Tribunal includes EXIM Bank and Axis Bank as Financial Creditors under I&B Code

The Tribunal determined that both EXIM Bank and Axis Bank qualify as 'Financial Creditors' under the I&B Code based on the guarantees provided by the respective debtors. The Resolution Professionals were instructed to include these banks in the Committee of Creditors and reassess the Resolution Plans. The appeals were successful, overturning the previous decisions rejecting the claims of EXIM Bank and Axis Bank.

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Issues Involved:
1. Whether the EXIM Bank qualifies as a 'Financial Creditor' under the I&B Code.
2. Whether the Axis Bank qualifies as a 'Financial Creditor' under the I&B Code.
3. Relationship between invocation of Corporate Guarantee and claim of a Financial Creditor.
4. Validity of moratorium on invocation of Corporate Guarantee during the Corporate Insolvency Resolution Process.

Detailed Analysis:

EXIM Bank Vs. Resolution Professional, JEKPL Private Limited:

Issue 1: Qualification of EXIM Bank as a 'Financial Creditor'
The JEKPL Pvt. Ltd. initiated Corporate Insolvency Resolution Process under Section 10 of the Insolvency and Bankruptcy Code, 2016 (I&B Code). The EXIM Bank, which had disbursed a loan to Jubilant Energy N.V. (JENV), Netherlands, claimed to be a 'Financial Creditor' based on a 'Counter Corporate Guarantee' provided by JEKPL. The Resolution Professional rejected EXIM Bank's claim, which was affirmed by the Adjudicating Authority. The core question was whether EXIM Bank, with a 'Counter Corporate Guarantee' from JEKPL, qualifies as a 'Financial Creditor' under Section 5(7) read with Section 5(8)(h) of the I&B Code.

The EXIM Bank argued that the loan and the guarantees provided by JEKPL and JEPL (Corporate Guarantor) made it a 'Financial Creditor'. The Resolution Professional and the Committee of Creditors contended that the 'Counter Corporate Guarantee' did not meet the criteria under Section 5(8) as it was not disbursed against the consideration for time value of money directly to JEKPL.

The Tribunal found that the 'Counter Corporate Guarantee' provided by JEKPL was indeed a guarantee for the loan disbursed to JENV, making EXIM Bank a 'Financial Creditor'. The Tribunal emphasized that the 'Counter Corporate Guarantee' amounts to a 'Guarantee' under Section 5(8)(h), thus qualifying EXIM Bank as a 'Financial Creditor'.

Axis Bank Limited vs. Edu Smart Services Private Limited & Anr:

Issue 2: Qualification of Axis Bank as a 'Financial Creditor'
DBS Bank Limited initiated the Corporate Insolvency Resolution Process against Edu Smart Services Pvt. Ltd. Axis Bank submitted its claim based on a 'Corporate Guarantee' provided by Edu Smart Services Pvt. Ltd. The Resolution Professional rejected the claim, stating that the 'Corporate Guarantee' could not be invoked during the moratorium period.

The Tribunal examined whether Axis Bank, as a 'Counter Corporate Guarantor', qualifies as a 'Financial Creditor' under Section 5(7) and Section 5(8) of the I&B Code. Axis Bank argued that the terms of the Master Restructuring Agreement and the Corporate Guarantee established it as a 'Financial Creditor'. The Committee of Creditors contended that the claim was contingent and not due at the commencement of the insolvency process.

The Tribunal noted that the Corporate Guarantee allowed the lenders, including Axis Bank, to act as if the Guarantor (Edu Smart Services Pvt. Ltd.) was the 'Principal Debtor'. The Tribunal held that Axis Bank qualifies as a 'Financial Creditor' and the claim should be considered during the Corporate Insolvency Resolution Process.

Issue 3: Relationship between Invocation of Corporate Guarantee and Claim of a Financial Creditor
The Tribunal clarified that the maturity of a claim or the invocation of a guarantee is not relevant for filing a claim during the Corporate Insolvency Resolution Process. The right to payment, whether matured or unmatured, is sufficient to constitute a claim under Section 3(6) of the I&B Code. The Tribunal emphasized that the duties of the Resolution Professional include collating and updating all claims, irrespective of their maturity status.

Issue 4: Validity of Moratorium on Invocation of Corporate Guarantee
The Tribunal addressed the argument that the moratorium under Section 14 prevents the invocation of Corporate Guarantees. It clarified that the moratorium does not affect the right to file claims based on guarantees provided before the commencement of the insolvency process. The Tribunal held that the claims based on guarantees should be included in the Corporate Insolvency Resolution Process, regardless of the moratorium.

Conclusion:
The Tribunal concluded that both EXIM Bank and Axis Bank qualify as 'Financial Creditors' under the I&B Code. The respective Resolution Professionals and Adjudicating Authorities were directed to include these banks in the Committee of Creditors and reconsider the Resolution Plans accordingly. The appeals were allowed, and the orders rejecting the claims of EXIM Bank and Axis Bank were set aside.

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