In case of default, the borrower is required to pay the entire amount in terms of the original Loan Agreement without any remission, as per the Debt Restructuring Agreement and Supplementary Agreement.

JUDGMENT :

SUDHANSU JYOTI MUKHOPADHAYA, J.

1. The Adjudicating Authority (National Company Law Tribunal), Kolkata Bench passed an order for liquidation of ‘Nicco Corporation Ltd.’ (Corporate Debtor). During the liquidation, the respondent – ‘Technology Development Board’ (‘Board’ for short), Government of India, a ‘Financial Creditor’ filed its claim, part of which was rejected by the ‘Liquidator’. In view of the aforesaid rejection, the ‘Board’ filed an appeal before the Adjudicating Authority under Section 42 of the Insolvency & Bankruptcy Code 2016 (for short, ‘the I&B Code’). The said appeal having allowed by the Adjudicating Authority by the impugned order dated 6th June, 2018 it has been challenged by the ‘Liquidator’.

2. The brief facts of the case are as follows.

The ‘Board’ provided two loans to the ‘Corporate Debtor’, namely-

(i) Term Loan of Rs. 5.62 Crores under the Loan Agreement dated 16th December, 1997 for XLPE Project; and

(ii) Term Loan of Rs. 18.46 Crores under Loan Agreement dated 28th July, 1999 for Irradiation Project.

Security /charge were created separately for each of the two Term Loan Agreements. Deed of Hypothecation dated 12th December, 2000 in respect of loan amount of Rs. 18.46 Crores was created.

3. The ‘Corporate Debtor’ defaulted in effecting repayments and approached the ‘Board’ for restructuring the debt. By the ‘Debt Restructuring Agreement’ dated 24th March, 2004, the debt was restructured whereby, inter alia, the principal amount of Irradiation Project Loan of Rs. 18.46 Crores was agreed to be converted to redeemable preference shares as per Clause 4 coupled with firm binding obligation of the ‘Corporate Debtor’ to redeem the shares in three instalments on specified fixed future dates by paying the principal amount and fixed accrued dividend amounts [Clause 4.3].

The accrued unpaid interest relating to the loan of Rs. 18.46 Crores was agreed to be paid after a moratorium of 2 years in 3 equal instalments [Clause 5.2(a)].

4. Clause 3.1(d) of the Debt Restructuring Agreement provides as follows:

“(d) The borrower issuing an undertaking to the Board that it shall continue to observe and be bound by obligations in accordance with the Irradiation Project Loan Agreement and the XLPE Cable Project Loan Agreement to the extent that such obligations have not been modified by the Agreement.”

5. The ‘Supplementary Agreement’ was reached between the parties on 19th January, 2011 whereby dates of redemption of shares and repayments were deferred/rescheduled. ‘Clause 1’ of the ‘Supplementary Agreement’ reads :

“1. This agreement shall form part of and shall be attached to and read with the Loan Agreements dated 16th December 1997 and 28th July 1999, and the Debt Restructuring Agreement dated 24th March 2004.”

6. ‘Clause I’ of the said ‘Supplementary Agreement’ reads as follows:

“I. The Borrower has agreed that in case of default in payment of the loan etc. as rescheduled in the Supplementary Agreement to the Debt Restructuring Agreement as above, this agreement shall be treated as cancelled and the Borrower will be required to pay the entire amount in terms of the Loan Agreement without any remission. The purpose and intent of this provision clearly is that in case of default by the Company of terms thereof, not only will the supplementary agreement relaxing restructuring conditions be treated as cancelled but the Company will also become liable to pay the entire amount due in terms of the Loan Agreement. In other words, in case of default financial obligations of the company will revert back to those provided in the Loan Agreement.”

7. In the aforesaid background the respondent made claim and taken plea that the ‘Corporate Debtor’ defaulted in effecting repayments as rescheduled thereby it became liable to pay in terms of the original Loan Agreement dated 28th July, 1999 without any remission. The Board, is a ‘Fin