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TMI Blog2022 (5) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... cted as an agent on behalf of all Banks/lenders under Consortium funding. As per clause No. 7 9 of guarantee agreement, such guarantee would be enforced as if corporate debtor was principal debtor to the lenders. As per clause 8, such guarantee of corporate debtor was continuing and such guarantee of corporate debtor is irrevocable and enforceable notwithstanding any dispute between Borrower and lenders. Further clause 18 makes guarantee deed executed by corporate debtor independent and distinct from any other security agreement. Subsequently, the Borrower and corporate debtor had executed the revival letter dated 07.03.2017 acknowledging the debt. As per said revival letter, the corporate debtor had acknowledged the entire outstanding debts in terms of section 18 of Limitation Act - It is settled legal position that application under Section 7 of IBC is not a recovery proceeding. Therefore, in terms of clause 7.5 of inter-se agreement dated 26.11.2013, any lender is at liberty to take any decision or action on any other matter and is not required to take any approval from any other lender, the applicant would not be restricted to take independent recourse. As per clause 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered with Registrar of Companies, Ahmedabad with CIN: U41000GJ2002PTC041470 and having registered office at Bodakdev, Ahmedabad, Gujarat State. The Authorized share capital of the Respondent is Rs. 8,00,00,000/- and paid up share capital of the company is Rs. 42,82,360/-. The corporate debtor is an associate company of M/s. Doshion Water Solution Private Limited being a part of Doshion Group. The corporate debtor is engaged in the business of manufacturing water treatment plant equipment and trading of water treatment components. 4. The present application is filed by IDBI Bank Ltd. against corporate debtor who is the corporate Guarantor for securing the financial assistance granted by the applicant to M/s. Doshion Water Solution Private Limited (hereinafter called the Borrower ) under Bank of Baroda Consortium Finance. In this regard corporate debtor had executed Corporate Guarantee dated 27.06.2014 in favour of the applicant Bank. 5. It is submitted by the applicant that vide letter 27.02.2009 a loan of Rs. 72 crores was sanctioned to the Borrower under Bank of Baroda Consortium finance. Subsequent modification letter dated 09.03.2009 explicitly laid down the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all terms and conditions has been duly acknowledged and accepted by the Borrower and Guarantors including the corporate debtor being corporate Guarantor. The said restructured enhanced financial facility was granted against: 1st pari passu charge on the current assets of the Borrower; and Pari passu first charge on immovable properties as described in sanction letter; and Personal guarantee of Mr. Ashit Dhirajlal Doshi, Mr. Rakshit Dhirajlal Doshi, Mrs. Kalpana Ashit Doshi, Mrs. Krupa Sujit Doshi, Mrs. Rupa Nishit Doshi, Mrs. Purvi Rakshit Doshi Mrs. Pooja Amit Doshi; and On corporate guarantees of M/s. Doshion Pvt. Ltd., M/s. Thomson Nusa Metals Pvt. Ltd. M/s. Fivebro International Private Limited. 10. The applicant further states that the Board of Directors of the corporate Guarantor had approved the granting of corporate guarantee against the said restructuring of financial assistance with enhanced limit of the Borrower by the applicant and in this regard a Board Resolution dated 20.06.2014 was resolved by the Board of Directors of the Corporate Debtor. In the said Board Resolution, the execution of various documents in favour of Consortium led by BOB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice dated 22.03.2017 under Section 13(2) of SARFESI Act, 2002 to the Borrower, copy of which was also sent to both personal and corporate guarantors including the corporate debtor. It is further submitted by the applicant that notice issued under Section 13(2) of SARRFAESI Act, 2002 dated 25.10.2019 was replied by the corporate debtor vide letter dated 04.01.2020. The applicant Bank has already initiated legal recovery proceedings under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 before DRT by filing OA No. 519/2017 on 16.08.2017 against the Borrower and personal Guarantors and corporate Guarantors including the corporate debtor. In the said proceedings, the contesting defendants (M/s. Doshion Water Solutions Private Limited), personal Guarantors and corporate Guarantors therein filed reply wherein the corporate debtor being corporate Guarantor has not disputed any liability of repayment against Consortium member Bank under restructuring package. 14. The applicant further states that, being corporate Guarantor of the Borrower, the total outstanding amount payable by the Borrower to the applicant Bank as on 01.09.2018 under fund based credit and non-fund based c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant filed affidavit rebutting the contentions raised in the reply filed by the corporate debtor inter alia as: (i) Under Delegation of Powers affirmed by Board of Directors of the applicant Bank bestowing various powers on various designated officers to act on behalf of the applicant Bank, DGM is empowered to approve the application and other documents to be filed before Adjudicating Authorities. (ii) As regards the issue of limitation, the applicant has rebutted that the recall notice was issued on 20.09.2016, the guarantee invocation notice was issued on 04.11.2016 (Statutory Notice under Section 13(2) of SARFAESI Act was issued on 22.03.2017). The present application was filed on 26.10.2018, thus the present application is within the period of limitation. (iii) As regards the contention raised by the corporate debtor that they have no common directors with the Borrower company resulting into no obligation, the applicant relied on the master data of the corporate debtor as well as details of the directors obtained from office of RoC which revealed that there are common directors between the corporate debtor and the borrower. (iv) As regards the contention that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurity trustee who had acted as an agent on behalf of all Banks/lenders under Consortium funding. Corporate debtor has executed deed of guarantee dated 27.06.2014 in favour of the security trustee who had acted as an agent on behalf of all Banks/lenders under Consortium funding. The trustee had acted by the consent of Borrower and lender in terms of security trustee agreement dated 26.11.2013 as his agent. As per clause No. 7 9 of guarantee agreement, such guarantee would be enforced as if present corporate debtor were principal debtor to the lenders. As per clause 8, such guarantee of corporate debtor was continuing irrevocably and enforceable, notwithstanding any dispute between Borrower and lenders. Further clause 18 makes guarantee deed executed by corporate debtor independent and distinct from any other security agreement. Subsequently, the Borrower and corporate debtor had jointly executed the revival letter dated 07.03.2017 acknowledging the debt. The applicant has recalled the loan facility by notice dated 20.09.2016, copy of which was also forwarded to corporate debtor and thereafter, the corporate guarantee was invoked on 04.11.2016. The present pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02 AIR 1981 AIR 215 (Union of India v. Narayanasetti Jugadeshwararao Ors. 03 1963 RLW 430 (Ram Narain v. Ltd. Col. Hah Singh) 04 [1861-73] All ER Ext 1634 (Westhead Ors. v. Spronson Anr. 05 [1874-80] All ER Rep. Ext. 1799 (Morell v. Cowan 06 [2017] 82 taxman.com 396 (NCLAT) State Bank of India, Colombo v. Western Refrigeration (P.) Ltd. 07 [2017]86 taxmann.com 81 (NCLAT) (Palogix Infrastructure P. Ltd. v. ICICI Bank 08 [2018] 98 taxmann.com 213 (SC) (BK Educational Services P. Ltd. v. Parag Gupta Associates) 09 [2020] 118 taxmann.com 48 (NCLAT) (Bijay Kumar Agarwal v. State Bank of India 10 [2020] 117 taxmann.com 478 (NCLT-Hyd.) (State Bank of India v. Athena Energy Ventures (P.) Ltd. 11 [2020] 116 taxmann.com 967 (NCLT-Allahabad) (Indiabulls Housing Finance Ltd. v. EMM VEE Infrastructure (I) P. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it appears that on 24.04.2014 the sanction letter under restructuring was issued by the applicant to the Borrower wherein corporate debtor had duly acknowledged such sanction as corporate Guarantor. The corporate debtor, by Board resolution dated 20.06.2014, had resolved to acknowledge guarantee for credit facilities upto Rs. 408.64 crores and further resolved for issuance of requisite deeds of guarantee. Corporate debtor had executed deed of guarantee dated 27.06.2014 in favour of the security trustee who had acted as an agent on behalf of all Banks/lenders under Consortium funding. The trustee had acted by the consent of Borrower and lender in terms of security trustee agreement dated 26.11.2013 as his agent. Relevant portion/clauses of the Deed of Guarantee dated 27.6.2014 is reproduced below: 1. If at any time default shall be made by the Borrower in payment of the principal sum (not exceeding Rs. 408.64 crores) together with interest, costs, charges, expenses and/or other moneys for the time being due to the BOB Consortium in respect of or under the abovementioned credit facilities or any one of them the Guarantor shall forthwith on demand pay to the BOB Consortium the wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters or things whatsoever which under the law relating to the sureties would but for this provision have effect of so releasing the Guarantor. 4. As the above mentioned credit facilities have been further secured by hypothecation and/or pledge of the Borrower's movable properties and/or mortgage of the Borrower's immovable properties by way of first charge under separate security documents executed by the Borrower with the BOB Consortium/security trustee which security documents would contain stipulations as to insurance assignment and delivery of insurance policies to BOB Consortium/security trustee the margin of insurance policies to BOB Consortium/security trustee the margin of value of properties to be maintained and the periodical furnishing of different statements to the BOB Consortium and other matters the Guarantor agrees that failure in requiring or obtaining such security or in the observance or performance of any of the stipulations or terms of the said security documents and no default of the BOB Consortium in requiring or enforcing the observance or performance of any of the said stipulations or terms effect of releasing or discharging or in any manner affe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time or by reason of the said accounts being opened in respect of fresh facilities being granted within the overall limit sanctioned to the Borrower. 9. Notwithstanding the BOB Consortium's rights under any security which the BOB Consortium may have obtained or may obtain the Bank shall have fullest liberty to call upon the Guarantor to pay the principal sum not exceeding Rs. 408.64 crores, together with interest as well as costs, (as between advocate and client) charges and expenses, and/or other money for the time being due to the BOB Consortium in respect of or under the abovementioned credit facilities or any of them without requiring the BOB Consortium to realise from the Borrower the amount due to the BOB Consortium in respect of the abovementioned credit facilities and/or requiring the BOB Consortium to enforce any remedies or securities available to the BOB Consortium. 10. The guarantee herein contained shall not be or in any way prejudiced by any absorption of or by BOB Consortium or by any amalgamation thereof or therewith but shall ensure and be available for and by the absorbing or amalgamated BOB Consortium of concern. 11. The guarantee shall be irrevocab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and satisfaction of the liability of the Guarantor under these presents. 16. The Guarantor agrees notwithstanding the BOB Consortium for any reason whatsoever losing and/or parting with any of the securities given by the Borrower, the Guarantor shall not be released or discharged of their obligations under this guarantee and in the event of the BOB Consortium so losing or parting with the security the Guarantor shall be deemed to have consented to or acquiesced in the same. 17. The Guarantor agrees that if the Borrower being an individual becomes an insolvent or being a company enters into liquidation or winding up (whether compulsory or voluntary) or if the management of the undertaking of the Borrower is taken over under any law or if the Borrower and/or the undertaking of the Borrower is nationalised under any law or make any arrangement or composition with creditors the BOB Consortium may (notwithstanding payment to the BOB Consortium by the Guarantor or any other person of the whole or any part of the amount hereby secured) rank as creditor and prove against the estate of the Borrower for the full amount of the BOB Consortium's claims against the Borrower or agree to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by any officer of the BOB Consortium and the same shall be binding and conclusive as against the Guarantor also and the Guarantor further agree that in the event of the Borrower making an acknowledgement or making a payment, the Borrower shall in addition to his personal capacity be deemed to act as the Guarantor duly authorised agent in that behalf for the purposes of sections 18 and 19 of the Limitation Act of 1963. 20. The Guarantor agrees that the loans hereby guaranteed shall be payable to the BOB Consortium on the BOB Consortium serving the Guarantor with a notice requiring payment of the amount and such notice shall be deemed to have been served on the Guarantor either by actual delivery thereof to the Guarantor or by dispatch thereof by Registered Post or certificate of posting to the Guarantor address herein given or any other address in India to which, the Guarantor may by written intimation given to the BOB Consortium request the communication addressed to the Guarantor be dispatched. Any notice dispatched by the BOB Consortium by registered posting to the address to which it is required to be dispatched under this clause shall be deemed to have been duly served on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to or challenged by Guarantor. 23. The Guarantor also confirms the rights of the BOB Consortium to securitise, assign and transfer the said credit facilities or any of them granted to the Borrower (either with or without the underlying securities created by Borrower/Guarantor in favour of the BOB Consortium) and the Guarantor hereby confirms that the guarantee's executed by Guarantor shall also be assignable/transferable to any Bank's and/or financial institution's and/or Securitisation Company or special purpose vehicle (SPV) or third parties without giving any notice to Guarantor and on such terms and conditions as the BOB Consortium may deem fit at Guarantor's costs and expenses. While doing so, the BOB Consortium may either reserve the right to collect the dues and/or to proceed against Guarantor/Borrower on behalf of the purchaser's assignee's or transferee's. In the event of the BOB Consortium assigning, securitising, transferring as above, the BOB Consortium/assignee may if it so desire and at its sole discretion appoint a trustee or a company or a SPV for the benefit of such purchasers/assigners and may transfer/assign the securities and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany incorporated and registered under Companies Act, 1956 (1 of 1956) and a Banking company within the meaning of Section 5(c) of the Banking Regulation Act, 1949 (10 of 1949) and having its registered office at IDBI Tower, WTC complex, Cuffe Parade, Mumbai 400005 and a branch office at IDBI Complex, Near Lal Bungalow, Off. C.G. Road, Ahmedabad 380006 (hereinafter called IDBI which expression shall, unless it be repugnant to the subject or context thereof, include its successors and assigns); IN WITNESS WHEREOF the Guarantor has executed these presents on the day and year first hereinabove written. 24. As per clause No. 7 9 of guarantee agreement, such guarantee would be enforced as if corporate debtor was principal debtor to the lenders. As per clause 8, such guarantee of corporate debtor was continuing and such guarantee of corporate debtor is irrevocable and enforceable notwithstanding any dispute between Borrower and lenders. Further clause 18 makes guarantee deed executed by corporate debtor independent and distinct from any other security agreement. Subsequently, the Borrower and corporate debtor had executed the revival letter dated 07.03.2017 acknowledging the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is complete in terms of Section 7(5) of the Code. The applicant is entitled to claim its dues, establishing the default in payment of the financial debt beyond doubt. In light of the above facts and records the present application is admitted and CIRP is ordered to be initiated against corporate debtor. 30. The applicant has proposed the name of Mr. Ramchandra Dallaram Choudhary as Insolvency Resolution Professional, who is be and hereby appointed as IRP of corporate debtor having registration number IBBI/IPA-001/IP-P-00157/2017-18/10326 having office at 9-B, Vardan Tower, Near Vimal House, Lakhudi Circle, Navrangpura, Ahmedabad 380014, subject to the condition that no disciplinary proceedings are pending against him. Specific consent of the IRP in Form 2 along with disclosures as required under IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 is filed which is on record. 31. We direct the Financial Creditor to deposit a sum of Rs. 2.00 lacs (Rupees two lacs only) with the Interim Resolution Professional, namely Mr. R.D. Choudhary to meet out the expenses for performing functions assigned to him in accordance with regulation 6 of Insolvency and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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