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2023 (4) TMI 448 - AT - Insolvency and BankruptcyAppointment of a debenture trustee - financial creditors or not - Whether the Debenture Holders, namely, the Respondents No. 1 and 2 are Financial Creditors in the light of the provisions of the IBC and the Debenture Trust Deed and Deed of Irrevocable and Unconditional Guarantee? - Whether the Debenture Holders can claim the repayment on account of Event of Default under Section 5(8) of the IBC and the Appellant is a Corporate Debtor under the provisions of the IBC? HELD THAT:- The appointment of a debenture trustee is a requirement of the relevant rules for protecting the interest of the debenture holders - on looking at the definition of Financial Creditor in Section 5(7) of the IBC, which lays down that ‘Financial Creditor’ is a person to whom a ‘financial debt’ is owed and also includes a person to whom such debt has been legally assigned or transferred to. Whether the Debenture Holders can be considered ‘Financial Creditor’ as defined under the IBC? - HELD THAT:- The DTD is entered into between various parties viz. LDRPL (Issuer Company), Mr. Rustom Darius Bharucha, Mr. Zubin Darius Bharucha, Bharucha & Motivala Infrastructure Pvt. Ltd. and PRA Realty (India) Pvt. Ltd. and Vistra ITCL (India) Limited (The Debenture Trustee). Out of these parties, Bharucha & Motivala Infrastructure Pvt. Ltd. and PRA Realty (India) Pvt. Ltd. are the Guarantors and Co-Obligors of the issued NCDs as is laid down in the Debenture Trust Deed. It is clear from clause 3.4 that the Debenture Holders shall pay the amount of subscription for the NCDs and from clause 8.12(a) that all due payments shall be made to the Debenture Holders. Significantly, clause 8.6(d) stipulates that Debenture Holders and the Debenture Trustee shall be entitled to exercise any of their rights as set out in the Transaction Documents and the Security shall be enforceable in the manner set out in the Transaction Documents. Thus the rights as set out in Transaction Documents are separately available for enforcement to the Debenture Holders and Debenture Trustee. Clause 18.1(c) lays down that the rights given to the Debenture Trustee are available to the Debenture Holders for enforcing the Securities. Significantly, the Corporate Debtor is a Co-obligor too, and it undertakes all the obligations that are falling on the Issuer Company of the NCDs. An ‘Event of Default’ notice was first sent by the Debenture Holders on 02.01.2019 and another ‘Event of Default’ notice was sent on 21.02.2019 where after the ‘Demand Certificate’ dated 14.05.2019 was issued by the Debenture Trustee to B & M Infra which was the Respondent No. 3 in the Section 7 petition invoking the Guarantee dated 06.10.2016 and calling upon B & M Infra to pay to the Debenture Holders an amount of Rs. 37,51,64,939/- - in accordance with clause (i) of Section 5(8), B & M Infra is liable to pay the amount claimed as Financial Debt on account of the “Deed of Guarantee” given by it both as a Guarantor and Co-obligor. Therefore, inescapable conclusion is arrived at that B & M Infra (R-3) is the Corporate Debtor with regard to the Section 7 application filed by the R-1 and R-2 as Financial Creditors - the Debenture Holders, namely, Respondents No. 1 and 2 are the Financial Creditors of the Corporate Debtor - B & M Infra in the light of the provisions of the IBC. Further, the issue whether the Debenture Holders can claim repayment with regard to the amount mentioned in the demand certificate as a Financial Debt is squarely answered in Clause 4 of the Deed of Irrevocable and Unconditional Guarantee of which B & M Infra and Vistra ITCL are co-signees since the demand certificate has been issued by the Debenture Trustee on 14.05.2019, a conjoint reading of the Debenture Trust Deed and Deed of Guarantee clearly establishes that the amount claimed in demand certificate is to be paid directly to the Debenture Holders by Respondent No. 3, who is the Corporate Debtor within the provisions of the IBC. The Adjudicating Authority has not committed any error in admitting the section 7 application filed by the respondents - There are no reason to interfere with the Impugned Order - appeal dismissed.
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