TaxTMI 
TaxTMI 
2018 (2) TMI 1354
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....g the Export-Import Bank of India Act, 1981 (for brevity the Act, 1981') and was incorporated vide gazette notification dated 11.08.1981. It has its registered office at Centre One Building, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai-400005 and acting through its representative office at Ground Floor, Statesman House, 148, Barakhamba Road, New Delhi-110001. A copy of the extract of Section 5 of the Act, 1981 and a copy of the gazette notification dated 11.08.1981 have been placed on record as Annexure 2 (Colly). 2. Mr. Manish K. Joshi, Deputy General Manager of the Financial Creditor-Bank has been authorized to sign and submit any such petition by the power of attorney dated 12.09.2017 (Annexure-1) issued by the Managing Director of the Financial Creditor in accordance with Section 5(2) of the Act, 1981 r/w gazette notification dated 11.08.2017 authorising him to issue such a power of attorney. 3. The Corporate Debtor-CHL Limited was incorporated on 16.03.1979. The identification number of the Corporate Debtor is L55101DL1979PLC009498 and its registered office is situated at Hotel The Suryaa, New Friends Colony, New Delhi-110025. Its authorised share capital i....
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....18 MILLION FACILITY LOAN NO. :HOOIFUSD00000604 Date of Disbursement Amounts Disbursed (in USD) 12 November 2010 3,000,000/- 12 July 2011 4,000,000/- TOTAL 7,000,000/- LOAN NO. :HOOIFUSD00000611 Date of Disbursement Amounts Disbursed (in USD) 21 February 2012 2,000,000/- 17 May 2012 2,500,000/- 8 August 2012 2,000,000/- 27 September 2012 2,000,000/- 11 December 2012 1,300,000/- 1 March 2013 1,000,000/- 29 July 2013 200,000/- TOTAL 11,000,000/- USD 8.5 MILLION FACILITY LOAN NO. :HOOIFUSD00000356 Date of Disbursement Amounts Disbursed (in USD) 17 September 2013 3,800,000/- 2 January 2014 1,293,158.64/- 17 January 2014 856,841.36/- 31 January 2014 1,000,000/- 28 July 2014 1,135,557.13/- 28 July 2014 414,442.87/- TOTAL 8,500,000/- USD 6 MILLION FACILITY LOAN NO. :HOOIFUSD00000903 Date of Disbursement Amounts Disbursed (in USD) 24 March 2015 3,000,000/- 27 April 2015 2,480,000/- 30 July 2015 520,000/- TOTAL 6,000,000/- 6. A perusal of the aforesaid details of disbursement would show that the Financial Creditor, th....
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....IFUSD00000611 11,000,000 1,327,775.09 106,754.70 12,434,529.79 USD 8.5 MILLION FACILITY LOAN NO. HOOIFUSD00000356 8,500,000 906,098.26 81,895.51 9,487,993.77 USD 6 MILLION FACILITY LOAN NO. HOOIFUSD00000903 6,000,000 560,242.56 51,702.16 6,611,944,72 TOTAL 32,500,000 3,735,449.86 308,243.90 36,543,693.76 The details regarding the date and the days of defaults with respect to the facilities granted by the Financial Creditor to the CHL International as guaranteed by the Corporate Debtor have been placed on record as Annexure 6 (Colly). 11. The facilities have been recalled by the Financial Creditor vide recall notice dated 2 May 2017 and the corporate guarantee issued by the Corporate Debtor for securing the amounts extended to CHL International, has also been invoked by the Financial Creditor vide notice of invocation dated 1 June 2017 seeking payment of an amount of USD 35,164,530.13/- (United States Dollars Thirty Five Million One Hundred and Sixty Four Thousand and Five Hundred Thirty and Thirteen cents) being the amount in default under the financial facilities. 12. The details of the sec....
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....Hundred and Sixty Four Thousand and Five Hundred Thirty and Thirteen cents) including interest accrued as on the date of the Recall Notice. (d) Notice of invocation of Corporate Guarantee dated 1 June 2017 issued by the Financial Creditor to the Corporate Debtor upon the failure of CHL International to repay the amounts in accordance with the Recall notice dated 2 May 2017. (e) Copy of the Annual Report of the Corporate Debtor for the year 2015-16 including the Balance Sheet of the Corporate Debtor as on 31 March 2016 admitting the debt owed to the Financial Creditor (as available with the Financial Creditor). (f) Various Balance confirmations issued by CHL International to the Financial Creditor acknowledging the debt towards the Financial Creditor." 16. The present application has been filed by Applicant/Financial Creditor in its capacity as the Financial Creditor of CHL Limited ("Corporate Debtor") being the guarantor of loan amount and that the default has occurred on the part of the principal borrower. The Corporate Debtor has guaranteed a total debt aggregating to USD 32,500,000 (United States Dollars Thirty Two Million and Five Hundred Thousand)....
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....rate Guarantees executed by the Corporate Debtor are governed by Indian Law. (v) The underlying dispute referred by CHL International is in respect to calculation of interest and interim disbursement which do not take away the admitted fact on record that CHL International is in default of repayment of the principal as well as interest, much in excess of the threshold of INR 1,00,000 (Indian Rupees One Lakh) under Section 4 of the Code. (vi) In any case, in terms of Corporate Guarantees, the obligation of the Corporate Debtor under the Corporate Guarantees shall remain in full force till the repayment of the principal, interest and other monies under the loan agreements and shall not be affected by any dispute or difference of any nature whatsoever that may arise between CHL International and the Applicant/Financial Creditor. 19. The Corporate Debtor has filed a detailed reply controverting the allegations and has opposed the admission of the application. The stand taken by the Corporate Debtor in essence is that firstly it is erroneous to call it as a Corporate Debtor as it does not fulfil the basic requirement of the expression as used in Section 3(8). It has....
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.... Code, 2016 have been initiated to achieve the object of resolution and the purpose of the IBC is not to make recovery of money. It implies that the aim of the corporate insolvency resolution process is to restructure the Corporate Debtor who is in default so as to maximize the returns to the stakeholders. It has then been submitted that the applicant-Financial Creditor does not satisfy the mandatory perquisites of Section 5(8), IBC which defines the expression 'financial debt'. According to the pleadings 'financial debt' must mean undisputed debt between the applicant and its borrower. The aforesaid feature having not been fulfilled in the present case as the borrower has disputed its liability in the proceedings initiated in the Economic Court at Dushanbe, the present petition would not be maintainable. The Corporate Debtor has also set up the plea that the applicant-Financial Creditor has contested the proceedings in the Economic Court at Dushanbe and no objection whatsoever has been taken to the jurisdiction of the Court there and therefore, it cannot now take up a contrary stand before the courts in Delhi. Reference has also been made to Clause XXII(3) and (4) to show that the....
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....y because of change in circumstances which are created by the Corporate Debtor except in some conditions laid down in section 141 of the Indian Contract Act, 1872. According to the learned Counsel, loan agreement and the contract of guarantee are two separate events and the Financial Creditor is entitled to invoke the guarantees without even invoking the provisions in the loan agreement against the principal debtor. Mr. Mehra has maintained that this is the essence of Section 128. For the aforesaid proposition, learned Counsel has placed reliance on the observations made in para 36 of Hon'ble the Supreme Court judgment in the case of Industrial Finance Corpn of India Ltd. v. Cannanore Spg. & Wvg. Mills Ltd. [2002] 5 SCC 54. Reliance has also been placed on the observations made by the Division Bench judgment of Madras High Court in para 6 in the case of Gopilal J. Nichani v. Trac Industries & Co. Ltd. AIR 1978 Mad 134. It has also been argued that the liability of the guarantor is absolute and unconditional and even in cases where the principal debtor has gone into liquidation, his liability of the guarantor would not be discharged and on the aforesaid proposition reliance has been....
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....nsion period, the contracting parties are absolved of all their obligations. 30. In that regard, learned Counsel has placed reliance on the observations made by a Full Bench of Punjab & Haryana High Court in the case of Divisional Superintendent Northern Railway Delhi Division v. Mukund Lal ILR 10 Punj. & Har. 1059. Banking on the principle laid down by the full bench, learned Counsel has argued that on account of order passed by the Courts at Dushanbe on 06.01.2017, 07.07.2017 and 03.10.2017 clearly suggesting that no coercive action is to be taken and the loan agreement have been suspended, the Financial Creditor has the audacity to initiate the present proceedings. Elaborating his arguments, Mr. Kathpalia has submitted that Section 128 of the Indian Contract Act, 1872 dealing with the liability of the surety is not absolute. It is subject to the agreement of the parties. In that regard, Mr. Kathpalia has placed reliance on Clause 4 of Deed of Guarantee dated 07.10.2010 which provides that the liability of the guarantor would arise only if the principal debtor is in default. It has been maintained that in view of order passed by the Economic Court at Dushanbe, the liability of....
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....es to B the payment of a bill of exchange by C, the acceptor. The bill is dishonoured by C. A is liable, not only for the amount of the bill, but also for any interest and charges which may have become due on it." A bare perusal of the aforesaid provision makes it patent that the liability of surety could be co-extensive with that of the principal debtor, if it is not otherwise provided by the contract. 33. In the present case, the contract of guarantee was executed between the applicant-Financial Creditor and the Corporate Debtor on 07.10.2010 and in Clause 4, it is expressly provided that the guarantor would be liable if a default on the part of the borrower (principal debtor) was to occur. The aforesaid clause is commended for verbatim reading which is as under: "In the event of any default on the part of the Borrower in the due repayment of the Loan or any part thereof (whether at stated maturity or upon acceleration or otherwise) including any converted Rupees amount (s) consequent upon default (in the case of Loan in foreign currency) or in payment of any interest, compound interest, additional interest by way of liquidated damages or other monies in acco....
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....t, Mortgage Agreement etc., and obligations associated therewith, in particular the use of coercive measures by the Respondent against the Applicant. According to part 1, Article 89 of the Economic Procedures Code of the Republic of Tajikistan, the Economic Court at Dushanbe city may apply immediate temporary measures (interim measures) based on the application of a party to a court case and/or the other party, in cases provided by the said Code, in order to secure the claim of property interests (assets) of the applicant. As provided by part 2 of the said Article, in case if it will be difficult or impossible to fulfil a court decision in the absence of security measures (interim measures), such measures can be applied at any stage of the economic court proceedings. According to part 1, Article 91 of the said Code, an application for security measures (interim measures) can be filed in parallel with a court claim and/or in the court proceedings prior to adoption of a court decision (verdict) by which the consideration of a case on its merits is completed (disposal of the case is completed). The request for security measures (Interim measures) can be stat....
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....at disputes if pending for examination of the courts at Dushanbe then it was not possible to investigate the case regarding the dispute of those parties and on the same ground in other courts. It appears that the court at Dushanbe has taken notice of the letter written by the principal borrower divulging the information that the Financial Creditor is keen to initiate proceedings in other courts for complete and lumpsum recovery of principal, interests accrued and other sums from the guarantor Mr. L.K. Malhotra and the Corporate Debtor. It is in the aforesaid context that the Economic Court at Dushanbe has passed an order on 07.07.2017, which reads as under: "Republic of Tajikistan Economic Court of Dushanbe 734042, Dushanbe, Aini ave. 14A, tel.+992 372 222 20 80 Letter #2/246 dated 07.07.2017 To: CJSC "CHL International" Dushanbe, Ayni str. 48. CC: Export-Import Bank of India Economic Court of Dushanbe examines your letter #123 dated June 22nd 2017 regarding legal case #2-99-17 as per claim of CJSC "CHL International" to the defendant-Export-Import Bank of India on amendment to clauses V and VI of the Loan Contract concluded between CJSC "C....
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....ract, that disputes between each other concerning loan contract dated September 23rd 2010, August 26th 2013 and March 18th, 2015 shall be judicially governed by the courts of Republic of Tajikistan. Hence, the dispute between CJSC "CHL International and Export-Import Bank of India on the abovementioned loan contract is being considered by the courts of Republic of Tajikistan". 37. The matter does not end there and the principal borrower has to write another letter again on 02.10.2017. Reiterating the order dated 06.01.2017, the Economic Court observed as under: "Republic of Tajikistan Economic Court of Dushanbe 734042, Dushanbe, Aini ave. 14A, tel.+992 372 222 20 80 Letter #2/364 dated 03.10.2017 To: CJSC "CHL International" Dushanbe, Aini str. 48. CC: Export-Import Bank of India Economic Court in Dushanbe has examined your letter #206 dated 02 October 2017 regarding legal case #2-99-17 according to CJSC "CHL International" claim against the defendant-Export-Import Bank of India on amendment of revisions and supplements to clauses V and VI of the Loan agreements dated 23 September, 2010, 26 August 2013 and 18 March 2015....
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....under Section 7 of the Code. Likewise, the arguments with regard to the jurisdiction of the Economic Courts at Dushanbe has not impressed us because the applicant-Financial Creditor has not only surrendered to the jurisdiction but it has filed pleadings. In the present case, we have noticed the orders passed by the Economic Courts at Dushanbe to show the non-existence of liability of 'Principal Debtor' and there could not be any default on its part. Therefore, no liability could be fastened on the guarantor-Corporate Debtor. We are not executing those order so as to require fulfilment of various features of Section 13 and Section 44A of the CPC. Even an application filed by the Financial Creditor was rejected vide order dated 29.03.2017, which reads as under: "Ruling On the refusal of the collateral Dushanbe March 29, 2017 Chairman of the Economic Court of Dushanbe, having examined the request of the representative of the Exim Bank of India on countermeasures in the case of the Suit/Application of CJSC "CHL International" against the Respondent-Exim Bank of India on Amendments to the Credit Agreements dated September 23, 2010, August 26, 2013 and....
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....llateral cannot be less than half the size of property claims. The counter collateral may also be provided by the respondent in exchange for measures on security measures to recover the monetary amount by depositing money to the deposit account of the economic court in the amount of the claims of the plaintiff. It follows from the materials of the case that the Suit/application/Statement of CJSC "CHL International" does not have a object/motive of collection of money or property claims, but has the essence of amending the Credit Agreements. In addition, the loan that disbursed to the Claimant is secured by pledge and the Claimant's obligations to the Respondent are very large. Including, according to the Contract on Agreements to the Mortgage Contract dated September 23, 2010, the building of a five-star hotel in Dushanbe that belongs to the Claimant and, by agreement of the parties, is valued at $53,830,000, the equivalent of TJS 423,631,334 at the rate of the National Bank Tajikistan on the date of 21.04.2016, is also placed in the pledge, According to the Pledge Agreement of certain shares of CJSC "CHL International" as of September 23, 2010, all actio....