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2022 (1) TMI 1017
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....7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the 'Code'). The Appellant had filed an IA No. 3783 of 2020 for intervention, which Application was dismissed by admitting the Company Petition filed by Respondent No.2. 2. We need to notice certain background facts and sequence of the events giving rise to this Appeal for deciding the issues raised in this Appeal are: (i) The Appellant S.A.R.E Public Company Limited is a Company existing under the laws of Cyprus. One Wafra Capital Partners L.P (Wafra) a Cayman Islands Limited Partnership having its office at New York, United States of America. In the year 2011 Wafra had invested US$ 50 million in convertible bonds issued by S.A.R.E Public and a Purchase Agreement dated 28.04.2011 was entered between Wafra and Appellant. Several other supporting/ ancillary agreements forming part of the composite transaction were also entered. A Share Pledge and Assignment Agreement dated 28.04.2011 was executed between Wafra and S.A.R.E Public and SARE Cyprus (a wholly owned subsidiary of S.A.R.E. Public). In terms of Clause 12 of the Purchase Agreement, S.A.R.E. Public has inter-alia undertaken that so long as a....
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....ugh its Receiver Mr. Augoustinos Papathomas seeking inter alia declaration that all securities such as power of attorney, Non-Disposable Undertaking, charge on assets/ encumbrances/ lien/ pledge of shares etc., already created or sought to be created by the companies forming part of the SARE Group in favour of KKR and Altico in furtherance of a Facility Agreement dated 14.05.2018 are non-est, null and void. In the suit, Corporate Debtor SARE Gurugram was Defendant No.3 and Altico was Defendant No.17. (vii) The Delhi High Court passed an interim order dated 12.10.2018 restraining Altico from giving effect to the Facility Agreement dated 14.05.2018 to the extent of taking lien, charge, security, mortgage or pledge of any of the assets of the companies forming part of SARE Group. (viii) On 23.03.2019, the Altico has assigned entire financial assistance aggregating to INR 370 Crores to Asset Care and Reconstruction Enterprises Ltd. - Respondent No.2 (hereinafter referred to as 'ACRE'). As per the Assignment Agreement all the facilities advanced by Altico to SARE Gurugram have been assigned in favour of ACRE. (ix) On 07.01.2020, ACRE filed an Application under....
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....ally restrained the Altico (Defendant No.17) in suit. not to give effect to the Facility Agreement dated 14.05.2018 to the extent of taking lien, charge, security, mortgage or pledge of any of the assets of the Company forming part of SARE Group. The Assignment by Altico in favour of Respondent No.2 dated 23.03.2019 being in teeth of interim order dated 12.10.2018, the Application ought to have been rejected. In filing the Application, Respondent No.2 had colluded with Respondent No.1, which is apparent from the fact that Respondent No.1 neither filed the reply in Section 7 application nor contested the Application. Specific plea of intervening raised by the Appellant before the Adjudicating Authority, which was not even considered by the Adjudicating Authority. Respondent No.2 had no locus to file and maintain Section 7 Application before the Adjudicating Authority, in view of the restraint order passed of the Delhi High Court of 12.10.2018. The Adjudicating Authority failed to consider the fact that Assignment Agreement does not permit severance/ bifurcation of the Facility. The Adjudicating Authority committed an error in taking the view that even if Facility Agreement dated 14.....
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....t suffer from any error or invalidity and admitted default being there with regard to DTD1 and DTD2, Adjudicating Authority did not commit any error in admitting Section 7 Application. For argument sake, even if it is assumed that there was any restraint with regard to Facility Agreement dated 14.05.2018, other two loans remained untouched, hence, default at the part of Corporate Debtor was an admitted fact, which could have been very well taken note on the basis of Section 7 Application. In the present case, debt and default having not been disputed either by the Corporate Debtor or by the Intervener herein, the Intervention Application was not maintainable and has rightly been rejected by the Adjudicating Authority. 6. Shri Ritin Rai, learned Senior Counsel for Interveners submits that homebuyers are already part of the CoC and there is a Resolution Plan which is pending consideration. 7. We have considered the submissions of learned Counsel for the parties and have perused the record. 8. We need to first notice the Section 7 Application filed by Respondent No.2 and the basis given in the Application for initiating insolvency proceedings. Section 7 Application has been b....
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....null and void. Other connected reliefs are also sought. The case of the plaintiff and the defendants No.1 to 15 form part of S.A.R.E.Group of companies which are all inter related to each other. SARE Public is the parent/holding company of the entire SARE Group and the entire group is controlled by it through its controlled subsidiaries. It is stated that in the year 2011 Wafra had invested US $50 Million in convertible bonds issued by SARE Public. The said funds were to be utilised by SARE Public through its controlled subsidiaries to acquire develop and sell middle-income residential projects across India. Wafra and SARE Public had also executed a secured convertible bond purchase agreement dated 28.4.2011, pursuant to which Wafra had purchased SARE Public's Series A Secured Convertible Bonds subject to terms and conditions of the purchase agreement. It is further pleaded that by virtue of Purchase Agreement SARE Group i.e. SARE Public and its subsidiaries were categorically barred from creating any lien/pledge/encumbrance/charge and any third party right whatsoever on their respective properties until the time the bonds are outstanding. It is further pleaded that the in....
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....fendant No.17 was Altico Capital India Ltd. The interim injunction passed by the Delhi High Court against Defendant No.16 and 17 is to the following effect: "Defendants 16 and 17 are also restrained from giving effect to the Facility Agreement dated 14.5.2018 to the extent of their taking lien charge, security, mortgage or pledge of any of the assets of defendants No.1 to 15 till the next date of hearing." 11. One of the submission advanced by learned Counsel for Respondent No.2 was that the above interim injunction order dated 12.10.2018 does not restrain Defendant No.17 to assign its debt. It is submitted that injunction was to restrain from giving effect to the Facility Agreement dated 14.05.2018, but there was no restraint of assignment. The tenor of the order dated 12.10.2018 is restraint to give effect to the Facility Agreement dated 14.05.2018. Any action taken in pursuance of Facility Agreement dated 14.05.2018 may be in teeth of the said injunction. The Assignment dated 23.03.2019 by Defendant No.17 in favour of ACER - Respondent No.2 was also for the loan which was advanced by Facility Agreement dated 14.05.2018. Thus, taking a broad view of the matter, we are....
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....erational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing-i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may....
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....Trust Deed dated 14.11.2016 and the debt due under the aforesaid Debenture Trust Deed as was detailed in Section 7 Application were unaffected by the interim order dated 12.10.2018. Hence, the debt under the aforesaid financial transaction was due and default was there with regard to the said financial transactions. 17. It is not the case of the Appellant that there was no default on the part of the Corporate Debtor with regard to Debenture Trust Deed dated 04.12.2015 and 24.11.2016. It is not even the case that there is no default with regard to Facility Agreement dated 14.05.2018, but the submission is that there being interim injunction on 12.10.2018, assignment of debt under the Facility Agreement dated 14.05. 2018 could not have been made in favour of defendant No.3. 18. At this juncture, we may notice one of the Clauses of the Assignment Agreement dated 23.03.2019, which is Clause 10.5 dealing with 'Severability' to the following effect: "10.5 Severability If any provision of this Agreement is held to be illegal, invalid, or unenforceable under Applicable Law, and if the rights or obligations under this Agreement of the Parties will not be materially a....
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.... to the respondents is a direction giving effect to a liability which already existed. It does not create the liability for the first time but merely works out the liability. But the same thing cannot be said about the charge. The charge is created for the first time. The case, therefore, involves two distinct matters - one is a personal liability to pay a certain amount, and the second is an additional relief to recover that amount from the immovable property of the appellants, should they fail to pay as ordered. It is, therefore, clear that the two do not form one transaction but two severable transactions. As pointed out long ago by Muttusami Ayyar, J., in Sambaya v. Gangayya [13 Mad 308, 311] : "The test, therefore, is whether the transaction evidenced by the particular instrument is single and indivisible or whether it really evidences two transactions which can be severed from each other, the one as creating an independent personal obligation and the other as merely strengthening it by adding a right to proceed against immovable property. But it should be remembered that it is not enough that there is an obligation to pay a sum of money, but that it is also necessary that the....
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.... 21. The Hon'ble Supreme Court had approved the judgment of the High Court, which directed that second transaction with regard to the charge being a severable transaction can be validly ignored and the personal obligation to pay the transaction, not being required to be compulsorily registered can be enforced, the Award was admissible in the above respect. 22. In the present case, we have noticed that there were three financial transactions, which were assigned by Agreement dated 23.03.2019. Even if, one transaction that is Facility Agreement dated 14.05.2018 was under cloud due to interim order passed by the Delhi High Court dated 12.10.2018, there was no cloud on other financial transactions, which were much before of passing of the interim order. There can be no illegality with regard to assignment of debt in favour of Respondent No.2 with regard to above two transactions and there being default with regard to above two transactions, which is an admitted fact, no exception can be taken to the admission of Application under Section 7 of the Code. 23. The judgment of Kerala High Court in (1985) KLT 87, Varkey vs. Subromonia Iyer has also been relied by the learned Counsel ....
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.... transactions which can be severed from each other, the one as creating an independent personal obligation and the other as merely strengthening it by adding a right to proceed against immovable property. But it should be remembered that it is not enough that there is an obligation to pay a sum of money, but that it is also necessary that the obligation should have an independent existence, and be in no way contingent or conditional on the breach of some obligation relating to immovable property created by the same instrument, for the contingency of the condition and the obligation would then be parts of one indivisible transaction." 18. Normally an agreement has to be considered as a whole. Of course, severance can be effected without affecting or damaging the core of the transaction. Severability which takes in the rule of separability is a principle which can be applied only if it does not affect the main aim and intention of the transaction and only if the objectionable part can be severed without affecting the validity of the remaining part." 24. We, thus, are of the view that the three loans which were assigned by Altico in favour of Respondent No.2 were severable....