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2024 (4) TMI 539 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LBInitiation of CIRP based on a corporate guarantee provided to a consortium of lenders- Validity of deed of Guarantee - existence of privity of the contract with the Corporate Debtor in relation to the deed of guarantee, or not - authority given by the trusteeship to the Respondents for initiating section 7 application or not - Deed of Guarantee was void under Section 186 of the Companies Act, 2013 or not. Deed of Guarantee - HELD THAT:- The deed of guarantee dated 10.06.2016 to be treated void in view of Section 186 of the Companies Act, 2013 - it is clearly established that both the principal borrower and the Corporate Debtor are family owned group companies which are owned and controlled by the same set of family member - it will be travesty of justice to even consider the arguments of the Appellant to treat the deed of guarantee as void just in order to avoid the financial obligations towards the consortium of lenders. In any case we also observe that at the best the Corporate Debtor was liable for punishment under Section 186 (13) of the Companies Act, 2013 and the Corporate Debtor is not entitled for any illegal enrichment for its own illegal and malafide acting. Lack of privity of contract between the Respondent No. 1 and the Corporate Debtor - HELD THAT:- Clause F of the deed of guarantee specifically provides that "the Security Trustee acting for the benefit of the IDBI Consortium has called upon the Guarantor to execute this Guarantee in favour of the Security Trustee in favour of the Banks." This makes it clear that security trustee was to act for the benefit of IDBI Consortium consisting of all four lenders - when the trust is created for the benefit of the beneficiary parties party, such parties are no more strangers to the contract and can step in shoes, to pursue their legal remedies on their own rights - the corporate guarantor is liable to meet its financial obligations. Initiation of application u/s 7 by guarantor or lender - HELD THAT:- The deed of guarantee and security trust agreement goes hand in hand which primarily provide financial security to the lenders for the credit facilities given to the principal borrower - Thus the lender is entitled to initiate and file application under Section 7 of the Code despite they have been engaged trusteeship. The allegation of the Appellant regarding want of support of other three bankers to the Respondent No. 1 are also found baseless as the proposed intervenors for three other lenders supported the CIRP proceedings of the Corporate Debtor and confirm the same during hearing before us and the same has been mentioned in their intervention applications filed in the present appeal. Thus, the contention of the Appellant on this ground stand rejected. Thus, it become clear that the principal borrower and the Corporate Debtor are group companies which are owned and controlled by the same set of close family members and relatives and the corporate guarantee of Rs. 181.29 Cores was duly given by the Corporate Debtor. Appeal dismissed.
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