Prior contractual security rights prevail over corporate debt restructuring when exclusive charge and agreed security terms cannot be altered without consent.

Prior contractual security rights over project assets and receivables cannot be diluted by a proposed corporate debt restructuring package without the secured lender's consent. Where loan, hypothecation and escrow arrangements grant an exclusive charge, a restructuring proposal cannot compel sharing of that security, pooling of receivables into a common account, or acceptance of additional funding terms that alter the lender's bargain. The interim restraint against further encumbrance was maintained, and the plaintiff's pre-existing security over the specified assets remained protected. The restructuring could proceed only outside the plaintiff's secured interest, preserving the contractual protections already created.

---

---

Issues: (i) Whether the ex parte interim restraint against creation of charge, pledge or hypothecation over the promoter's shares and the project assets should be vacated or modified to permit implementation of the Corporate Debt Restructuring package. (ii) Whether the lenders implementing the restructuring could compel the plaintiff to share its exclusive security, route project receivables into a common account, or accept additional funding arrangements that would alter the plaintiff's contractual rights.

Issue (i): Whether the ex parte interim restraint against creation of charge, pledge or hypothecation over the promoter's shares and the project assets should be vacated or modified to permit implementation of the Corporate Debt Restructuring package.

Analysis: The contractual documents gave the plaintiff a first charge over the specified project assets and barred any further encumbrance without prior consent. The Court found that the restructuring package could not be used to dilute those pre-existing rights, and that the borrowers had proceeded with the restructuring in a manner that would prejudice the plaintiff's security. The plea for modification was treated as an attempt to override those contractual protections.

Conclusion: The request to vacate or modify the restraint was rejected, and the interim protection in favour of the plaintiff was maintained.

Issue (ii): Whether the lenders implementing the restructuring could compel the plaintiff to share its exclusive security, route project receivables into a common account, or accept additional funding arrangements that would alter the plaintiff's contractual rights.

Analysis: The Court held that a lender having an exclusive charge over identified assets cannot be compelled to share that security merely because a restructuring package is proposed or accepted by other lenders. Corporate debt restructuring was treated as a voluntary mechanism, and the rights arising from the prior loan, hypothecation and escrow arrangements remained binding. The proposed pooling of receivables and creation of additional charge or pledge could not be enforced against the plaintiff without consent.

Conclusion: The Court held that the plaintiff could not be forced to join in any restructuring term that impaired its security or other contractual rights.

Final Conclusion: The restructuring could proceed only if the plaintiff's secured interest in the specified project assets and receivables was kept outside the proposed package, and the plaintiff was entitled to continue protection of its pre-existing contractual security.

Ratio Decidendi: A voluntary restructuring package cannot override prior contractual security rights, and a lender with an exclusive charge cannot be compelled to share that charge or alter agreed security arrangements without consent.

---