TaxTMI 
TaxTMI 
2021 (1) TMI 1157
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....solvency & Bankruptcy Code (hereinafter called "Code") read with Rule 4 Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Facts of the case: 2. The Petitioner is a Non-Banking Financial Company which extended loan amount of Rs.3,00,00,000/- against securities facilities to the Corporate Debtor along with one Doshi Holdings Private Limited (Doshi) as co-borrowers under the Loan cum Pledge Agreement dated 29.06.2015 for a period of 6 months from the date of disbursement. The amount was disbursed to the Corporate Debtor on 29.06.2015. Thereafter, the tenure of the Loan cum Pledge Agreement dated 29.06.2015 was extended by a period of 6 months up to 28.06.2016 through an addendum dated 28.12.2015 and the same was further extended by a period of 24 months up to 28.06.2018 through an addendum dated 31.03.2016 (Facility 1). 3. The Petitioner granted a loan of Rs.2,00,00,000/- to the Corporate Debtor along with one Doshi Holdings Private Limited (Doshi) as coborrowers under another Loan cum Pledge Agreement dated 04.05.2016 for a term of 6 months from the date of disbursement. The amount was disbursed to the Corporate Debtor on 05.05.2016. Thereafter, th....
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....greements. Then, the Petitioner invoked 53,01,000 shares pledged by Doshi on 02.07.2020. The securities are listed on the stock exchange as on 14.09.2020 at Rs.3.90 per share and therefore, the notional value thereof would be Rs.2,06,73,900/-. However, the security as shares is not realizable at present and/or cannot be liquidated inasmuch as there are no buyers for buying a large stake (17.45% of the share capital) of the said shares on the stock exchange/s. Therefore, the estimated value of the security as per the Petitioner is NIL. Hence, the Petitioner filed the present Petition on 18.09.2020. 10. The Petitioner has enclosed the copy of following documents along with the Petition: i. Copy of Sanction Letter dated 27.06.2015; ii. Copy of Loan cum Pledge Agreement dated 29.06.2015; iii. Copy of Addendum to the Loan cum Pledge Agreement dated 28.12.2015; iv. Copy of Addendum to the Loan cum Pledge Agreement dated 31.03.2016; v. Copy of Sanction Letter dated 04.05.2016; vi. Copy of Loan cum Pledge Agreement dated 04.05.2016; vii. Copy of Addendum to the Loan cum Pledge Agreement dated 06.10.2016; viii. Copy of Sanction Letter dated 05.10.2016; ix. Copy....
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....8 the stock exchange price of the Corporate Debtor Shares was in or around Rs. 14 - 16 per share, i.e., Rs. 7,42,14,000 (53,01,000 X Rs. 14 per share). As per Clause 3.4 and 6 of the Loan Agreements, the Petitioner was entitled to immediate right of sale of the Corporate Debtor Shares. If the Petitioner had without unreasonable delay and demur invoked its pledge over Corporate Debtor Shares at the relevant time, then the entire amount of outstanding principal debt of Rs. 6,00,00,000 could have been satisfied. However, the Petitioner chose to invoke the pledge almost after 2 years after the purported default made by the Company in its repayment obligations. In the event the Petitioner was aggrieved by such default of Corporate Debtor, it could have exercised its pledge over Corporate Debtor Shares in 2018 itself when the price per share on the stock exchange was Rs. 14-16 per share. Had the Petitioner timely invoked the pledge, it would have recovered all the amounts that may have been outstanding and payable by Corporate Debtor to the Petitioner. Having voluntarily waited for 2 years, the Petitioner in this manner and with malafide intent cannot seek to now initiate actions under t....
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....or) for the same identical debt arising out of the identical loan disbursed by the Petitioner to Corporate Debtor. Based on the above facts and circumstances and in view of the aforementioned submissions, the present Petition ought to be dismissed with exemplary costs. Findings: 14. The present Petition has been filed under Section 7 of the Code by the Petitioner, M/s. Anand Rathi Global Finance Limited (ARGFL), which is a Non-Banking Financial Company which has extended security facilities to the Corporate Debtor, M/s. Premier Limited. The Corporate Debtor has admitted its default in payment of the debt to the tune of about Rs. 8.35 crores of which the Principal amount is of Rs. 6 crores and rest is interest as per rate applicable in terms of the Loan Agreements. 15. The Petitioner has disbursed the amount of Rs. 6 crore as loan to the Corporate Debtor along with Doshi Holdings Pvt. Ltd. (Doshi) as Co-borrower under three different Loan-cum-Pledge Agreements with the subsequent addendums. Under these Loan Agreements, the Co-borrower of the Corporate Debtor, Doshi has pledged 53.01 lakhs shares of the Corporate Debtor to the Petitioner to secure the repayment of amount dis....
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....sferred into the Pledgee's account. Only after this, the Pledgee, i.e., in this case the Petitioner, would be in a position to choose to sell or to hold on to the shares as per its discretion. Therefore, this Bench finds that the contention of the Corporate Debtor that since the Pledge was invoked on 02.07.2020, it amounts to the value of debt being reduced to the extent of the existing price of the shares in the stock markets on 02.07.2020 which is about Rs. 2.06 crores in this case as not tenable. Also, the Petitioner can not be held responsible for not invoking and selling the shares for a period of two years from the time of default. No fault can be attributed to the Petitioner for not invoking the shares and selling it immediately after default. 20. In this regard, the Bench notes that it is a settled law that any pledger, in this case Doshi, cannot compel a Pledgee (in this case Petitioner) to exercise power of sale as a mean to discharge debt. In this regard reference has been drawn to the High Court of Bombay Judgment of February 13, 2019 of Reliance Project Ventures and Management Pvt. Ltd. Vs. ECL Finance Ltd. wherein at Para 32, reference has been made to the Para ....
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....es of Gitanjali between the period 19th March, 2013 to 27th April, 2013 is unsustainable in law." 21. It is very clear from the above quoted Judgment that it is entirely at the discretion of Pledgee which is the Petitioner to sell the shares in case the Pledger makes the default. However, in the event the pledgee does not exercise the discretion, no blame can be put on the pledgee. It is therefore clear that the Pledgee has the discretion to decide if he wants to sell the pledged security, when to sell it and how much to sell it. The Pledger cannot dictate terms to the Pledgee on how to exercise his right. 22. In view of the above this Bench is very clear that the decision of the Petitioner not to exercise option of invocation of shares at the time when the default occurred in 2018 and invoking it only on 02.07.2020 is perfectly correct as per law and he is well within his rights to exercise such discretion and no blame can be put by the Corporate Debtor on the Petitioner. It is also interesting to note here that even the Pledger (Doshi) way back on 19.02.2020, i.e., way before 02.07.2020 when the Petitioner invoked the Pledge, had written a letter, both in the capacity of Pl....
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....ress this can be made with regard to the Para Nos. 32 and 33 of the Judgment of Dr. Vishnu Kumar Agarwal Vs. Piramal Enterprises Limited (2019 SCC OnLine NCLAT 542) which are extracted below: "32. There is no bar in the 'I&B Code' for filing simultaneously two applications under Section 7 against the 'Principal Borrower' as well as the 'Corporate Guarantor(s)' or against both the 'Guarantors'. However, once for same set of claim application under Section 7 filed by the 'Financial Creditor' is admitted against one of the 'Corporate Debtor' ('Principal Borrower' or 'Corporate Guarantor(s)'), second application by the same 'Financial Creditor' for same set of claim and default cannot be admitted against the other 'Corporate Debtor' (the Corporate Guarantor(s)' or the 'Principal Borrower'). Further, though there is a provision to file joint application under Section 7 by the 'Financial Creditors', no application can be filed by the 'Financial Creditor' against two or more 'Corporate Debtors' on the ground of joint liability ('Principal Borrower' and one 'Corporate Guarantor', or 'Principal Borrower' or two 'Corporate Guarantors' or one 'Corporate Guarantor' and other 'Corporate Guar....