Appeal Dismissed: Debt Discharged, Merger Satisfies Guarantee, No Default

The Tribunal dismissed the appeal, finding that the Corporate Debtor fulfilled its obligation under the Deed of Corporate Guarantee through a merger, satisfying the additional equity infusion requirement. It was determined that no default occurred under Section 7 of the Insolvency and Bankruptcy Code, as the debt was considered discharged. Additionally, the initiation of Corporate Insolvency Resolution Process against another Corporate Guarantor precluded further action against the Respondent. The appeal was dismissed without costs.

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Issues Involved:
1. Whether the Corporate Debtor (Visa Infrastructure Ltd.) had discharged its obligation under the Deed of Corporate Guarantee.
2. Whether the infusion of additional equity of Rs. 125 crores was fulfilled as per the terms of the CDR Package.
3. Whether the default under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) was established.
4. Whether the initiation of Corporate Insolvency Resolution Process (CIRP) against another Corporate Guarantor precluded initiation against the Respondent.

Detailed Analysis:

1. Discharge of Obligation under Deed of Corporate Guarantee:
The Appellant (State Bank of India) argued that the Corporate Debtor had not discharged its obligation under the Deed of Corporate Guarantee, as the additional equity of Rs. 125 crores was not infused in the form of cash. The Respondent contended that the obligation was fulfilled through the merger of Visa Bao Limited (VBL) with Visa Steel Limited (VSL), which resulted in an infusion of equity exceeding Rs. 125 crores. The Tribunal found that the Deed of Guarantee did not specify that the additional equity had to be in cash and that the merger satisfied the condition of additional equity infusion.

2. Infusion of Additional Equity:
The Appellant maintained that the additional equity of Rs. 125 crores had to be in cash, while the Respondent argued that the merger of VBL with VSL, which brought in assets valued at Rs. 460 crores, fulfilled the requirement. The Tribunal noted that the CDR Package did not explicitly mandate cash infusion and allowed for equity infusion through various means, including mergers. The Tribunal concluded that the merger met the requirement of additional equity infusion.

3. Establishment of Default under Section 7 of IBC:
The Appellant claimed that there was a default in repayment, justifying the initiation of CIRP under Section 7 of the IBC. The Respondent argued that there was no default as the obligation under the guarantee was discharged through the merger. The Tribunal agreed with the Respondent, stating that there was no debt payable in law or fact, and thus, no default occurred.

4. Preclusion of CIRP Initiation against Respondent:
The Respondent argued that the initiation of CIRP against another Corporate Guarantor (Visa International Ltd.) precluded the Appellant from initiating CIRP against it for the same debt. The Tribunal found merit in this argument, noting that the Appellant had already initiated CIRP against another guarantor for the same debt, which precluded further proceedings against the Respondent.

Conclusion:
The Tribunal dismissed the appeal, agreeing with the Respondent's arguments that the obligation under the Deed of Corporate Guarantee was discharged through the merger, which fulfilled the additional equity requirement. The Tribunal found no debt payable in law or fact, and thus, no default occurred. The initiation of CIRP against another Corporate Guarantor also precluded the initiation against the Respondent. The appeal was dismissed with no order as to costs.

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