TaxTMI 
TaxTMI 
2025 (1) TMI 227
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....impugned order dated 17.05.2024 in CP/IB/76/NCLT/AHM/2021 while the appeal filed by Rahul Arunprasad Patel is against the impugned order dated 17.05.2024 in CP/IB/77/AHM/2021. In both these appeals the above two Appellants have assailed the impugned order admitting the Section 95(1) application filed by the Respondent No.1-State Bank of India allowing initiation of insolvency resolution process of the Appellants-Personal Guarantors. Since, the facts and the grounds on which both the appeals have been premised are common, it would suffice to confine ourselves to the pleadings made in Company Appeal No. 1826 of 2024 to decide both these appeals at hand. 2. The facts in both these appeals being largely identical, the same are conjointly outlined as below: On 09.02.2016 SBI-the Respondent No.1 Bank along with two other consortium lenders i.e. Bank of Baroda and IDBI Bank entered into COR Common Loan Agreement ("CORLA" in short) with the principal borrower-Shirpur Power Private Limited for financing under COR Facility Agreement. By virtue of a Security Trustee Agreement dated 21.09.2015, the lenders had appointed SBI Cap as their Security Trustee for the purpose of ....
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....dividual capacity. Neither the PGA nor the CORLA empowered any of the individual lenders to invoke the personal guarantee on their own. When the COR lenders had collectively appointed SBI Cap as the Security Trustee, the Respondent No.1 Bank in their individual capacity could not have initiated personal insolvency proceedings against the Personal guarantor. There was no request which flowed from the guarantor for release of loan in favour of the borrower and the guarantor is also not party to the CORLA. Moreover, the PGA is not a tripartite agreement between the Borrower, Lender and the Guarantor and hence the Section 95 application was not maintainable. Submission was pressed that the Adjudicating Authority while passing the impugned order had missed these vital nuances of the PGA and CORLA. Yet another contention made was that the insolvency petition was defective because it was filed by a person who was not in possession of valid authority to do so. Also the application was not accompanied by an affidavit and vakalatnama on behalf of Respondent No.2-Resolution Professional ("RP" in short). Hence the Section 95 application was not maintainable. 4. Refuting the submissions made....
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....s filed on behalf of Respondent No.1 Bank by a person having valid authority to do so. 7. On the issue whether Respondent No.1 Bank was entitled to invoke the personal guarantee, it is the case of the Appellant that the determining factors are the PGA which stipulated that the personal guarantor shall execute the guarantee in favour of the SBI Cap-Security Trustee for the benefit of all COR Lenders read with Schedule-1 of the CORLA which specified the Banks which collectively formed the part of COR Lenders. It was further stressed that all the Banks viz SBI, Bank of Baroda and IDBI are collectively referred to as "COR Lenders" in the CORLA and the same agreement also refers to the individual banks as "COR Lender". Since the clauses of the CORLA clearly makes a distinction between "COR Lenders" and "COR Lender", the two terms cannot be used interchangeably. Thus, SBI Cap having been appointed by "COR Lenders" to secure the COR facility collectively and to protect the collective interest of all COR Lenders, no individual "COR Lender" had the power to invoke the alleged personal guarantee. Attention was also adverted to the manner in which the demand could be placed before the pers....
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....y with the manner prescribed in the PGA. 9. To analyse the tenability of the rival submissions, it may be useful to weigh their contentions in the light of the relevant clauses of the CORLA and PGA. From the material on record, at the outset, we would like to observe that it is an indisputable fact that both the CORLA and the PGA were signed on the same date and the terms and conditions are integral and relatable to each other. The CORLA was signed amongst Shirpur Power Private Limited (As Borrower) and the Banks set forth in Part-A of Schedule I (as COR Lenders); the State Bank of India (as COR Lenders' Agent) and SBICAP Trustee Company Limited (as COR Security Trustee) as maybe seen at page 312 of Appeal Paper Book ("APB" in short). Coming to the signatories of the PGA, we find that it was signed between the Appellant, Amit Dinesh Patel as one of the Guarantors and SBICAP Trustee Company Limited in its capacity as Security Trustee for the COR Lenders (as "COR Security Trustee") as maybe seen at page 518 of APB. 10. Having noted the signatories of the CORLA and PGA, we now proceed to glance through the relevant provisions of the CORLA and the PGA before returning our fin....
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....sued or to be issued as sub- limit to the respective loan granted or to be granted by the COR Lenders to the Borrower. "Personal guarantors" shall collectively mean (a) Shri Amit Dineshchandra Patel... and (b) Shri Rahul Arunprasad Patel... "2.2 NATURE OF RIGHTS AND OBLIGATIONS OF COR LENDERS The obligations of each COR Lender hereunder are several. No COR Lender shall be responsible for the obligations of any other COR Lender. Any COR Lender may separately enforce any of its rights arising out of any of the COR Finance Documents The rights of each COR Lender under the COR Finance Documents are separate and independent. Any COR Lender may separately enforce any of its rights arising out of any of the COR Finance Documents, except as otherwise stated in the COR Finance Documents." We also take note that the CORLA at Clause 7.2 provides for "Consequences of Default" which at Clause 7.2 (iii) further clarifies that the COR Lenders on the occurrence of the event of default can enforce security interest under the COR Security Documents. 12. Coming to the relevant recitals and clauses of the PGA (with emphasis placed) which are necessary to be no....
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....urity Trustee/COR Lenders the whole of such Outstanding Sum and shall indemnify and keep indemnified the COR Security Trustee/COR Lenders against all losses, costs, charges and expenses whatsoever which COR Security Trustee/COR Lenders may incur by reason of any default on the part of the Borrower. 26 "Manner of Demand" 29.1 Any demand made by the COR Security trustee/COR lenders upon the Guarantor during the subsistence of this Guarantee in accordance with its terms, pursuant to a Demand Certificate (herein below defined), shall be conclusive evidence that: (a) the Guarantor's liability hereunder has accrued; and (b) the extent of the Guarantor's liability is the amount shown in such Demand Certificate. 29.2 The Demand Certificate shall be conclusive evidence against the Guarantor of the amount for the time being due to the COR Security Trustee/COR Lenders from the Borrower/Guarantor in any action or proceeding brought on this Guarantee against the Guarantor during the subsistence of this Guarantee and in accordance with the terms of this Guarantee." 29.3 Any demand made under this Guarantee, shall be deemed to have been duly g....
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.... by the Applicant and as such in over view entire amount demanded is unserviced as on the date of order. v. In our view the application is not hit by Limitation." 15. Coming to our analysis, in the present factual matrix, in terms of the PGA, the Appellant as personal guarantor was mandatorily obliged to honour its guarantee keeping in view that PGA provided for an unconditional, irrevocable and continuing guarantee to the COR Security Trustee/COR Lenders in respect of the COR Secured Obligations and credit facilities secured by the principal borrower. Recital F of the PGA makes it clear that the Personal Guarantor at the request of the Borrower and in consideration of the COR Lenders having agreed to grant the COR Facility to the Borrower, had agreed to execute this Guarantee in favour of the COR Security Trustee, acting for the benefit of the COR Lenders, for guaranteeing the outstanding sum. It is clear from the reading of the terms of the PGA at Clause 26 that if the Borrower failed to perform its obligations under the COR Finance Documents, it was incumbent on the Personal Guarantor to forthwith pay on demand to the COR Security Trustee/COR Lenders the whole of suc....
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....s Agent" by Respondent No. 1 Bank has been questioned by the Appellant. We are dissuaded from agreeing with the Appellant since the Respondent No. 1 Bank had signed the CORLA wherein it had been clearly designated as COR Lenders' Agent. Moreover, though the lenders had appointed SBI Cap as their Security Trustee, in the Security Trustee Agreement dated 21.09.2015, Clause 8.12 stated that any duty or the obligation of the Security Trustee may be performed by the COR Lenders and any such performance shall not be construed as a revocation of the trusts or agency created thereby. 19. This now brings us to the argument canvassed by the Appellant that in Rakshit Dhirajlal Joshi vs IDBI Bank Ltd 2022 SCC Online NCLAT 4524 it had been held by this Tribunal that if the Security Trustee Agreement had laid down that the lenders shall act collectively, then an individual bank without obtaining formal consent of the other lenders cannot substitute itself in place of the Security trustee. The reliance placed by the Appellant on the decision of this Tribunal in Rakshit Dhirajlal judgment is not applicable in the present case since in this case there is no dispute inter se between the membe....