TMI Blog2020 (9) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... ter-creditor Agreement and Trust and Retention Account and also No Objection Certificate given by the applicant. It is not a dispute between the applicant and the corporate debtor. The documents, to which the applicant is a party would go to establish that the amount in Trust and Retention Account to be applied at the first instance to the priority lender. When such is the case and applicant being a party to the said agreements, namely, Inter-creditor Account Agreement and Trust and Retention Agreement, then the relief sought by the applicant cannot be granted in favour of the applicant. There is no dispute that the applicant is also a party to the said agreements. Then the same are binding on the applicant and the applicant cannot be permitted to seek relief against the terms of the agreements - application dismissed. - IA No. 116 of 2020 in CP (IB) No. 43/7/HDB/2020 - - - Dated:- 25-2-2020 - Ratakonda Murali , Member ( J ) and Narender Kumar Bhola , Member ( T ) For the Appellant : Kiran Kumar K For the Respondent : Duwa Pavan Kumar , Advocates ORDER Ratakonda Murali , Member ( J ) 1, This Application is filed under Rule 11 of National Company Law Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.04.2016 (iv) Fourth Facility Agreement dated 21.07.2017 (v) Working capital consortium agreement 3.2 It is further submitted that under these facility agreements, the Corporate Debtor undertook, inter-alia not to sell or dispose of any of its assets or part thereof by executing unattested Deed of Hypothecation dated 21.07.2017 in favour of IDBI Trusteeship Services Limited (Respondent No. 17) and granted first ranking charge over the assets of the Corporate Debtor. 3.3 When the Corporate Debtor failed to make payments in terms of repayment schedules stipulated in the Facility Agreements as mentioned aforesaid, despite issuing a recall notice dated 17.12.2019 demanding payment of outstanding amount of ₹ 442,20,14,321.40 along with unpaid interest reckoned up to 30.11.2019, the Company Petition bearing CP (IB) No. 43/7/HDB/2020 was filed under Section 7 of Insolvency Bankruptcy Code, 2016 by the Applicant who is the Petitioner / Financial Creditor in the main petition on 20.12.2019 seeking initiation of Corporate Insolvency Resolution Process against GVK power (Goindwal Sahib) Limited, which is pending adjudication on the file of this Tribunal. 3.4 It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor including Applicant herein. It is contended, no debt is payable to the Applicant till the Priority Lender has been repaid in full and that Applicant should be estopped from doing so, lest it will affect adversely the rights and interests of the priority lenders. It is further contended if the Applicant's claim was to be paid without payment to Bondholder, it would be violating the terms of Inter-creditor Agreement and Trust and Retention Accounts the reason being Applicant is a signatory to Inter-creditor Agreement. Specific reference is drawn to the obligations undertaken by the Corporate Debtor in Clauses 5.6, 24.3(a), 24.34 (b) and 24.23 of the Debenture Trust Deed. 4.2 The other objection raised by Respondent No. 3 is that this Tribunal lacks jurisdiction to entertain the present Application as the issues involved in the Application pertains to the rights and obligations inter-se between the lenders of the Corporate Debtor. It is submitted, even assuming the petition filed by Applicant is maintainable or is admitted but the said Trust and Retention Accounts held by the Account Bank neither constitute Corporate Debtor's property nor would be available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistent with the terms of Inter-creditor Agreement, even in case the Corporate Debtor goes for liquidation or insolvency proceedings. 4.8 It is further contended that Applicant has given No-objection Certificate dated 30.03.2017 for grant of priority facility by way of Bonds by the priority lender and security interest on all the bank accounts of the Corporate Debtor. It is alleged by way of this Application, the Applicant is making malafide attempt to renege on its obligation to refrain from taking any action which is contrary to the priority facility and the priority rights of the Priority Lender. 4.9 It is contended, the Applicant being Existing Creditor is restricted from taking any action under Restricted Action which has been defined in the Inter-creditor Agreement. It is further alleged that by filing the present Application, the Applicant is attempting to change the undisputed position of Priority Lender under Debenture Trust Deed, Inter-creditor Agreement and Trust and Retention Account. 4.10 It is submitted in view of non-waiver of Events of Default under the Debenture Trust Deed, the Bondholder has accelerated the Bonds and all payments under the said Bonds ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king interim order of status quo as regards money lying in the Trust and Retention Account maintained with respondent No. 2/ IDBI Limited. 9. The apprehension of the Applicant is that the money lying in Trust and Retention Account will be released to other creditors under the instructions of respondent No. 3 in which event the applicant as well as other creditors will be put to serious inconvenience or loss. The contention of the applicant is that the money is to be distributed to all the creditors in the event CIRP is triggered against the corporate debtor. The money lying in Trust and Retention Accounts belongs to the corporate debtor. As such all the lenders are having equal interest including the applicant. The apprehension voiced by the applicant is that at the instance of Respondents No. 16 and 17, money lying in Trust and Retention Account to the tune of ₹ 217 crores (approximately) will be released to certain lenders. If it is allowed to do so, it will have adverse effect on the applicant and other lenders. Therefore, an interim order is sought to maintain status quo as regards the amount lying in Trust and Retention Accounts with respondent No. 2-Bank. The content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the Trust and Retention Account Agreement and the account bank to ensure the priority lender to be paid in priority from the moneys credited into all the accounts of the corporate debtor. Thus, the learned counsel contended that the amount due to the priority lender is to be paid from out of the amounts credited to the account of the corporate debtor. Thus, the priority lender stands on a higher footing than the existing creditors including the applicant. The learned counsel contended that the applicant by way of this application is seeking relief contrary to the terms of Inter-creditor Agreement and Trust and Retention Account. The moneys deposited into the account are held in Trust as per the Trust and Retention Account, which is shown as Exhibit-B. The contention of the learned counsel is that no amount is payable to the applicant till discharge of debt due to the priority lender. The applicant is not entitled for payment until the priority lender is paid in full. The learned counsel contended that the applicant is a party to the Inter-creditor Agreement, who explicitly agreed not to take any steps or actions which are inconsistent with the terms of Inter-creditor Agreement. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Priority in prepayment : Any prepayment or any accelerated repayment to any existing creditor will be made only after the priority facility has been repaid in full. Thus, the learned counsel heavily relied on the consent given by the applicant as per the Inter-creditor Agreement recognising the rights of the priority lender and now the applicant cannot seek a relief which is in contravention of the terms of the Inter-creditor Agreement. The learned counsel also relied on the relevant clauses of the Inter-creditor Agreement. Clauses 3.2 and 3.7 are reproduced hereunder: With respect to the foregoing and whether or not an event of default is continuing, until the Account Bank is notified otherwise by the priority lenders, the Account Bank shall not act to any contrary instruction from any party. Each creditor and Administrative Party agrees that all Cash flow or proceeds in connection with the borrower or its assets will be credited only into the relevant accounts (including the new accounts to be set up as mentioned above) and proceeds thereof shall be utilised in the order of priority as set out in this Agreement. 3.7 Actions in Insolvency. The parties hereby agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjection Certificate are all binding on the applicant. Therefore, the applicant cannot seek any relief in respect of the amount lying in the Trust and Retention Account to be applied to the priority lender. 14. It is true that the present application is filed by the applicant before admission of his application filed under section 7 of I B Code against the corporate debtor. The applicant is seeking interim order with regard to the amount lying in the Trust and Retention Account maintained in respondent No. 2-Bank. The only grievance of the applicant is that money is to be applied to all the creditors, if petition under section 7 of the I B Code is admitted. IRP/ RP will take control of the amount lying in the account and the same forms asset of the corporate debtor. The applicant is seeking a direction to maintain status quo in respect of the money lying in the Trust and Retention Account. 15. The learned counsel for respondent No. 3 has drawn attention to various documents, particularly, Inter-creditor Agreement and Trust and Retention Account and also No Objection Certificate given by the applicant. It is not a dispute between the applicant and the corporate debtor. The doc ..... 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