CIRP initiation necessitates proof of financial debt and default; defenses against claims based on inter-creditor agreements are ineffective under statutory law.

ORDER

1. This application, filed by State Bank of India, the Financial Creditor, seeks initiation of the Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), against M/s TN (DK) Expressways Limited, the Corporate Debtor for the alleged default in repayment of debt of Rs. 138,27,79,560.97/- as on 31.03.2023 and the date of default as per part IV of the Petition was 31.12.2018.

Application

2. The Corporate Debtor was incorporated under the Companies Act, 1956 on 31.01.2006, as a Special Purpose Vehicle for undertaking the Design, Construction, Development, Finance, Operation and Maintenance of National Highway No. 7 from KM 305.600 (End of Karur Bypass) to KM 373.275 (Start of Proposed Flyover at Dindigul Bypass), covering 68.125 Kms, and the Improvement, Operation and Maintenance of KM 292.600 (Start of Karur Bypass) to KM 305.600 (End of Karur Bypass), covering 9.600 Kms, in the State of Tamil Nadu on a Build, Operate and Transfer basis.

3. The project was awarded by the National Highway Authority of India (NHAI) pursuant to a Concession Agreement, IA No. 363 of 2006 in CP No 112 of 2023 Application page 11 dated 20.04.2006, executed between the Corporate Debtor and NHAI. As per the terms of the said Agreement, the concession period was fixed at 20 years, including a construction period of 30 months, upon expiry of which the entire facility was to be handed back to NHAI.

4. For the purposes of implementing the project, the Corporate Debtor approached a consortium of lenders for financial assistance. The lenders included the Financial Creditor herein, along with State Bank of Hyderabad, State Bank of Mysore, and State Bank of Saurashtra (each of which later merged with the Financial Creditor), as well as Bank of Maharashtra, Vijaya Bank and Andhra Bank.

5. A Common Loan Agreement (CLA) dated 11.10.2006 was executed between the Corporate Debtor and the consortium of lenders, under which Rupee Term Loans aggregating to Rs. 224 Crores were sanctioned. Out of the total sanctioned amount, the Financial Creditor and its merged entities disbursed an aggregate sum of Rs. 190 Crores.

6. The Corporate Debtor executed various security documents, including Lenders Agent Agreement, Agreement for pledge of shares, Undertaking for overrun/ shortfall by Madhucon Projects Limited and SREI Infrastructure Private Limited and Indenture of Mortgage in favour of the Financial Creditor and other consortium lenders to secure the repayment of the loan and credit facilities.

7. As per the terms of the CLA, the Corporate Debtor agreed to repay the loan in quarterly instalments commencing from 30.09.2009 until 31.03.2019. However, due to various operational and financial difficulties, the Corporate Debtor approached the lenders for restructuring of the debt.

8. The Financial Creditor, vide its sanction letter dated 28.03.2013, approved the restructuring of the debt, including sanction of a Funded Interest Term Loan (FITL) of Rs. 3.10 Crores out of a total of Rs. 5.81 Crores approved by all lenders. In accordance with the said restructuring, a Master Restructuring Agreement, In application at page 311 (MRA) dated 30.03.2013 was executed by the Corporate Debtor, lenders including the Financial Creditor, and the Security Trustee.

9. Under the MRA, the Corporate Debtor agreed to repay the restructured debt in 40 quarterly instalments between 31.03.2013 and 31.03.2023. The FITL component was agreed to be repaid in 16 quarterly instalments starting from 31.03.2014.

10. In support of the restructured debt, the