TaxTMI 
TaxTMI 
2018 (2) TMI 1354
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (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 is Rs. 30,00,00,000/- (Rupees Thirty crores) and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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, through multiple financial facilities and loan agreements, advanced as financial debt to the CHL International, Tajikistan, a subsidiary of Corporate Debtor amounting to a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....OIFUSD00000903 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 security held by, or created for the benefit of 'financial creditor' for securing the financial contracts for the facilities along with the security documents executed by the Corporate Debtor and the relevant certificates for registration of charges, as applicable, have been....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nal 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) together with the interest, additional interest and other monies on behalf of Closed Joint Stock Company CHL International, a subsidiary of the Corporate Debtor incorporated under the laws of Tajikistan and having its address at 48, Aini Street, Dushanbe, Republic of Tajikistan ("CHL International"). The corporate guara....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 further been pointed out that there is active and deliberate suppression of material facts which should be regarded sufficient to deny grant of any relief to the Financial Creditor. Elaborating the aforesaid plea, it has been claimed that there are serious disputes between the applicant-Financial Creditor and its borrower, namely CJSC CHL International. The nature of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 law applicable to the loan agreement was to be governed by and construed in accordance with the laws of Republic at Tajikistan. Likewise, the jurisdiction has been conferred for bringing any legal action or proceeding in connection with the Loan Agreement or for enforcement of security on the courts of the Republic of Tajikistan. 23. In rejoinder to the reply of the Corpo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ement 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 placed on the judgment of the Hon'ble Supreme Court in the case of Maharashtra State Electricity Board v. Official Liquidator [1982] 3 SCC 358. Our attention has been drawn to the observations made in para-6 of the Judgment. Another submission made by Mr. Mehra is that once the clauses of the contract are clear, then no external aid for construction of such clauses is permissible ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as 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 the principal debtor, i.e. CJSC CHL International has been put in abeyance by suspending the operation thereof which would be evident from the orders dated 06.01.2017, 07.07.2017 and 03.10.2017 (at page 52 of the reply). Therefore, in terms of clause 4 of the guarantee deed, once the principal debtor is not liable then it is unthinkable to fasten the liability on the guarantor. Learned Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 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 accordance with the Loan Agreement, or in the due compliance with any of the terms and conditions of the Loan Agreement, then in and in such an event, the Guarantor shall, within a period not exceeding seven days from the date of despatch of delivery by Exim Bank to the Guarantor of a notice in writing of such default by the Borrower, pay to Exim Bank at Mumbai, on first demand without delay, demur or protest, and without any se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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 stated in the court claim. It follows from the court claim that the respondent can apply the compulsory recovery of funds form the applicant's account. According to the requirements of paragraphs 5, Part 1, Article 90 of the Economic Procedures Code of the Republic of Tajikistan, the suspension of recovery under an enforcement order or any other document which provides for the compulsory (coercive) recovery (direct debit), can be used as a security measure....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 "CHL International" and Export-Import Bank of India, as of September 23, 2010. It has been revealed from content of your letter, that Export-Import Bank of India notwithstanding the fact that proceedings on Loan contracts dated September 23rd 2010, August 26th 2013 and March 18th, 2015, concluded between CJSC "CHL International" and Export-Import Bank of India provision of personal guarantee of Mr. Lalit Kumar Malhotra and corporate guarantee of CHL Limited are subject to dispute at the Economic Court of Dushanbe, (EXIM Bank) plans to initiate process at othe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ushanbe 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 executed by CJSC "CHL International" and Export-Import Bank of India. The request of CJSC "CHL International" has been upheld by the Judicial definition of the Economic Court in Dushanbe dated January 6th 2017, and the validity of Loan agreements dated 23 September, 2010, 26 August 2013 and 18 March 2015 and Mortgage contract executed by CJSC "CHL International" and Export-Import Bank of India has been suspended till essential examination of a statement of claim. The Economic Court in Dushanbe informs you and the Export-Import Bank of India, that this definition still has a legal effect, and the validity of Loan agreements dated 23 September, 2010, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 March 18, 2015, concluded between the Claimant and the Respondent, Has defined: CJSC "CHL International" applied to the Economic Court of Dushanbe with the claim for Amendments to the Credit Agreements and at the same time the enactment of interim measures. (READ STAY order). 01/06/2017 The court ruled to suspend the operation of the Credit Agreements and mortgages for the period of consideration of the case on the merits. Representative of Exim Bank Akhmedov Sh., Applied to the Court with a request for the imposition of counter collateral on possible damage that may arise for the respondent in the amount of 3 530 422,89 $, including overdue interest for the amount of $836,452.73 as January 3....