Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(Online)(NCLAT) 644

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Barun Mitra (Member (Technical)) , Hon'ble Mr. Arun Baroka (Member (Technical)) ,
Vistra ITCL India Limited Through Ms. Khushboo Kotadia (Authorized Person) & Ors. – Appellant
Versus
IIFL FINANCE LTD & Anr. – Respondent
1592/ND/2023 COMPANY APPEAL(AT)(INS)

Advocates:
Mr. Devashish Chauhan, Mr. Paras Mithal, Mr. Satvik Verma, Sr. Advocate, Ms. Gazal Ghai, Mr. Manas Syal, Mr. Sumesh Dhawan, Mr. Abhirup Dasgupta, Ishaan Duggal, Ms. Ruchi Goyal, Mr. Pulkit Sharma

The Deed of Security did not discharge the Corporate Debtor from its obligations under the financial agreements, affirming the binding nature of the Consent Terms and Amendment Agreement.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 5(8) - Financial Debt - Appeals filed by Financial Creditors against the admission of claims by IIFL Home Finance Ltd. and IIFL Finance Ltd. as Financial Creditors in the Corporate Insolvency Resolution Process of Satra Properties India Ltd. - The Adjudicating Authority allowed the claims based on the Consent Terms and Amendment Agreement, affirming that the Deed of Security did not discharge the Corporate Debtor from its obligations. (Paras 1-50)

(B) Contract Law - Interpretation of Agreements - The court emphasized that it cannot rewrite contracts but must interpret them as per the parties' intentions, reaffirming the binding nature of the Consent Terms and Amendment Agreement. (Paras 10, 47)

Facts of the case:
The Appellants, Financial Creditors of Satra Properties India Ltd., challenged the admission of claims by IIFL Home Finance Ltd. and IIFL Finance Ltd. as Financial Creditors, arguing that a Deed of Security discharged the Corporate Debtor from obligations.

Findings of Court:
The court found that the Deed of Security was additional security and did not discharge the Corporate Debtor from its obligations under the financial documents.

Issues: The main issue was whether the Deed of Security discharged the Corporate Debtor from its obligations under the financial agreements.

Ratio Decidendi: The court ruled that the Deed of Security was merely additional security and did not alter the obligations of the Corporate Debtor, emphasizing the importance of adhering to the original agreements.

Result: Appeals dismissed.

JUDGEMENT

ASHOK BHUSHAN, J. Comp. App. (AT) (Ins.) No. 1590/2023 has been filed by the Appellant who are Financial Creditors of the Corporate Debtor/Satra Properties India Limited (hereinafter referred to as `SPIL’), aggrieved by the order dated 22.11.2023 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench – I) in I.A.1686/2020 in C.P. (IB) No.1632/MB/2019. I.A. No. 1686 of 2020 filed by the Respondent herein, IIFL Home Finance Limited has been allowed and the claim filed by IIFL Home Finance Ltd. in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor has been directed to be admitted as a Financial Debt.

2. Appellants who are the Financial Creditors of the Corporate Debtor aggrieved by the admission of claim of IIFL Home Finance Ltd. as Financial Creditor has come up in this Appeal.

3. Comp. App. (AT) (Ins.) No. 1592/2023 has been filed by Appellant who are Financial Creditor of the Corporate Debtor/Satra Properties India Ltd. 4 of 26 (SPIL) challenging the order dated 05.12.2023 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench – I) in I.A.1687/2020 in C.P. (IB) No. 1632/MB/2019, filed by IIFL Finance Ltd.

4. The Adjudicating Authority by the impugned order allowed the I.A. No. 1687/2020 filed by IIFL Finance Ltd. directing for acceptance of claim of IIFL Finance Ltd. as Financial Creditor of the Corporate Debtor/SPIL. Aggrieved by which order, Comp. App. (AT) (Ins.) No. 1592/2023 has been filed.

5. The facts and issues raised in these two Appeals being similar, both the Appeals have been heard together and are being decided by this common Judgment.

6. It shall be sufficient to refer to Comp. App. (AT) (Ins.) No. 1590/2023, pleadings therein for deciding both the Appeals.

7. Brief facts necessary to be noticed for deciding the Appeals are:

IIHFL granted a loan of ₹20 Crores to the Corporate Debtor/SPIL.

Another loan of ₹5.21 Crores was granted by IIHFL to SPIL on 27.07.2018. ii.

IIFL extended loan facility of ₹60 Crores to SPIL on 17.11.2015 and further additional facility of ₹40 Crores was extended on 29.09.2016 to SPIL.

iii.

The loan facility granted by IIFL and IIFL Home Finance Ltd. being not serviced and both SPDPL and SPIL having failed to comply with the respective obligation under the facility Agreement. IIFL filed C.P. IB No. 175/2019 against SPDPL and C.P. IB No. 176/2019 against SPIL for initiating Insolvency Resolution Process against the Corporate Debtors.

5 of 26 iv.

On 09.09.2019, a Consent Term was entered between IIFL, IIHFL, SPDPL and SPIL, where outstanding amount of the loan facility extended by IIFL and IIHFL was acknowledged Agreement further noticed that SPDPL shall reserve an area of 2,00,000 sq. ft. carpet area of the project known as Satra Hills to be constructed by SPDPL and create a first and exclusive charge by way of registered mortgage in respect of the said area in favour of IIFL and IIHFL as additional security in respect of the loan extended to the Corporate Debtors.

The outstanding amount was to be paid with effect from 01.09.2019, as per the repayment schedule set out in Annexure 1 and Annexure 2 of the Consent Terms.

vi.

On 09.09.2019, an Amendment Agreement was also executed to amend certain terms and conditions of the Facility Agreement, the Additional Facility Agreement and the relevant Security Agreement, to the extent provided therein.

vii.

Amendment Agreement contains acknowledgement by the Corporate Debtors of the outstanding liability which was to be paid with effect from 01.09.2019 as per the repayment schedule. Agreement also provided that parties were at liberty to pursue all recourse and actions available under the applicable laws in the event of non- compliance of the Consent Terms and the Amendment Agreement.

viii.

On 09.09.2019, a Security Release Agreement was also executed which is not relevant for issues raised in the Appeal.

ix.

On 20.03.2020, in furtherance

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