TaxTMI 
TaxTMI 
2021 (11) TMI 840
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....The corporate debtor with a view of raising debt for the purposes of purchase of FSI, undertakings constructions of duties, creation and maintenance of internet services, meeting issue expenses and another general corporate purposes. 3. The said debenture trust deed was registered on January 10, 2018 and also registered as charged with the Ministry of Corporate Affairs. 4. Both the parties further executed a supplementary debenture trust deed dated September 20, 2019 to amend terms and conditions of debenture interest rate. The corporate debtor defaulted the payment terms of debenture and supplementary debenture trust deed and hence an amount of Rs. 32,08,76,450 is claimed by the financial creditor as on the debt and default on December 31, 2019. The particulars of principal amount and interest in default is as follows : Sl. No. Particulars Amount (Rs.) 1. Principal amount 25,00,00,000 2. Interest due at 16.5% P. A. 2,76,88,356 3. Default interest at 36% P. A. 4,31,88,093 Total amount due 32,08,76,450 5. The corporate debtor issued series A and series B debenture amount of Rs. 25,00,00,000 in offer past for the list of documents attached....
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....ed January 5, 2018 and the debenture trust deed-cum-indenture of mortgage dated January 10, 2018 indicate that the transaction between the debenture holders and the corporate debtor is not simpliciter loan or finance transaction. 11. Perusal of the debenture trust deed-cum-indenture of mortgage clearly held that the parties have reached to an understanding with respect to the debentures including the consequences of default and in redemption of debentures. The debenture trust deed-cum-indenture of mortgage is a complete understanding between the parties with sets out events of defaults at clause 17 events to reach is as follows : "17.1 : Event of default An event of default shell means the occurrence and continuance of any of the events as specified in the Schedule 7 (events of default) hereto (each an 'event of default'), weather voluntary or voluntary or resulting from the operation of law of otherwise subject to the applicable cure period, with each event being determined by the debenture trustee at its sole and absolute discretion. 17.2 : Remedies 17.2.1 The security created hereunder or any other transaction document in favour of the debenture trustee shall be....
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.... of the mortgaged property at a rate determined appropriate by them (to be determined at the sole discretion of the majority debenture holders) and issuer and or promoter hereby covenant and undertake to provide all necessary corporation to the debenture holders for enforcing the aforesaid right including issuing letters of allotment and/or executing sale agreements in respect of thereof in favour of the debenture holders' ; (i) Enter into and take possession of the mortgaged properties in these presents and after the taking of such action the issuer and/or any security providers shall take no action inconsistent with or pre judicial to the rights of debenture trustee quietly to possess, use and enjoy the same and receive the income, profits and benefits thereof without interruption or hindrance by the issuer and/or the security providers or any person or persons whomsoever, and upon the taking of such action the debenture trustee shall be freed and discharged from or otherwise the issuer well and efficiently saved and kept harmless and indemnified of, from and against all former and other estates, titles, claims, demands and encumbrances whatsoever, unless caused by gr....
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....corporate debtor is in default. Further, it is clearly understood between the parties that the consequences of non-payment by the corporate debtor trigger enforcement of security. A specific recourse addresses the consequences of non-payment wherein without enforcing security and realizing the secured assets the financial creditor is not entitled to claim default as contemplated under the provisions of the IBC. In the event, after enforcing the security, if any amount is still due the corporate debtor, then it can be said it is default of receiving amount. However, until completion of process as contemplated in the debenture trust deed, the corporate debtor cannot be said to have committed default. 13. The corporate debtor further objected that the financial creditor cannot exceed authority under the debenture trust deed and that the trustee is liable to act, as per the provisions of clause 17.2 read with clause 19. A plain reading of debenture trust deed indicates that the financial creditor has recourse to the mortgage and in case of default and to recover the amount due and payable to the debenture holders. Rejoinder by the petitioner 14. The petitioner denied that the petiti....
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.... trustee in connection with the debenture the security providers hereby create a first ranking sole and exclusive English mortgage in favour of the debenture trustee for the benefit of the debenture holders, the security providers cloth hereby grant, convey, assign, assure and transfer." 20. In as per clause 13, it is clear that the English mortgage is created in favour of the debenture trustee for the benefit of debenture holders and therefore, the title, ownership possession, interest, benefits, claim and demand including and lease hold rights or for the mortgaged units were transferred to the debenture trustee absolutely. 21. The debenture trust deed-cum-indenture of mortgage, further envisages right to cause sale of certain mortgage property at clause 16.4 is as follows : "The security providers agree and undertake that commencing from the occurrence of an event of default till the final settlement debt, if the business of the security providers is being carried out in a manner prejudicial to the interest of the debenture holders and/or the security interest in any manner as determined at the sole discretion of the debenture trustee, after giving a prior written notice as m....
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....security created under this deed shall not thereby affect or cause the reassignment retransfer or release of any property or assets secured under any other mortgage or charge which ranks pari passu in point of security or otherwise. In this regard the debenture trustee agrees and undertakes to execute all such deeds and documents that may be required for the purposes of the aforementioned release reconveyance and reassignment onto the issuer of the mortgaged property at the cast of the issuer. 22.2 The reconveyance and reassignment on the performance as stated hereinabove of the conveyance and other deeds, documents and writings in case of the mortgage property in exercise of the power of the sale herein contained or transfer of mortgage or other assurance required to be created by the debenture trustee acting for the benefit of the debenture holders shall if executed by any of the duly and validly authorized officers of the debenture trustee be deemed as good and effectual as if the same had been executed by the debenture trustee acting for the benefit of the debenture holders." 25. Further upon perusal of the debenture trustee deed-cum-indenture of mortgage dated January 10, 2....