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2020 (10) TMI 734 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - unattested Pledge Agreement - the same is being given a new nomenclature as agreement of pledge and guarantee - pre-existing dispute or not - HELD THAT:- Each and every clause points to the clear cut intention of the parties who had entered into a Pledge Agreement thereby pledging the shares of the Corporate Debtor and other Pledgers. None of the clauses of the agreement except clause 5.1(g) referred to above and clause 6.2 (b) referred to above have been referred to by the Financial Creditor. The agreement runs into 20 pages and under different heads it beautifully describes the intention of the parties, assigning the role of the Pledger and the pledged shares. For understanding and interpreting this agreement one would have to go into and understand the circumstances which led to the execution of this agreement. Since the loan agreement between the Borrower and the Financial Creditor had also been entered into on the same date i.e. 27.02.2015 which required security package for the said loan to be submitted by the Borrower to the Financial Creditor. This agreement can be referred to as a hybrid agreement. Though it is in fact an agreement of pledge but, for the convenience of the Financial Creditor the same is repeatedly being referred to by the Financial Creditor in its pleadings as "Agreement of Pledge and Guarantee" without there being any Guarantee explicitly or implicitly. This agreement cannot be interpreted as per the convenience of the Financial Creditor. The role of the Pledgers has been clearly specified from the very beginning and it was very much clear to all the parties including the Borrowers and the Financial Creditors. The Minutes of the Board Meeting submitted to the Financial Creditor by the Borrower specifically in clause 5 mentioned that the Corporate Debtor, and another Pledger shall pledge the number of shares mentioned against their respective names and that Mr. Manoj Kumar Agarwal shall execute Letter of Guarantee received from the Financial Creditor in this connection in favour of the Financial Creditor to secure the dues of the Company. If there had been any intention to include the Pledger Corporate Debtor herein as a Guarantor, a similar guarantee agreement would have been executed from the Corporate Debtor as well. The present application under Section 7 seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, which is only a Pledger of shares, and has not availed any financial benefit from the Financial Creditor and has never signed any document intending to be a Guarantor, cannot be allowed to be proceeded against under Section 7 of the Code - Admission of this petition and initiation of CIRP against the Corporate Debtor shall be the harshest action if allowed to be taken in the foregoing facts and circumstances. The application of the Financial Creditor does not inspire confidence and has failed to convince us as regards fixing any liability on this Corporate Debtor as regards the outstanding dues of the Financial Creditor. Nothing is found due and payable by the corporate debtor to the financial creditor - Petition dismissed.
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