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TMI Blog2022 (3) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(ND)/2019 filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short 'IBC'). 2. The Appellant is aggrieved by the fact that despite there being no default and incorrect averments of the Appellant, Section 7 application submitted by the Respondent No. 1 was admitted vide the Impugned Order 3. The Appellants have stated in the appeal that they are ex-directors of the Corporate Debtor-M/s Abloom Infotech Pvt. Ltd., which is an associate company of Ninex Group of Companies. The four companies in Ninex Group entered into a common loan agreement dated 27.4.2016 for availing a total loan of Rs. 69,51,00,000/- from the Respondent No. 1. The Appellants have further stated that the corporate debtor, who is one of the borrowers, and three other co-borrowers have repaid Rs. 88,37,00,000/- against the loan which is much more than the combined principal and interest amount and yet a Section 7 application alleging that the corporate debtor/Abloom Infotech Pvt. Ltd. had defaulted in repayment of Rs. 7,94,47,080/- of financial debt to the Respondent No. 1 was filed by Respondent No. 1 and which was admitted by the Adjudicating Authority vide the Impugned Order. 4. The Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Debtor to the Financial Creditor (Respondent No. 1); (ii) Whether the financial creditor can invoke multiple remedies by filing claims of the same amount in some other Corporate Insolvency Resolution Processes (in short 'CIRP') going on against other companies of the Ninex Group; and (iii) Whether the claim of Respondent No. 1 which is being considered in the CIRP of the Corporate Debtor/Abloom Infotech Pvt. Ltd. does not preclude him from filing an application for initiating CIRP against the personal guarantor (Appellant No. 2). 7. We heard the oral arguments submitted by the Learned Counsels of both the parties and also perused the record. 8. The Ld. Counsel for the Appellant has submitted the following arguments:- (i) That out of total sanctioned loan amount of Rs. 16 Crores the Corporate Debtor was disbursed an amount of Rs. 6,75,50,000/- against which it has already repaid an amount of Rs. 13,38,99,599/- to Respondent No. 1. (ii) Despite repeated requests, Respondent No. 1 did not provide any clear statement of accounts to the Appellants, neither under Section 7 application nor in response to the legal notice dated 24.07.2020 (attached at Pg. 162-174 of the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vii) Red Topaz Real Estate, a co-borrower, is undergoing CIRP in which the Respondent No. 1 is a secured creditor whose claim has been admitted by the RP. The liquidation value of assets of Red Topaz Real Estate is more than Rs. 102 Crores and the total financial debt due to the secured creditors is less than the liquidation value. After approval of the resolution plan by the Adjudicating Authority the entire debt due to the Respondent No. 1 will be paid and, therefore, the present proceedings CIRP against the Corporate Debtor/Abloom Infotech Pvt. Ltd. is not justified. 9. The Ld. Counsel for the Respondent No. 1 has argued that in accordance with clause 2.5 and Schedule 2 of the loan agreement dated 27.04.2016 (attached at pp. 59-154 of the Appeal Paper Book) a total loan of Rs. 13,35,00,000 was disbursed by Respondent No. 1 against the payment of interest in accordance with the following four letters of drawal:- Sl. No. Date Amount Disbursed in Rs. 1. 04.05.2016 7,00,00,000/- 2. 12.02.2018 2,00,00,000/- 3. 13.03.2018 2,75,00,000/- 4. 16.05.2018 1,60,00,000/- Total 13,35,00,000/- This disbursed amount has been admitted by the Corporate Debtor in Paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers Limited (First Part), Red Topaz Real Estate (P) Limited, (2nd Part), RMG Developers (P) Limited (3rd Part) and Abloom Infotech Primate Limited (4th Part) who are collectively referred to as 'Borrowers' and the persons/entities listed in Part A of Schedule 1 individually referred as 'Guarantor' and collectively as 'Guarantors' (4th Part) and DMI Finance Limited, 'Lender' (6th Part). 15. We also note that the averments that the Corporate Debtor and the co-borrower have already repaid more than of Rs. 88,73,00,000/- to the Respondent No. 1 which includes principal amount of Rs. 69,51,00,000 and Rs. 16,45,00,000 as interest was never submitted before the Adjudicating Authority and therefore, should not be taken into account here before the Appellate Tribunal. 16. The Applicable Rate of Interest is given in Article 1 "DEFINITIONS AND INTERPRETATION" in the Loan Agreement (supra) which is as follows:- "Applicable Rate of Interest" means in respect of the Loan Facility the rate at which interest is agreed to be pain in respect thereof as prescribed Schedule 2" Further, the quantum of Applicable Rate of Interest is given in Schedule 2 of the Loan Agreement (supra) in the section o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim in light of the no claim letters issued by the Financial Creditor against M/s Ninex Developers Limited on 25.07.2017. The Financial Creditor however has not filed any claim against the company M/s Red Topaz Real Estate Pvt. Ltd. which is also under CIRP. The cop of the list of creditors of M/s Ninex Developers Limited as furnished to the Corporate Debtor in the meeting of the committee of creditors of the said company is enclosed as Annexure R-3 and that of M/s Red Topaz Real Estate Pvt. Ltd. is Annexure R-4. 20. A point raised by the Appellant in his written submissions is that certain amounts were retained by the Respondent No. 1 for future repayment which is referred to as Debt Service Reserve Account (DSRA) and thus a total amount of Rs. 1,06,97,157 was retained from the four disbursements made by the Financial Creditor to the Corporate Debtor. We note that DSRA is allowed to be kept by the Financial Creditor from money to be made available by the Corporate Debtor. The provision for DSRA has been made in Schedule 7 of the Loan Agreement (supra) which is described on pg. 130 of the Appeal Paper book Vol. I as follows:- "2. The following Security Interest shall be creat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the 'IT Land' is given in Schedule 7 'Security Governance' of the Loan Agreement (supra) at pg. 127 of Appeal Paper book, which is as hereunder:- (m) "IT Land" means the land admeasuring 20242.60 sq. mtrs. constituted in plot No. A-3A, Sector 132, New Okhla Industrial Development Area, Distt. Gautam Budh Nagar, UP leased to Abloom by NOIDA Authority under lease deed dated 24.08.2006." 24. The permitted purposes for the loan facility is given in clause 8 of Schedule 2 of Loan Agreement (supra) which is as follows:- "Permitted Purpose The Term Loan Facility shall be used only for the following purpose: (i) Proceeds of the First Tranche shall first be used for repayment and full and final settlement of unsecured loans obtained by Abloom as identified below. ......... (ii) Proceeds of Second Tranche shall first be used for repayment and full and final settlement of unsecured loans obtained by Abloom from Dhoot Ninex Projects Pvt. Ltd. ....... (iii) Balance amount shall be utilised first for the payment of dues to NOIDA Authority for the IT Land....... (iv) Any amount remaining shall be utilised for general corporate purposes subject to End Use Restrictions." 25. Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious clauses and conditions included in the loan agreement dated 27.4.2016 (supra), it is amply clear that admittedly a disbursement amounting to Rs. 13,35,00,000 was made by the Financial Creditor to the Corporate Debtor and an event of default as described in Article 8 'Event of Default and Remedies' of the Loan Agreement, the Corporate Debtor defaulted in the repayment of the due loan amounts. In accordance with clause 8.2 of Article 8 the Lender had the right to terminate the said agreement after giving a notice to the borrower. The terms and conditions relating to Applicable Rate of Interest, Permitted Purpose, Security Interest (regarding the IT Land) define the use of loan amount, the time value of money aspect and the personal guarantors specified in the Loan Agreement. All these are among the issues raised by the Appellant which are cogently covered in the Loan Agreement. Thus we find that the Loan Agreement, which is a written document, signed by the corporate debtor and financial creditor along with the guarantors, lays down conditions of disbursement and events of default and thus establish various aspects and conditions of the loan provided by the financial creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al No. 3595 of 2018) and State Bank of India Vs. Athena Energy Ventures Pvt. Ltd. [(2020) SCC Online NCLAT 774] are relevant in this context which hold that the principal debtor and surety have co-extensive liabilities and also that there is no bar under the IBC for the financial creditor to simultaneously file claims against all co-borrowers or there is any prohibition for the financial creditor to proceed against both the corporate debtor and the surety. 31. We also note that the judgment of NCLAT in the matter of Dr. Vishnu Kumar Agarwal Vs. M/s Piramal Enterprises Ltd. [CA (AT) (Ins) No. 346 of 2018 has been subsequently revised through a judgment of NCLAT in the case of State Bank of India Vs. Athena Energy Ventures Pvt. Ltd. (supra) wherein it was held as follows: "16. We find substance in the arguments being made by the learned Counsel for Appellant which are in tune with the Report of ILC. The ILC in para-7.5 rightly referred to subsequent Judgment of "Edelweiss Asset Reconstruction Company Ltd. V. Sachet Infrastructure Ltd." dated 20th September, 2019 which permitted Company Appeal (AT) (Ins.) No. 186 of 2021 simultaneously initiation of CIRPs against Principal Borrower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rower and surety are co-extensive under an agreement, it stands to reason that the liabilities of co-borrowers who have equal and similar liabilities under a loan agreement will also be there and CIRPs against them can run simultaneously. Moreover, till the financial creditor is able to get payment of his claim, he can file claim in all the CIRPs and also have voting rights in the respective CoCs based on the quantum of his financial debt. Thus we infer that the liabilities of the corporate debtor and the co-borrower companies are joint and co-extensive in nature and that claims of similar amounts could be submitted by the financial creditor in all the CIRPs. 33. The Respondent No. 1 is also entitled to initiate independent proceedings under the different statutes and that would not be a bar for initiating proceedings under Section 7 of the IBC in the present case. The Judgment of NCLAT in the matter of Punjab National Bank Vs. Vindhya Cereals Pvt. Ltd. [CA (AT) (Ins) No. 854 of 2019] and Neeraj Jain Vs. Yes Bank Ltd. & Anr. [CA (AT) (Ins) No. 323 of 2019] have been cited in support of this contention by the Ld. Counsel of Respondent No. 1. 34. The issue about simultaneous CIRP a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India & Ors. [Transferred Case (C) No. 245 of 2020], the Hon'ble Supreme Court has held the validity of notification authorising the Central Government and the Insolvency and Bankruptcy Board of India to frame Rules and Regulations on how to allow actions against a Personal Guarantor to a Corporate Debtor before the Adjudicating Authority. In Para 95 of the said Judgment, it is held as follows:- "95. The impugned notification authorises the Central Government and the Board to frame rules and regulations on how to allow the pending actions against a personal guarantor to a corporate debtor before the Adjudicating Authority." 37. Later in the Lalit Kumar Jain Judgment in Para 111 and 112, it is held by the Hon'ble Apex Court as below:- 111. In view of the above discussion, it is held that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of her or his liabilities under the contract of guarantee. As held by this Court, the release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process, i.e. by operation of law, or due to liquidation or insolvency proceeding, does not absolve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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