TaxTMI 
TaxTMI 
2026 (3) TMI 93
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....tra ITCL (India) Ltd., under Section 61 of the Insolvency and Bankruptcy Code, 2016 ("Code"), challenging the Impugned Order dated 07.05.2024 passed by the National Company Law Tribunal, Mumbai Bench-IV ("Adjudicating Authority") in I.A. 2680 of 2023 filed in C.P. (IB) No. 380 of 2021. Vithal Madhukar Dahake, Resolution Professional of the Corporate Debtor i.e. Radius Estate Projects Pvt. Ltd., is the Respondent No. 1, herein. Avenue 54 Welfare Association is the Respondent No. 2 herein. The Avenue 54 Welfare Association (Homebuyers) filed an I.A. No. 5827 of 2024 seeking impleadment in the present appeal. The said I.A was allowed vide order dated 18.03.2025 and it was impleaded to the present appeal as Respondent No.2. Omkara Asset Reconstruction Pvt. Ltd., is the Respondent No. 3 herein. The Omkara Asset Reconstruction Pvt. Ltd. filed an I.A. No. 6627 of 2024 seeking impleadment in the present appeal. The said I.A was partially allowed vide order dated 13.08.2025 and it was impleaded to the present appeal as Respondent No.3. 2. Two appeals namely, Company Appeal (AT) (Ins.) No. 1110 of 2024 & Company Appeal (AT) (Ins.) No. 1801 of 2024 were tagged together and heard t....
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....tures were not redeemed. 7. The Appellant contended that while it was exploring filing a Section 7 petition, SBICAP Trustee Company Limited filed a Section 7 application against the Corporate Debtor which was admitted on 06.09.2021 and the Respondent No. 1 was appointed as Interim Resolution Professional. The Appellant submitted that on 02.12.2021, it filed its claim in Form-C for Rs.874,03,27,404/- as a secured financial creditor on the basis of the guarantee in the nature of covenant to pay under the mortgage deeds, enclosing all transaction documents. The Respondent No. 1 sought copies of corporate guarantee and related documents by email dated 04.12.2021, the Appellant reiterated its position and furnished documents again through emails dated 07.12.2021 and 21.01.2022 to the Respondent No.1. 8. The Appellant contended that the Respondent No. 1 failed to verify the claims and kept verification in abeyance due to a purported settlement between the Corporate Debtor and SBICAP Trustee Company Limited. After the Adjudicating Authority dismissed the settlement application on 28.03.2022 and revived CIRP, the Appellant again requested verification by emails dated 04.04.2022 and 1....
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.... 13. The Appellant further submitted that Clause 24 of the DTD makes security providers jointly and severally liable to discharge obligations, thereby making the Corporate Debtor jointly and severally liable to repay debenture amounts, constituting financial debt under the Code. The Appellant relied on Pioneer Urban Land and Infrastructure Ltd. v. Union of India, [(2019) 8 SCC 416] to contend that the definition of financial debt under Section 5(8) is inclusive and expansive and not exhaustive. 14. The Appellant contended that the Corporate Debtor, as security provider, was a co-obligor jointly and severally liable under the DTD, and co-obligors are financial creditors as held in State Bank of India v. PE Electronics [2018 SCC OnLine NCLT 26427] and Zubin Barucha v. Reliance AIF Management Company [2023 SCC OnLine NCLAT 167]. The Appellant submitted that the Adjudicating Authority wrongly held that absence of disbursement to the Corporate Debtor negates financial debt. The Appellant emphasised that disbursement need not be to the Corporate Debtor itself. Section 5(8)(i) includes guarantees securing debentures, and judgments in BVS Lakshmi v. Geometrix Laser Solutions [2017 SCC O....
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....mitted that the Adjudicating Authority held that covenant to pay is linked only to mortgaged property and creates no personal liability, which is contrary to Section 126 of the Contract Act and, alternatively, Section 68(1)(a) of the Transfer of Property Act. 18. The Appellant contended that it had explained and supported its claim with documents on three occasions over two years and the Respondent No. 1 failed to properly verify the claim. The Appellant submitted that the mortgage deeds form part of finance documents and must be read with the DTD. Clause 3 shows that the covenant to pay was given in consideration of debenture subscription and cannot be read in isolation. Alternatively, the Appellant contended that under Section 68(1)(a) of the Transfer of Property Act, a mortgagee has a right to sue for mortgage money, giving rise to a right to payment constituting a claim under Sections 3(6) and 3(11) of the Code and thereby a financial debt under Section 5(8) of the Code. 19. The Appellant submitted that the Adjudicating Authority erred by relying only on Clause 2.2 of the mortgage deeds while ignoring other sub-clauses of Clause 2. The Appellant contended that nomenclatur....
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..... The Respondent No. 1 submitted that pursuant to this arrangement, a Debenture Trust Deed dated 03.08.2018 was executed between the Appellant, ACPL, the developer, and the promoters. The said deed recorded the terms for issuance of debentures and appointment of the Appellant as debenture trustee. It was one of the terms of the transaction that the debenture payments and secured obligations under the debenture documents would be secured by creation of security by ACPL, the developer, and the promoters in favour of the debenture trustee. 26. The Respondent No. 1 submitted that a sum of Rs. 340 crores were disbursed to ACPL in tranches between 04.10.2017 and 04.04.2019 against issuance of optionally convertible debentures. It was specifically contended that the Corporate Debtor was neither a party to the original borrowing arrangements nor did it receive any amount from the Appellant under these disbursals. 27. The Respondent No. 1 submitted that a Supplemental Indenture of Mortgage dated 29.03.2019 was executed by the Corporate Debtor, along with other parties, to secure outstanding amounts under the debenture documents by creation of a first-ranking mortgage in favour of the ....
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....in it was emphasised that disbursement to the corporate debtor is an indispensable requirement for classification as financial debt. It was submitted that any disbursement made by the Appellant to ACPL may entitle the Appellant to be a financial creditor of ACPL, but not of the Corporate Debtor. 32. The Respondent No. 1 also relied upon the judgment in Vistra ITCL Ltd. v. Dinkar Venkatasubramanian (Supra), wherein the Hon'ble Supreme Court treated Anuj Jain as good law. Further reliance was placed on the decision of this Appellate Tribunal in Edelweiss Asset Reconstruction Company Ltd. v. Anuj Jain, Company Appeal (AT) (Insolvency) No.517 & 518 of 2023 which clarified that certain observations in Vistra were confined to the facts of that case. 33. The Respondent No. 1 contended that even if the mortgage deeds contain a covenant to pay, the same cannot be equated with a deed of guarantee. A claim based on mortgage securing a third-party debt does not qualify as a secured financial debt and can at best be treated as a claim of an "other secured creditor". The Respondent No. 1 submitted that the Appellant's claim has not been rejected but has only been classified appropriately. ....
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....orporate Debtor against consideration for the time value of money and the Corporate Debtor merely created security by way of mortgage over its assets to secure the obligations of ACPL. The Respondent No. 3 contended that the alleged guarantee provided by the Corporate Debtor is at best contingent and does not create a direct debtor-creditor relationship with the Appellant in the nature of financial debt. Reliance was placed on the judgment of the Hon'ble Supreme Court in Anuj Jain v. Axis Bank Limited (2020) 8 SCC 401, wherein it was held that the essential elements of financial debt include disbursal of money against time value of money and such disbursal must be to the corporate debtor itself. 39. The Respondent No. 3 further submitted that the Hon'ble Supreme Court has held that where a corporate debtor merely creates a mortgage or other security over its property to secure repayment of a loan availed by a third party, such a transaction does not constitute a financial debt qua the corporate debtor. In such circumstances, the consideration for the time value of money flows to the principal borrower and not to the corporate debtor. Accordingly, the Appellant cannot be treated ....
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....finitions.-In this Code, unless the context otherwise requires,- "..... (6) "claim" means- (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured; ..... (11) "debt" means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt;" Section 5 (7) of Code is reproduced hereunder: - "5. Definitions - (7) "financial creditor" means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to;" Section 5 (8) of Code is reproduced hereunder: - 5. Definitions - (8) "financial debt" means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of i....
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.... simple mortgagee. (c) Mortgage by conditional sale.-Where the mortgagor ostensibly sells the mortgaged property- on condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: [Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale.] (d) Usufructuary mortgage.-Where the mortgagor delivers possession 1 [or expressly or by implication binds himself to deliver possession] of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property 2 [or any part of such rents and profits and to appropriate the same] in lieu of interest, or in payment of the mortgage -money, or partly in lieu of interest 3 [or] par....
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....n No. 2680 of 2023 in Company Petition No. 380 of 2021, inter alia, rejecting the IA preferred by the Appellant seeking admission of its entire claim as a Secured Financial Creditor, whereby, the Appellant sought admission of its claim to the tune of Rs. 874,03,27,404/- as on the Insolvency Commencement date against the Corporate Debtor in relation to Debenture Trust Deed dated 3rd August, 2018 executed between the Appellant, APCL, Radius and Deserve Builders LLP, Mr. Sanjay Chhabria and Mrs. Ritu Chhabria. The claim of the Appellant is arising out of alleged guarantee given by the Corporate Debtor under Mortgage Deeds in the nature of a covenant to pay. 46. We take into consideration that ACPL proposed to borrow funds by way of issuing 3,95,00,000 optionally convertible Debentures of face value of Rs. 100 each on private placement basis up to aggregate value of Rs. 395 crores. ACPL had entered into and executed a Debenture Trustee Agreement (DTD) dated 5^th September, 2017 for appointment of the Appellant as the Debenture Trustee in respect of the aforesaid borrowing. 47. We note that a Development Management Agreement dated 2lst September, 2017 was executed between M/s Radi....
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....plemental Indenture of Mortgage dated 16th April, 2019 was also executed between the Corporate Debtor (Mortgagor), Radius and Deserve Builders LLP (Developer), ACPL (Borrower), Mr. Sanjay Chhabria (Obliger 1), Mrs. Ritu Chhabria (Obliger 2), the Appellant (Mortgagee) in order to further secure the Secured Obligations under the DTD and in furtherance of the Supplemental Indenture of Mortgage dated 29th March, 2019. It is under the said Agreement that the Corporate Debtor has agreed to create by way of exclusive first charge, mortgage and security by way of registered mortgage in favour of the Appellant on the Additional Mortgaged Properties. 51. It is the case of the Appellant that the said debt arising out of the aforesaid Mortgage Deeds falls squarely within the definition of the term 'financial debt' as defined under Section 5(8)(c) of the Code being a debt along with interest which is disbursed against the consideration for the time value of money and includes any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument. 52. It is the claim of the Appellant that defaulted amount, pertains to....
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....pensable or mandatory condition. The question arises whether direct transfer of funds to the Corporate Debtor is an essential prerequisite for a debt to qualify as financial debt under Section 5(8) of the Code earlier. The statutory text of Section 5(8) of the Code does not mandate that disbursement must be made exclusively or directly to the Corporate Debtor. What the statute requires is disbursement against consideration for time value of money, not necessarily direct transfer into the Corporate Debtor's account. Accordingly, it can be held that direct disbursement to the Corporate Debtor is not a sine qua non. We may add that, however, this becomes a significant contributory factor to determine the actual nature of transaction between the Financial Creditor and the Corporate Debtor, which can vary from case to case as per its own peculiar facts. 55. We shall take into consideration, judgement cited by all the parties, delivered by the Hon'ble Supreme Court of India in the matter of Anuj Jain - Interim Resolution Professional for Jaypee Infratech Limited vs. Axis Bank Limited (Supra) where it was held that when the Corporate Debtor creates mortgage to secure payment obliga....
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....ideration the relevant portion of the Debenture Trust Deed This DEBENTURE TRUST DEED (this "Deed") made at Mumbai on this 3rd day of August, 2018 (the "Execution Date"). BETWEEN VISTRA ITCL (INDlA) LIMITED, a company incorporated under the Companies Act, 1956 and having its registered office at The IL&FS Financial Centre, Plot No. C - 22, G Block, 3rd Floor, Sandra Kurla Complex, Bandra (East), Mumbai 400051, acting in its capacity of debenture trustee in trust and for the benefit of the Debenture Holders and the Debenture Holders' successors and assigns from lime lo lime (hereinafter referred to as the "Debenture Trustee/Trustee", which expression shall, unless repugnant to the context or meaning thereof, include its respective successors and assigns and such other person as may be appointed as the Debenture Trustee in its place from time to lime in accordance with the provisions of this Deed) of the FIRST PART AND AADITRI CONSTRUCTION PRIVATE LIMITED, a company duly incorporated under the provisions of Companies Act, 1956 having its registered office al ONE BKC, A-Wing, 1401, Plot No.C-66, Sandra Kurla Complex, Sandra (East), Mumba....
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....nt partners of the Developer and their interest in the LLP is as set out in the First Schedule hereunder written. The Larger land is more particularly described in the Second Schedule hereunder written ('Larger Land"). The Larger Land is delineated with a black colour boundary line on the plan annexed hereto and marked as Annexure "A". The Larger Land is owned by the Government of Maharashtra. B. The Scheme is being undertaken by the Developer in a phase wise manner wherein, Phase 1 of the Scheme is being undertaken on a portion of the Larger Land being all that piece and parcel of land admeasuring 53.192.35 square meters ("said land") and Phase 2 of the Scheme is being undertaken on a portion of the Larger land being the Second Land (defined herein below). The said Land is washed in blue colour on the plan annexed hereto and marked as Annexure "A". C. By and under a Letter of Intent ("LOI") dated 24th July 2013, issued by the Slum Rehabilitation Authority ("SRA") in favour of, inter alia, the Developer (then known as Wadhwa & Deserve Builders LLP), the SRA has sanctioned the Scheme on a portion or the 1arger Land admeasuring 53,192.35 square meters being the ....
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....d all other costs, chargers and expresses, redemption proceeds and other amounts due and payable by the Company in respect of the Debentures. ...... "Debentures", shall mean the First Tranche Debentures, the Second Tranche Debentures, the Third Tranche of Debentures and the Fourth Tranche of Debentures, being secured option a by convertible debentures having a lace value of Rs. 100/- (Rupees One Hundred) each to be issued by the Company at par, in the manner provided in this Deed. The terms and conditions of the Debentures and the manner in which the Debentures will be converted are set out in Annexure "D" of this Deed. ...... "Security Interest" shall refer to any security interest created / to be created for the purposes of securing the obligations of the Company in relation to the Debentures and shall include the Mortgage, Pledge. Corporate Guarantee Personal Guarantee or any other agreement or arrangement having the effect of conferring Security in favour of the Debenture Trustee. "Security Providers" shall mean the Obligors and shall also include any other person which has created or agreed to create any Security Interest for or in ....
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.... as may be created in favour of the Debenture Trustee from time to time Clause 24- LIABILITY OF THE SECURITY PROVIDERS Notwithstanding anything to the contrary contained elsewhere, the Security Providers shall be jointly and severally liable for their obligations specified hereunder. (Emphasis Supplied) 60. After examination of above relevant clauses of DTD, we find that APCL, Borrower, Radius LLP/ Developer and the Promoters are collectively referred to as the "Obligors". "Security Interest" refers to any security interest created for the purposes securing the obligations of APCL in relation to the HDFC Capital/ Debentures and inter alia include mortgage or any other agreement or arrangement having the effect of conferring Security in favour of Debenture Trustee. Further, "Security Providers" mean the Obligors and include any other person which has created or agreed to create any Security Interest for or in relation to the Debentures. Similarly, "Secured Obligations" mean all present and future obligations and liabilities of the Obligors to the Debenture Holders including the connection with the issue and subscription of the Debentures, the Debenture Paymen....
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....iabilities of the obligors to the debenture holders. From above, it is seen that secured obligations including debenture payment payable in respect to debentures and performance of obligors of their obligations have been secured by security in favour of debenture trustee. 66. Various type of security has been defined in clause 7 from (i) to (vi). (i) stipulates English mortgage (without position of mortgaged properties) and (vi) stipulates other security as may be created in favour of debenture trustee from time to time. Thus, we note that Radius Estate Projects Pvt. Ltd. i.e., Corporate Debtor, which although was not party to above DTD., however, in terms of Clause 7, it includes any other securities as may be created in favour of debenture trustee from time to time, the Corporate Debtor may find place in this chain. Thus, we need to understand whether at any later stage, the Corporate Debtor became party to offer security in favour of the debenture trustee which falls in the definition of security under clause 7 of the DTD and resultantly will fall in the definition of security provider etc. 67. Hence, we need to refer to Supplemental First and Second Indenture of Mortgage.....
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....ERS LLP, a limited liability partnership incorporated under the Limited Liability Partnership Act, 2008 and having its registered office at ONE BKC, A-Wing, 1401, Plot No.C-66, Bandra Kurla Complex, Bandra (East), Mumbai 400 051, hereinafter referred to as the "Developer" (which expression shall, unless repugnant to the context or meaning thereof, be deemed mean and indicate its successors and permitted assigns) of the of the SECOND PART; AND AADITRI CONSTRUCTION PRIVATE LIMITED, a company duly incorporated until the Companies Act, 1956 having its registered office at ONE BKC, A-Wing, 1401, Plot No.C-66, Bandra Kurla Complex, Bandra (East), Mumbai 400051 (being the investee company and hereinafter referred to as "Borrower' which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include its successors in interest and permitted assigns) of the THIRD PART; AND MR. SANJAY CHHABRIA, Indian inhabitant having his office at ONE BKC, A-Wing, taeifot No.C-66, Bandra Kurla Complex, Bandra (East), Mumbai 400 051, hereinafter referred to as "Obligor 1 (which expression shall, unless repugnant to the context or mea....
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.... (iii) the Obligors (therein referred to as the Confirming Parties), (iv) Deserve Exim Private Limited, (v) Deserve Builders and Developers (Wadhavali) Private Limited and the (vi) Debenture Trustee and registered with the office of the Sub- Registrar of Assurances under Serial No. KRL4-10020-2018 (hereinafter referred to as the "Original Indenture of Mortgage"), a first and exclusive mortgage and charge was created over the Mortgaged Property (as defined therein) to secure the outstanding amounts in relation to the Debentures. Full stamp duty has been paid on the Original Indenture of Mortgage and therefore, nominal stamp duty Is being paid on this Second Supplemental Indenture of Mortgage. ...... (g) "Security Interest" shall mean any mortgage, pledge, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever including, without limitation any conditional sale or other title retention agreement, any financing or similar statement or notice filed under any recording or notice statute; and any designation of loss payees or beneficiaries or any similar arrangement under ....
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....defined. 74. The most crucial part of the First supplemental indenture dated 29.03.2019 is clause 2 i.e., covenant to pay. For sake of clarity, the Clause 2 is reiterated as under: - 2. COVENANT TO PAY 2.1 Pursuant to the Finance Documents and in consideration of the Debenture Holders having.... Debentures, the Mortgagor covenants and agrees with the Mortgagee that the Mortgagor shall discharge the Secured Obligations in accordance with the terms and conditions in the Finance Documents. 2.2 The Mortgagor hereby further covenants with the Mortgagee that in the event the Mortgagor fails to discharge the Secured Obligations on the respective due date as set out in the Debenture Trust Deed, then and in every such case the Mortgagor shall pay default interest at the rate mentioned in the Debenture Trust Deed and it is hereby further agreed that the provisions relating to default in discharge of the Secured Obligations shall not in any way be deemed to authorize the Mortgagor to allow any Secured Obligations to fall in arrears nor shall it in any way interfere with, prejudice, limit or affect the powers of sale or entry or any other rights, authorities, powe....
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....not create an Independent Guarantee and argued that the Appellant's reliance on Clause 2.1 of the Mortgage Deeds to assert the existence of a standalone guarantee is legally untenable and contextually incomplete and the "Covenant to Pay" needed be read holistically, comprising both Clause 2.1 and Clause 2.2 of the Mortgage Deeds. The Respondent No. 1 & 3 further submitted that Clause 2.1 Independently Cannot Constitute a Guarantee as Clause 2.1 of the Mortgage Deeds records the Corporate Debtor's undertaking to "discharge the Secured Obligations" in accordance with the DTD. The Respondent No. 1 and Respondent No. 3 also argued that this clause, when read independently, does not constitute a guarantee under Section 126 of the Indian Contract Act, 1872. It is the argument of the Respondent No.1 and Respondent No.3 that Clause 2.1 of the Mortgage Deed merely records the Corporate Debtor's undertaking to pay the "Secured Obligations.". Whereas Clause 2.2 immediately qualifies and limits this undertaking by stipulating that: " ...in the event of failure to pay the Secured Obligations, the Corporate Debtor shall pay default interest at the rate mentioned in the said DTD. It i....
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....e. Such language reflects, at best, a primary co-obligation or a performance covenant, not a secondary liability contingent upon another's default-which is the hallmark of a guarantee under Section 126 of the Indian contract Act, 1872. The Respondents submitted that such an interpretation would amount to rewriting the contract rather than interpreting it. Therefore, the Respondent No. 1 and Respondent No. 3 pleaded that Mortgage Deeds do not create a guaranteed obligation under Section 126 of the Indian Contract Act, 1872. The obligation to pay is conditional, enforcement- linked, and limited to default interest only and not for the whole debt lent to APCL. 81. Thus, we need to now deep dive into the aspects of covenant to pay: In our understanding, a covenant to pay is a legally binding promise in a contract where one party commits to pay a specified sum to another, often on demand or a fixed date, commonly seen in loan agreements, security documents, promissory notes, and deeds. It forms the primary obligation in debt instruments, ensuring the debtor (covenantor) repays principal, interest, or other liabilities to the creditor (covenantee). Covenant to pay directly enforce....
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....d rival contentions on the issue of 'covenant to pay' and its implications on Financial debt in previous discussions. 83. Now we will see Impact of judgment of Anuj Jain v. Axis Bank (supra) and Rajiv Kumar Jain v. Uno Minda Ltd. (Supra) on Appellant as Financial creditor classification, differing primarily in security provider roles and covenant analysis. In Anuj Jain v. Axis Bank, the Resolution Professional challenged lenders' financial creditor status for mortgages by Jaypee Infratech Ltd. (JIL, CD) securing loans to affiliate Jaypee Infratech Ltd. (JAL). Hon'ble Supreme Court ruled that no financial debt under Section 5(8) of the code, as JIL received no disbursal or time-value consideration and held that mere third-party security without payment covenant doesn't qualify lenders as financial creditors. In contrast in case of Rajiv Kumar Jain v. Uno Minda where Ex-director appealed NCLT's admission of Section 7 petition against Unicast Autotech (CD); Uno Minda claimed financial debt from advances under Business Support Agreement, backed by promoters' guarantees and pledges. This Appellate Tribunal upheld CIRP, classifying debt as financial Debt due to explici....
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....ution Professional) and upheld by the Adjudicating Authority in the impugned order. 86. We also hold that covenant to pay in the mortgaged deed creates an enforceability guarantee. For sake of clarity, we are conscious of the fact that the Corporate Debtor did not receive the disbursement. However, with Corporate Debtor's covenant to pay through supplemental indenture of mortgage covering earlier DTD, even in respect of loans disbursed by the Appellant to APCL (principal borrower) will tantamount to contract of guarantee under Section 126 of the Indian contract Act, 1872. 87. We also do not subscribe to the arguments of the Respondent No. 1 & 3 that since in the indenture the Schedule -I specifically provides for specific securities and therefore the rights of the Appellant are restricted to only such mortgaged securities for the simple reason that once the Corporate Debtor as mortgagor covenant to pay of secured obligation as per DTD, such restriction to properties ceased to hold good. 88. Now, we also examine the Respondents reliance on Clause 2.2 of Indenture of Mortgage to amplify that the 'covenant to pay' in the Indenture of Mortgage is restricted only to the payment....
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....nterest" at the rate mentioned in DTD. We behold that had this clause ended only after here, then perhaps the contentions of the Respondent No. 1 & 3 would have been considered favourably. But once we look the later part of Clause 2.2 of Indenture of Mortgage, we find that it clearly stipulates undertaking akin to guarantee that the mortgagor (Corporate Debtor) shall not allow "Secured Obligations" to full in error. Secured Obligations reads as: - 91. Thus, we tend to agree with the logic of the Appellant that Clause 2.1 r/w Clause 2.2, highlights understanding of the Corporate Debtor to undertake guarantee to satisfy secured obligation towards the Appellant. All these strengthen the case of the Appellant to be treated as secured financial creditor. 92. At this stage, we also appraise Section 126 of the Indian Contract Act, 1872 which inter - alia, provides few essential requisites of a contract of guarantee like the contract of guarantee must have all the essentials of a contract; there must be an existing debt which should be recoverable; existence of three parties in a contract of guarantee i.e. principal debtor, creditor and surety and there must be promise by the surety ....
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....was in the nature of a guarantee under Section 126 of the Contract Act,1872 and constituted a "financial debt" under Section 5(8) of the Code. 95. We note that in the present case, the Appellant's claim arises from the security and finance documents, namely the Debenture Trust Deed r/w further Mortgage Deeds (discussed earlier), which constitute a tripartite arrangement between APLL as borrower, the Appellant as debenture trustee for the debenture holders, and the corporate debtor. Under the DTD, the Appellant was appointed to act on behalf of the debenture holders, and Clause 24 provides that security providers, including the Corporate Debtor (discussed earlier) are jointly and severally liable to repay the debentures as co-obligors despite CD was not signatory to original DTD. Further, Clause 2 of the Mortgage Deeds contains a clear covenant to pay by the Corporate Debtor, undertaken in consideration of the debenture holders subscribing to the debentures, thereby obligating the Corporate Debtor to discharge the secured obligations originally owed by the borrowers. As the obligors have defaulted under the DTD, the Corporate Debtor has become jointly and severally liable to repa....
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.... their successors-in-title) of the First Part; SUMER RADIUS REALTY PRIVATE LIMITED, a company within the meaning of Companies Act, 2013 with corporate identity number U45400MH2015PTC266590 and having its registered office at 220 Commerce House, 140 N M Road, Fort. Mumbai-400023 (hereinafter called "Confirming Party 1", which expression shall, unless excluded by or repugnant to the context or meaning thereof, include its successors-in-title and permitted assigns) of the Second Part; SUMER BUILDCORP PRIVATE LIMITED, a company Companies Act, 2013 with corporate identity number U45209MH201aP.C2026 and having its registered office at 203, Peninsula Corporate Park, TowerNo: 1, 2nd Eldos Marg, Lower thall, unless/ the provisions Parel Mumbai-400013 (hereinafter called "Confirming Fitty 2", which opfok excluded by or repugnant to the context or meaning thofof, include it @ suc n-title and permitted assigns) of the Third Part; AND VISTRA ITCL (INDIA) LIMITED, a company within the mex elpanies Act, 2013. having Corporate Identity Number U66020MH1995PLC095507 and having its registered office at IL&FS Financial Centre, Plot no C- 22, G-Block Bandra Kurla Complex, Bandra (East....
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....same meaning as ascribed to these terms under the Debenture Trust Deed or the Transaction Documents, as the case may be; B. By and under an Indenture of Mortgage dated 10 August, 2018 executed between the Developer, the Borrower Mr. Sanjay Chhabria, Mrs. Ritu Chhabria, Deserve Exim Private Limited, Deserve Builders and Developers (Wadhavali) Private Limited and the Debenture Trustee and registered with the office of the Sub-Registrar of Assurances under Serial NoKRI4-10020-2018 (hereinafter referred to as the "Original Indenture of Mortgage"), a first and exclusive mortgage and charge was created over the Mortgaged Property (as defined therein) to secure the outstanding amounts in relation to the Debentures, Full stamp duty has been paid ou the Original Indenture of Mortgage and nominal stamp duty is being paid on this Supplemental Indenture of Mortgage; UB REGISTR fas on thesale hereof, the Mortgagor legally and beneficially owns the Mortgaged Property foglipod below), as more particularly provided in the First Schedule bereunder; To furtheressere all outstanding amounts in relation to the Debentures under the Debeimuro a Deed ("Secured Obligatious") , the Mortgagor herei....
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....ission or any court, tribunal, arbitral or judicial body (including any grand jury), and any recognized stock exchange of India. "Indenture" shall mean this supplemental indenture of my recitals, annexures, schedules and exhibits appended harof supplement thereof made in accordance with its provisions. "Project" sball mean the residential project known as "Avenue 54" constructthey constructed all that piece and parcel of land bearing bearing (1)'CTS Nos3901 415 to 438 admeasuring 21,774.10 square meters; and (ii) (TS Nos. 395;596. 398 admeasuring 4,325.30 square meters, aggregately admelwiring 26,009 Tuate meters, situale, lying and being at 200 Hasnabad Lane, SantanaWieaux thbai - 400054, Village: Bandra, Registration Sub-District of Bandra, Mitimbar Surburban District; "Mortgaged Property" shall mean the assets being mortgaged in favour of the Mortgagee and more particularly described in the First Schedule hereunder. "Project Property" or "Property" shall mean all the described in the Second Schedule hereunder; property moyenangularly 3300 to Heu "Power of Sale" shall have the meaning given to such ferm in Clause 15 (d) (Sle Without Intervention of Court);....
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....ied, or supplemented; all references in this Indenture to any provision of any statute shall be deemed to refer to the statute, modification or re-enactment thereof or any statutory HAumrekor regulation made thereunder or under such Te-enactment; e contained in the Schedules hereunder written shall have effect in if they were specifically herein set forth; COVENANTTOPAY ince Documents and in consideration of the Debenture Holders having Debentures, the Mortgagor covenants and agrees with the Mortgagee rigagor shall discharge the Secured Obligations in accordance with the terins and conditions in the Finance Documents. 2 Purguant, 16 22. The Mortgagor hereby further covenants with the Mortgagee that in the event the Mortgagor fails to discharge the Secured Obligations on the respective due dates as set out in the Debenture Trust Deed, then and in every such case the Mortgagor shall pay default interest at the rate mentioned in the Debenture Trust Deed and it is hereby further agreed that the provisions relating to default in discharge of the Secured Obligations shall not in any way be deemed to authorize the Mortgagor to allow any Secured Obligations to fall in arr....
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....s of the Mortgagee/Receiver under this Indenture and/or any documents or instruments contemplated by or in connection with or relating to this Indenture including, without limitation, costs of investigation of title, travelling expenses and legal fees for drafting. stumping and registration of the documents and any other expenses on actual basis pursuant to this Indenture, and further covenants and agrees to indemnify the Mortgagee/Receiver against all actions, proceedings, costs, charges, expenses on actual basis, claims and demands whatsoever which may be brought or made against or incurred by any or all of them in respect of any matter or thing done or omitted to be done without their wilful default or gross negligence in respect of or in relation to the Mortgaged Property. 21. LIABILITY TO MORTGAGEE FOR DEFICIENCY The Mortgagor shall remain liable to the Mortgagee for any deficiency occurring, arising or existing under the Finance Documents. बदर-४ 22. WAIVER 3300 26 No implied waiver or impairment 2093 No delay or omission of the Mortgagee or any Receiver in Exercising any right, power of remedy accruing to the Mortgagee upon any default....