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TMI Blog2024 (4) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... templated creation for first and exclusive charge by way of registered mortgage in respect of 2,00,000 sq. ft. carpet area in favour of IIFL and IIFL Home Finance Ltd. as additional security in respect of the loan extended by the Financial Creditor. The Deed of Security dated 20.03.2020 is clearly in reference to Consent Term paragraph 2(a) and i.e., a Deed of Additional Security - Clause E of the Deed of Security clearly referred to creation of first ranking mortgage and charge over the property described in Clause 4.1 and Schedule 3. Clause F also referred to same obligation by mortgagor to execute this indenture/deed in favour of the lender on behalf of the obligor/SPIL as security for the payment of the secured obligation payable to the lenders in accordance with the Consent Terms and this Amendment Agreement. The present is case where from the Mortgaged Properties debt and dues of SPIL has not been discharged and SPIL is claiming discharge only on basis of execution of Security Agreement dated 20.03.2020, which is unacceptable. When all the Clauses E, F, G, I and J are read, it is clear that the Deed of Security was nothing but additional security by creating a mortgage of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hai and Mr. Manas Syal , Advocates For the Respondents : Mr. Sumesh Dhawan , Mr. Abhirup Dasgupta , Ishaan Duggal and Ms. Ruchi Goyal , Advocates for R - 1 . Mr. Pulkit Sharma , Advocate JUDGMENT ASHOK BHUSHAN , J. Comp. App. (AT) (Ins.) No. 1590/2023 has been filed by the Appellant who are Financial Creditors of the Corporate Debtor/Satra Properties India Limited (hereinafter referred to as `SPIL ), aggrieved by the order dated 22.11.2023 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench I) in I.A.1686/2020 in C.P. (IB) No.1632/MB/2019. I.A. No. 1686 of 2020 filed by the Respondent herein, IIFL Home Finance Limited has been allowed and the claim filed by IIFL Home Finance Ltd. in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor has been directed to be admitted as a Financial Debt. 2. Appellants who are the Financial Creditors of the Corporate Debtor aggrieved by the admission of claim of IIFL Home Finance Ltd. as Financial Creditor has come up in this Appeal. 3. Comp. App. (AT) (Ins.) No. 1592/2023 has been filed by Appellant who are Financial Creditor of the Corporate Debtor/Satra Properties India Ltd. (SPIL) challenging t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent provided therein. vii. Amendment Agreement contains acknowledgement by the Corporate Debtors of the outstanding liability which was to be paid with effect from 01.09.2019 as per the repayment schedule. Agreement also provided that parties were at liberty to pursue all recourse and actions available under the applicable laws in the event of non-compliance of the Consent Terms and the Amendment Agreement. viii. On 09.09.2019, a Security Release Agreement was also executed which is not relevant for issues raised in the Appeal. ix. On 20.03.2020, in furtherance of Consent Terms and Amendment Agreement, IIFL, IIHFL, SPDPL and SPIL entered into registered Deed of Security for creation of the additional security i.e., first and exclusive charge by way of registered mortgage on Mortgaged Property. x. SPDPL agreed to provide security to IIFL and IIHFL on behalf of SPDPL and SPIL for payment of secured obligations. SPDPL confirmed that Mortgaged Property is sufficient to discharge the total debt of the Corporate Debtor as and when it becomes due and the Corporate Debtor shall not be required to pay any further amount. xi. The Agreement further noticed that SPIL shall stand discharged fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after execution of Deed of Security, SPIL/obligor henceforth shall not be liable for the said due and it shall stand discharged from its obligation to make the payment under the Loan Agreement read with Amendment Agreement as well as Consent Terms. Mortgager i.e., SPDPL had represented that mortgage properties are sufficient to discharge the secured obligation of the obligor as and when becomes due. Learned Counsel for the Appellant relying on the Judgment of the Hon ble Supreme Court in `Shree Ambika Medical Stores Ors. Vs. `The Surat People s Cooperative Bank Limited Ors. , Civil Appeal No. 562 of 2020, submits that Court through its interpreted process cannot rewrite or create a new contract between the parties. 11. Further, reliance has been placed on the Judgment of the Hon ble Supreme Court in `Venkatraman Krishnamurthy Anr. Vs. `Lodha Crown Buildmart Pvt. Ltd. , Civil Appeal No. 971 of 2023 for the proposition that when the parties committed themselves to written contract same would be binding upon them. Learned Counsel for the Appellant has also placed reliance on Section 41 of the Indian Contract Act, 1872 and submits that when a promisee accepts performance of the promise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Agreement. The Deed of Security was executed for creation of mortgage as additional security and the Adjudicating Authority has rightly read the clauses of Deed of Security to come to the conclusion that SIPL was not discharged from its secured obligation. 15. Section 62 of the Indian Contract Act, 1872, is also not attracted since Deed of Security did not novate the terms of the facility document. 16. The submission of the Appellant that Respondent are taking double benefit is wholly erroneous in the CIRP of SPDPL claim was admitted as other Creditor, in view of the mortgage. It is further submitted that Appellants who are Financial Creditor of the Corporate Debtor having an independent claim cannot be said to be prejudiced by admission of legitimate claim of IIHFL and IIFL. 17. We have considered the submissions of the Counsel for the parties and perused the record. 18. As noted above that after filing of the Petition under Section 7 by IIFL against SPDPL and SPIL, a Consent Term was entered between the Financial Creditor and the Corporate Debtor i.e., SPDPL and SPIL. 19. Under the Consent Term, parties arrived at mutually agreed settlement. The consent term clearly provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor) along with interest thereon starting from 1 September 2019, as per the repayment schedule, set out in Annexure II to these Consent Terms, and the same shall be first recovered from Mortgaged Property (defined herein) / the cash flows generated from the Mortgaged Property (defined herein). (v) The Financial Creditor shall not initiate legal proceedings / actions against SPIL and/or its directors and/or its promoters, except as provided in clause 6 of these Consent Terms. The Financial Creditor shall also ensure that IIFL Home Finance Limited does not initiate legal proceedings / actions against SPIL and/or its directors and/or its promoters, except as provided in clause 6 of these Consent Terms. (c) The Parties agree and acknowledge that as on 31 August 2019, SPDPL has an outstanding financial debt due to the Financial Creditor amount to INR 1,09,08,59,532. The Parties, accept and confirm that this amount is due and payable to the Financial Creditor. SPDPL agrees acknowledges and unconditionally undertakes to repay the outstanding financial debt due to the Financial Creditor amounting to INR 1,09,08,59,532 along with interest thereon at 16% per annum starting from 1 September ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red forty eight crores sixty eight lakhs nineteen thousand five hundred and four) to IIFL, along with interest thereon compounded quarterly at 16% (sixteen percent) per annum starting from 1 September 2019, as per the repayment schedule, set out in Schedule I hereto and the same shall be first recovered from Mortgaged Property / the cash flows generated from the Mortgaged Property. 2.3 As on 31 August 2019, the Company has an outstanding financial debt due to IIHFL amounting to Rs 22,80,76,772 (Rupees Twenty two crores eighty lakhs seventy six thousand seven hundred and seventy two). Each Party admits, accepts and confirms that this amount is due and payable by the Company to IIHFL. 2.4 The Company shall pay the aforesaid sum of Rs 22,80,76,772 (Rupees Twenty two crores eighty lakhs seventy six thousand seven hundred and seventy tow) to IIHFL along with interest thereon compounded quarterly at 16% (sixteen percent) per annum starting from 1 September 2019, as per the repayment schedule, set out in Schedule II hereof, and the same shall be first recovered from Mortgaged Property / the cash flows generated from the Mortgaged Property. 2.5 the cash flow/ proceeds generated from the Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated (9th September, 2019), executed between SPDPL and India lnfoline Finance Limited ( Amendment Agreement 2 ). C. The Obligor in terms of their respective Loan Agreements had defaulted in making the payments/ repayments in respect of the loans pursuant to which the Lenders declared the default under their respective Loan Agreements. D. However, based on the mutual discussions, the Obligor and the Lenders entered into the consent terms dated 9 September 2019 filed in the National Company Law Tribunal, Mumbai Branch ( Consent Terms ), which, inter alia, states that the Obligor shall repay (i) a principal amount of INR 227,84,90,568/- (Indian Rupees [Two Hundred and Twenty Seven Crore Eighty Four Lakhs Ninety Thousand Five Hundred and Sixty Eight]) and an interest amount of INR 43,48,68,807/- (Indian Rupees Forty Three Crores Forty Eight Lakhs Sixty Eight Thousand Eight Hundred and Seven) to India Infoline Finance Limited; and (ii) a principal amount of INR 37,02,76,224 (Indian Rupees Thirty Seven Crores Two Lakhs Seventy Six Thousand Two Hundred and Twenty Four) and an interest amount of INR 6,60,81,627/- (Indian Rupees [Six Crores Sixty Lakhs Eighty one Thousand Six Hundred and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated on the properties of the Mortgagor, as set out in Recital (E) above shall be by way of a mortgage without possession form being these presents. J. Believing upon the aforesaid representations, confirmation, declarations and covenants as true and correct and the same have been duly accepted by the Lenders and accordingly, in furtherance of the Consent Terms and amendment Agreement to the Loan Agreement, the Lenders have agreed to receive the security of the Mortgaged Properties from the Mortgagor, at the behest of SPIL/Obligor against the debt of SPIL/Obligor to enable the Lenders to satisfy its dues (SPIL's dues) as specified in the consent terms. 29. Clause 5.2 records that the security is a continuing security and is additional security which is clear from Clause 5.2 and 5.3 which are as follows: 5.2 Continuing Security The Security created by or pursuant to these presents is a continuing security and shall remain in full force and effect, notwithstanding any intermediate payment or thing whatsoever and in particular the intermediate satisfaction of the whole or any part of the Secured Obligations in accordance with the Financing Documents and is in addition and without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen it becomes due and accordingly on execution of this deed/agreement i.e. in compliance of the consent terms (read with the extension letter dated 17.01.2020) as well as the Amendment Agreement, and as such SPIL/Obligor henceforth shall not be liable for the said dues (as specified in the consent terms) and shall stand discharges from its obligations to make the repayment under the Loan Agreement read with Amendment Agreement as well as Consent Terms. 34. The Consent Term between the parties dated 09.09.2019, in para 2(a) clearly contemplated creation for first and exclusive charge by way of registered mortgage in respect of 2,00,000 sq. ft. carpet area in favour of IIFL and IIFL Home Finance Ltd. as additional security in respect of the loan extended by the Financial Creditor. The Deed of Security dated 20.03.2020 is clearly in reference to Consent Term paragraph 2(a) and i.e., a Deed of Additional Security. 35. Clause E of the Deed of Security clearly referred to creation of first ranking mortgage and charge over the property described in Clause 4.1 and Schedule 3. Clause F also referred to same obligation by mortgagor to execute this indenture/deed in favour of the lender on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Loan Agreement read with Amendment Agreement as well as Consent Term . 38. It is relevant to notice that above stipulation in Clause G has been made in wake of earlier statement, which is contained in the earlier part of Clause G i.e., the mortgager hereby represent declares and confirms to the lenders that Mortgaged Properties including the units/premises to be constructed by utilising the 2,00,000 sq. ft. FSI is sufficient to discharge the total debt of SPIL/obligor as and when becomes due . The second part of Clause G which mentioned that on execution of this Deed Agreement, the SPIL/obligor henceforth shall not be liable for the said dues and shall stand discharge, is premised on first part where it was represented that Mortgaged Property was sufficient to discharge the total debt of SPIL/obligor. 39. The present is case where from the Mortgaged Properties debt and dues of SPIL has not been discharged and SPIL is claiming discharge only on basis of execution of Security Agreement dated 20.03.2020, which is unacceptable. When all the Clauses E, F, G, I and J are read, it is clear that the Deed of Security was nothing but additional security by creating a mortgage of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of the debt of 10,000 rupees. This is a new contract and extinguishes the old. (c) A owes B 1,000 rupees under a contract. B owes C 1,000 rupees B orders A to credit C with 1,000 rupees in his books, but C does not assent to the arrangement. B still owes C 1,000 rupees, and no new contract has been entered into. 46. We have already noted the relevant Clauses of Consent Terms and Amendment Agreement and Deed of Security. We have already held that Deed of Security does not novate the terms of the facility document. Facility document were amended by the Amendment Agreement which recorded that terms of the Loan Agreement and Additional Laon Agreement shall be amended only to the extent provided therein. Deed of Security was executed as the additional security document and is not novation of financial documents or Consent Term. 47. Learned Counsel for the Appellant has also placed reliance on the Judgment of the Hon ble Supreme Court in `Shree Ambika Medical Stores Ors. (Supra), Civil Appeal No. 562 of 2020 decided on 28.01.2020. Reliance has been placed on paragraph 20 which is as follows: 20. This Court, while interpreting the contract of insurance must interpret the words of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d rationale to decide as to whether future course of action of the parties should be. In paragraph 22 of the Judgment following has been held : 22. On the above analysis, we have no hesitation in holding that the NCDRC overstepped its power and jurisdiction in ignoring the binding covenants in the Agreement and in introducing its own logic and rationale to decide as to what the future course of action of the parties and more particularly, the appellants, should be. As we are informed that the appellants did not choose to act upon the belated offer of the respondent-company, in its letter dated 29.11.2017, and are still intent on terminating the Agreement as per Clause 11.3 of the Agreement, we set aside the order dated 09.11.2022 passed by the NCDRC and allow Consumer Complaint No. 35 of 2018, directing the respondent-company to refund the deposited amount of 2,25,31,148 ₹ /- in twelve equal monthly installments, through post-dated cheques, with simple interest thereon @ 12% p.a., from the date of receipt of the said amount or parts thereof till actual repayment. The first such installment shall be payable on the 5th of April, 2024, and the succeeding installments shall be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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