TMI Blog2019 (2) TMI 1827X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the Corporate Debtor as required by the provisions of the agreement. Nor the Financial Creditor's move of discontinuing/withdrawing the credit facility given to the Corporate Debtor, without the consent or directions of the Lead Bank or other members of consortium was in consonance with the terms of the agreement. Hence, prima facie, it appears that the Financial Creditor has committed a breach of contract, therefore, it appears that the Financial Creditor is not entitled to file this petition. IBC nowhere says that irrespective of all the contractual obligations, a financial creditor can file by itself without the knowledge/approval of other financial creditors. Rather, on reading of several clauses of consortium agreement, it is clear that all the members shall act in coherence with each other. In one of the clauses i.e. clause (n) it is provided that if a bank is desiring to opt out of the consortium, or want to reduce its share, has to offer his offer of quitting the consortium to other members of the agreement. In this case, the OBC /Financial Creditor has not exercised this option. While OBC remained a member of consortium, has taken this step which is prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (Hyp), Packing Credit (PC) (Sub Limit of CC), Non- Fund based - Letter of Credit, Guarantee was enhanced vide sanction letter dated 16.10.2011. The sanction letters were renewed from time to time. Third Supplemental Working capital Consortium Agreement dated 27.01.2012 was entered into by the Consortium of Banks and the Corporate Debtor in order to secure Credit facilities granted by the Financial Creditor Oriental Bank of Commerce for an amount of ₹ 34.15 Cr, out of the total credit facility by the Consortium of Banks of ₹ 343.44 Crores. 4. The credit facility given by the Oriental Bank of Commerce was further secured by: i. Third Supplemental Joint Deed of hypo the cation dated 27.01.2012 in favour of the Financial Creditor, ii. Third Supplemental Inter Se Agreement dated 27.01.2012 in favour of the Financial Creditor, iii. Deed of Guarantee dated 27.01.2012 executed by Mr. Kailash Chandra Shahra and Mr. Umesh Shahra in favour of the consortium of Banks including the Financial Creditor, iv. Undertaking/Declaration dated 27.01.2012 of the Borrower in favour of the Consortium of Banks including the Financial Creditor. 5. The above said facilities are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts and stop all further advances or accommodations to the borrower on the relative cash credit accounts/packing credit accounts/other accounts of the borrower with it and notify its intentions in writing either to act jointly in such action with the lead bank or otherwise and in case the other Banks shall agree to jointly in such action then the said banks shall act jointly and in case of failure, neglect or refusal by the other banks to join in any such action, the lead bank taking action shall make the banks so refusing, a defendant/respondent in any action with it may take against the borrower. In case of any of the said banks desire to initiate any action for the enforcement of the said securities against the borrower for the recovery of any monies due to them, the said banks shall provide a notice of such intent to the lead bank. In the event of the lead bank does not within a period of 30 days after the receipt of such notice take steps to the satisfaction of such bank to realise or enforce the said securities and/or to recover the dues of the said banks from the borrower, the said banks shall be at full liberty to enforce all its rights severally and take such procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 05.09.2017 was issued. The Financial creditor argues that the notice to the Lead Bank is not mandatory for filing Section 7 Petition under IBC as the requirement of Section 7 is a financial creditor either by itself or jointly with other financial creditors may file an application . . Reliance has been placed on a principle of law that the clause of an agreement cannot supersede or breach the provision of the statute made by the parliament . Moreover, it is argued that Inter Se Agreement cannot be read with IBC proceedings as IBC proceedings are meant for resolution and not for recovery. Sur-rejoinder by the Corporate Debtor: 9. The Corporate Debtor has further argued through its Sur-rejoinder that the clause of an agreement which is neither void nor repugnant to any provisions of existing and applicable laws is binding on both the parties. The objective of the Financial Creditor is not the Resolution of the Corporate debtor but the recovery of their purported debt. Due to the arbitrary termination of the loan agreement by the Financial Creditor, the Corporate Debtor could not repay. Otherwise, the account of the Corporate Debtor was regular and due to one time defaul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are under an obligation to abide by the same and merely because a move is made under the IBC, does not discharge the parties from a lawful obligation. Section 7 of IBC starts as a financial creditor either by itself or jointly with other financial creditors may file an application . . A joint application under IBC ought to be filed with the consent of all other interested parties. In the present case, the Financial creditor appears to have filed this petition U/s 7 on its own without having consultation or without having approval of rest of the members of the consortium. 13. On consideration of a legal interpretation of the word jointly and on due analysis of terminology used in section 7 that a financial creditor either by itself or jointly with other financial creditors . , has its own significance because of the introduction of word jointly, probably keeping in mind that the banks jointly lend money to the borrower and in that situation, a joint petition is required to be filed by banks. The examples are JLF or Consortium of Banks when in respect of the same assets of debtor company as well as the same business of the company, several banks join hands and collectively gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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