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2020 (10) TMI 445 - Tri - Insolvency and BankruptcyRejection of claim submitted by the applicant as a financial creditor under regulation 18 read with Form-D of the IBBI (Liquidation Process) Regulations, 2016 - condonation of delay in filing present application - HELD THAT:- Because the liquidation proceedings are yet to be finalised in the present case, no prejudice will be caused if the claim of the applicant is adjudicated. Also, section 238A of the I&B Code makes applicable the provisions of Limitation Act, 1963 on this Code, the delay in filing of this application by the applicant deserves condonation. Further, it cannot be said that the requirement of "sufficient cause" is not met out in this case as the applicant was not sleeping over its rights, but was continuously following up with the liquidator for the perusal of its claims and this process caused the delay in filing this application - the delay is condoned. The loan agreements are executed between applicant and the borrower. It is worth to notice that the corporate debtor is not a party to the Loan agreement. It is also noticed that under Master Restructuring JLF Agreement dated 29th June, 2015, the Pledge Agreement dated 2nd August, 2016 was executed, among other things, by Varan Corporation Ltd. in favour of SBICAP Trustee Company Ltd., a security trustee, acting as agent and security trustee for various lenders including for ICICI Bank Ltd. (Applicant). The corporate debtor has not undertaken any counter-indemnity obligation by the said pledge agreement dated 2nd August, 2016 in respect of any guarantee, indemnity, bond, documentary letter of credit or any other instrument given/issued by ICICI Bank. As per liquidator, ICICI Bank has also confirmed that there is no guarantee given by the corporate debtor - The corporate debtor has only given security in the form of a pledge of shares of borrower for the loan facilities granted by the applicant to the borrower. Therefore, it is worth to make a mention that the corporate debtor being not part of the loan agreement but only a facilitator to provide security by pledging the shares cannot be said to be a borrower. The terms of the deed of pledge are quite clear in this regard. Therefore, it can be said that the said security given for the above loan is merely collateral security. In the present case, what is denied by the RP is not the existence of security in the form of pledge of shares towards the debt granted by the applicant to borrower, but the applicant's status as a guarantor/financial creditor of the corporate debtor in the light of section 5(8) of the Code. Hence, being a secured creditor of the corporate debtor, the option to move under section 52(1)(b) of the I&B Code is always open to the applicant for realising the security interest on its own. Thus, liquidator has rightly rejected the claim of the applicant on the ground that the applicant is not a financial creditor of the corporate debtor and the liability of the corporate debtor is restricted to the pledge of shares only which has already been meted with - petition dismissed.
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