It pertinent to mention that provisions of Limitation Act, 1963 do not affect the provision of Section 25 of Indian Contract Act, 1872 as provided in Section 29(1) of Limitation Act, 1963. 29. The application is otherwise complete and defect free. The name of the IRP has been proposed whose consent is on record at Annexure-'O', hence, we appoint the same person as IRP against him no disciplinar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sub-section (1) of the Section 31 or passes an order for liquidation of Corporate Debtor Company under Section 33 of the Insolvency & Bankruptcy Code, 2016, as the case may be. 3. The Financial Creditor has proposed the name of the Interim Resolution Professional(IRP). Therefore, this Adjudicating Authority hereby appoint Mr. Umesh Ved, 304, Shoppers Plaza-5, Govt. Servants Co-op Hsg. Soc. Opp. Municipal Market, C.G. Road, Navrangpura, Ahmedabad-380 009, having registration No. IBBI/IPA-002/IP-N00136/2017-18/10376 to act as an 'IRP' under Section 13(1)(c) of the Code. The IRP did not give his fee schedule. 4. The IRP shall perform all his functions as contemplated, inter-alia, by Sections 17, 18, 20 & 21 of the Code. It is further made clear that all personnel connected with Corporate Debtor, its Promoter or any other person associated with management of the Corporate Debtor are under legal obligation under Section 19 of the Code extend every assistance and co-operation to the Interim Resolution Professional. Where any personnel of the Corporate Debtor, its Promoter or any other person required to assist or co-operate with IRP, do not assist or Co-operate, IRP is at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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