ICICI Bank's Claims Upgraded to Financial Debt, Influencing Creditor Committee Decisions

The Tribunal held that the Corporate Debtor is liable to repay the amounts granted by ICICI Bank to Era Infrastructure (India) Limited and Dehradun Highways Project Limited as Financial Debt. It directed the Resolution Professional to admit ICICI Bank's claims as Financial Debt, revise the list of financial creditors, and adjust ICICI Bank's voting share in the Committee of Creditors proportionally to the admitted claims, granting it a significant say in the Corporate Insolvency Resolution Process decision-making.

---

---

Issues Involved:
1. Whether the Corporate Debtor is liable to repay the amount granted by ICICI Bank Limited to Era Infrastructure (India) Limited (EIIL) and Dehradun Highways Project Limited (DHPL) as a Financial Debt.
2. Whether the claims of ICICI Bank should be admitted as Financial Debt by the Resolution Professional.
3. Whether the voting share of ICICI Bank in the Committee of Creditors (COC) should be revised based on the admitted claims.

Issue-wise Detailed Analysis:

1. Liability of the Corporate Debtor to Repay Financial Debt:
The Tribunal examined whether the Corporate Debtor is liable to repay the amounts granted to EIIL and DHPL as Financial Debt. The Tribunal noted that ICICI Bank had extended various credit facilities to EIIL and DHPL, secured by guarantees and securities provided by the Corporate Debtor. The Corporate Debtor had executed several agreements, including a Loan Purchase Agreement, Non-Disposal Arrangement, and Promoter's Undertaking, which guaranteed payment in case of default by EIIL and DHPL. The Tribunal found that these agreements constituted a contract of guarantee under Section 126 of the Contract Act, 1872, making the Corporate Debtor liable as a surety for the defaults of EIIL and DHPL.

2. Admission of ICICI Bank's Claims as Financial Debt:
The Tribunal reviewed the Resolution Professional's rejection of ICICI Bank's claims, which were based on the argument that the claims did not constitute Financial Debt under the Insolvency and Bankruptcy Code, 2016. The Tribunal analyzed the relevant clauses of the Loan Purchase Agreement and other securities provided by the Corporate Debtor. It concluded that the agreements and undertakings provided by the Corporate Debtor amounted to guarantees, thereby qualifying as Financial Debt under Section 5(8) of the Code. The Tribunal referenced the judgment of the Bombay High Court in IL&FS Financial Services Limited v. Vandana Global Limited, which supported the interpretation of such agreements as guarantees. Consequently, the Tribunal directed the Resolution Professional to admit ICICI Bank's claims as Financial Debt.

3. Revision of Voting Share in the Committee of Creditors (COC):
The Tribunal addressed the issue of revising ICICI Bank's voting share in the COC. Given that ICICI Bank's claims were to be admitted as Financial Debt, the Tribunal directed the Resolution Professional to revise the list of financial creditors to include ICICI Bank's claims amounting to INR 700.75 crores. This inclusion would adjust ICICI Bank's voting share in the COC proportionally to the admitted claims, thereby granting it a significant say in the decision-making process of the Corporate Insolvency Resolution Process (CIRP).

Conclusion:
The Tribunal allowed the application by ICICI Bank, setting aside the Resolution Professional's decision to reject the claims. It directed the Resolution Professional to admit the claims as Financial Debt, revise the list of financial creditors, and adjust ICICI Bank's voting share in the COC accordingly. The decision underscores the interpretation of guarantees under the Contract Act and their recognition as Financial Debt under the Insolvency and Bankruptcy Code.

---