A borrower remains liable for obligations under a loan agreement until complete repayment, despite any recall of the loan, necessitating continued monitoring and compliance with court orders.

JUDGMENT

[VIA HYBRID MODE]

Sanjeev Narula, J. (Oral)--The Petitioner [viz. Aditya Birla Finance Ltd.] a company rendering financing services had extended facilities of Rs.100 Crores to Respondents No. 1-5 by taking over their liabilities towards Respondent No. 20 [viz. Yes Bank Ltd.] from whom they had initially taken a loan aggregating to Rs.260 Crores. Respondent No. 1 [viz. Presidium Educational and Charitable Trust] owns and operates schools, in particular Respondents No. 2-4, and Respondent No. 5 provides services to the schools (and students thereof) [collectively referred to as "Contesting Respondents" and they form part of the `Presidium Group' umbrella]; Respondents No. 6-14 stood as guarantors for repayment of the loans; Respondents No. 15-17 are trusts wherein Presidium Group had purportedly moved certain schools out of the Group at the time of assignment of the original facility; Respondents No. 18 and 19 are entities set up by the Presidium Group.

2. The present petition under Section 9 of the Arbitration and Conciliation Act, 1996 [hereinafter "the Act"] was filed seeking interim reliefs pending constitution of the Arbitral Tribunal. During the pendency of the present proceedings, Arbitral Tribunal stands appointed by this Court vide Order dated 11th October, 2021 in ARB.P. 706/2021, and the Petitioner and Respondents No. 1-9 have been referred to arbitration for adjudication of disputes relating to transaction documents/Facility Agreements all dated 10th February, 2018 and other finance documents/security documents.

3. Certain interim Orders, referred to later in the Order, are in force. However, now that the Arbitral Tribunal stands constituted, counsel for the parties' request that present application be considered and decided by the Arbitral Tribunal as one under Section 17 of the Act. Thus, the short question that arises for consideration is whether the interim mechanism already in place needs to be continued or modified till such time the learned Tribunal decides the application under Section 17 of the Act.

PREVIOUS ORDERS PASSED BY THIS COURT

4. On 15th November, 2019, an interim Order was passed in favour of the Petitioner directing the Respondents No. 1-14 not to "dispose of, alienate, encumber either directly or indirectly or otherwise part with the possession of any assets to the tune of the outstanding amount, except in the ordinary course of business such as payment of salary and statutory dues...". The said Order also notes the submission of the Petitioner that the Respondents had failed to transfer any amount to the escrow account, as required under the Loan Agreements/Facility Agreements all dated 10th February, 2018 and other finance documents/security documents [hereinafter "Financing Documents"] and that they were siphoning off the entire outstanding amount by transferring the same to other accounts.

5. Subsequently, on 14th January, 2020, on a statement made by counsel for Respondents No. 1-12 that settlement was being negotiated and that a payment of Rs.3.62 Crores had been made to the Petitioner, the Court directed that in the event, the matter is not resolved in the ensuing meeting, Contesting Respondents shall "deposit all collections in the escrow account in terms of the agreement between the parties.".

6. Thereafter, on 26th February, 2020, after considering the submission of the parties, Court appointed an independent Chartered Accountant ["