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2022 (6) TMI 1317 - Tri - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - enforcement of guarantee by the creditors - Whether the Applicants qualify as a financial creditor in terms of provisions of the Code of the Corporate Debtor? - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor is obliged to reimburse and indemnify the founder promoter (including the Applicants herein) on fulfilment of two conditions, first, enforcement of guarantee and second due to enforcement of such guarantee any loss is suffered by the founder promoters. In an instant matter, Vistra ITCL (India) Ltd. formerly known as IL&FS Trust Company Limited through demand certificate dated 17.03.2018 to the Applicants had demanded to pay an amount of Rs. 9147.88 crore under the Deed of Guarantee/Deed of Personal Guarantee, within 3(three) days. Also, through letter dated 21.03.2018, Vistra ITCL called upon the pledgors of 14,51,04,995 shares (including Applicant in IA 257/2021) to pay an amount of Rs. 9131 crores with interest of Rs. 11.80 crore within 5 days. Neither the Applicants had denied in its rejoinder nor placed any document to establish that the Applicants had made any payment to any of the lenders against whom guarantee has been given under Deed of Guarantee/Deed of personal Guarantee nor the Applicants has placed on record any document showing sale of equity shares pledged with the lenders. Thus, it is established that the Applicants had not suffered any loss due to enforcement of guarantee by the creditors since 2018. It is a settled law that liability of surety is co-extensive with that of the principal debtor. In case the creditor enforces its right against the guarantor and the guarantor disburses due amount to the creditor, such disbursement, amounts to repayment of loan on behalf of the principal debtor and the guarantor steps into the shoes of the creditor - if there is no encashment of debt on account of enforcement of guarantee, it cannot be said that there is disbursement of debt to the Corporate Debtor, which is an essential condition to fall under the definition of financial debt. As in the instant case there is neither encashment nor sale of pledged shares. Thus, there is no disbursement of debt by the Applicants to the Corporate Debtor to fall under the category to have created any financial debt - Applicants do not qualify as financial creditors of the Corporate Debtor in terms of provisions of the Code. The claim of the Applicants do not fall under the definition of financial debt - appeal rejected.
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