TMI Blog2020 (10) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. 27.02.2015 which required security package for the said loan to be submitted by the Borrower to the Financial Creditor. This agreement can be referred to as a hybrid agreement. Though it is in fact an agreement of pledge but, for the convenience of the Financial Creditor the same is repeatedly being referred to by the Financial Creditor in its pleadings as Agreement of Pledge and Guarantee without there being any Guarantee explicitly or implicitly. This agreement cannot be interpreted as per the convenience of the Financial Creditor. The role of the Pledgers has been clearly specified from the very beginning and it was very much clear to all the parties including the Borrowers and the Financial Creditors. The Minutes of the Board Meeting submitted to the Financial Creditor by the Borrower specifically in clause 5 mentioned that the Corporate Debtor, and another Pledger shall pledge the number of shares mentioned against their respective names and that Mr. Manoj Kumar Agarwal shall execute Letter of Guarantee received from the Financial Creditor in this connection in favour of the Financial Creditor to secure the dues of the Company. If there had been any intention to inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Creditor has proposed the name of Mr. Bimal Kanti Choudhury, a Chartered Accountant to be appointed as the Interim Resolution Professional in case the application is to be admitted. Mr. Choudhury vide his letter dated 13th March, 2019 has given his consent to act as such. 4. The brief facts leading to the filing of the present application are that the Financial Creditor had agreed to extend a Term Loan Facility of up to ₹ 30,00,00,000/- (Rupees Thirty Crore Only) towards Working Capital Requirements/General Corporate Purposes to Adhunik Meghalaya Steels Private Limited (the 'Borrower'), vide Loan Agreement dated February, 27, 2015 and a sum of ₹ 24,44,44,456/- (Rupees Twenty Four Crore Forty Four Lakh Forty Four Thousand Four Hundred Fifty Six Only) was disbursed to the Borrower on 17th March, 2015. Thereafter, an UNATTESTED PLEDGE AGREEMENT dated 27th February, 2015 was entered into between the Financial Creditor and the Borrower, the Corporate Debtor and one Sungrowth Share Stocks Limited, hereinafter referred as the 'Pledgor-1', Pledger-II and Pledger-III respectively, whereby the Pledgers including the Corporate Debtor pledged certain shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, Corporate Debtor and Sungrowth Shares Stocks Limited is also mentioned therein which would alone show that no guarantee had been given by the Corporate Debtor for the debts of the Borrower. 9. It is further submitted in the reply affidavit that the Financial Creditor had required a Board Resolution to be provided by the Corporate Debtor wherein the Corporate Debtor would agree to pledge its shares and in terms of the said Board Resolution, the Corporate Debtor executed the pledge agreement and there is no Board Resolution which authorised the Corporate Debtor to execute a guarantee document. It is submitted that the sanction letter dated 19th February, 2015 also clearly lists the nature of security and surety to be provided. The Corporate Debtor was not required to give a guarantee. 10. The minutes of the Board Meeting of the Borrower dated 19th February, 2015 also do not record that the guarantee would have to be provided by the Corporate Debtor. It is submitted that the Financial Creditor has invoked the pledged shares owned by the Corporate Debtor and pledged in favour of the Financial Creditor exclusively. It is, therefore, evident from these documents that the Pled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l further referred to clause 6.2(b), which is reproduced as under:- 6.2(b): Sale of Pledged Securities: IFIN shall be entitled (but not bound) to sell or otherwise dispose of, in any manner all or any of the Pledged Securities, at the risk and expense of the Borrower/Pledgor(s), by public auction or private contract in such manner and upon such terms and subject to such conditions as IFIN may think fit, without obtaining consent of the Borrower/Pledgor(s) but after giving written notice of not less than 7 days to the Borrower/Pledgor(s). However, on the happening of an Event of Default on account of failure on the part of the Borrower/Pledgor(s) to maintain the margin on the Pledged Securities. IFIN shall give a written notice of 2(Two) working/trading days to the Borrower/Pledgor(s), within which period the margin has to be restored, failing which IFIN shall be entitled to sell or otherwise dispose of or enforce the Pledged Securities without any further notice to the Borrower and/or the Pledgor(s) and the Borrower and the Pledgor(s) hereby consent to such notice. The powers conferred on IFIN pursuant to the Power of Attorney executed by the Pledgor(s) in their favour, shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hereto shall deem to be an integral part of this Agreement and the stipulations thereunder shall be binding and effective on the parties. In case of any difference between the terms stipulated in the Annexure and the provisions of this Agreement the terms stipulated in the Annexure shall prevail . She further referred to Annexure 'J' of the agreement, which is a letter dated 19th February, 2015 by the Financial Creditor to the principal borrower, which is reproduced as under:- Adhunik Meghalaya Steels Private Limited 14 NS Road Kolkata 700001 Kind attn.: Manoj Agarwal Dear Sir, Re: Term Loan Facility of up to ₹ 300 million With reference to the above, we are pleased to attach herewith the offer for providing Term Loan Facility of up to ₹ 300,000,000/- (Rupees Three Hundred Million Only) to Adhunik Meghalaya Steels Private Limited. The principal terms and conditions of the Facility are enclosed in the Annexure. Kindly note that this is in the nature of an in-principle commitment and is subject to the approval of our Committee of Directors and is not to be construed as a financial obligation of whatsoever nature on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Principal Borrower submitted to the Financial Creditor. The relevant extract thereof would be useful for understanding the nature of the agreement:- FURTHER THAT in connection with the Borrower's dues with respect to the Facility from IFIN the Company do pledge and do request Mahananda Suppliers Limited and Sungrowth Share Stocks Limited to pledge the following shares in favour of IFIN as security for the Facility: Name of the holder/owner Name of the Company Number of Securities pledged face value of the Securities Client ID/Depository ID No. Mahananda Suppliers Limited Adhunik Metaliks Limited 2,143,485 ₹ 10/- 10040714/IN302978 Adhunik Meghalaya Adhunik Metaliks Limited 8,10,804 ₹ 10/- 10309029/IN302978 Steels Private Limited Sungrowth Share and Stocks Limited Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgor providing first charge of equity shares of Adhunik Metaliks Limited (AML), as mentioned in point 14 of this form for credit facilities of ₹ 30 crores availed by Adhunik Meghalaya Steels Private Limited and in column 14, short particulars of the property or assets charges, it is written Pledge of 2143485 equity shares of Adhunik Metaliks Limited for credit facilities of ₹ 30 crores availed by M/s. Adhunik Meghalaya Steels Private Limited. It is submitted that this form has been digitally signed by the Director of the charge holder i.e. the Financial Creditor as well. Therefore, according to the Ld. Counsel it was unambiguously clear to the parties that the Corporate Debtor is pledging only the shares mentioned in the said form and in no way stood as guarantor or surety for the borrower. 25. Ld. Counsel for the Corporate Debtor has submitted that the intention of the parties in providing the pledge agreement clearly depicts that it was only the Pledge Agreement, thereby pledging the shares of the Corporate Debtor like the other Pledgers limiting its liability to the extent of value of shares which have already been invoked by the Financial Creditor. 26. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited (MA 223/2018), IFCI Limited (MA 199/2018), Standard Chartered Bank Ltd. (MA 261/2018) vs. Mr. Sumit Binani vs. State Bank of India vs. Monnet Ispat Energy Limited dated 05.06.2018, the relevant extracts thereof is as under:- On perusal of the facts of the application, it appears that the Corporate Debtor herein gave a Letter of Comfort to the applicant herein stating that sponsor (Corporate Debtor) shall ensure that the borrower repays the facility along with all interest, liquidated damages, front end fee, etc. and in the event of the fund of the borrower being insufficient to meet any debt obligations, the sponsor shall make funds available to the borrower (Monnet Power) to ensure payment by the borrower to the lender on the stipulated date and on the debt obligations under the Facility Agreement by further saying that in the event the borrower defaults in any of its obligations to the lender, the Corporate Debtor shall make good to the lender any loss, damages, expenses or other costs as may accrue to the lender as a result thereof, and the sponsor shall immediately either make available funds to the borrower in order that the borrower is able to meet its commitme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecifically mentioned that in the event of any dip in the market of shares by which top up as stipulated above is triggered, it would be necessary for the Borrower to arrange pledge of additional shares of AML from the pledgers in favour of Lender as top up for the short fall in the drawing power within 5 trading days from the date of such short fall. In the event top up by way of pledge of additional shares of AMIL cannot be provided, top up by way of cash/cash collateral to be provided within a time frame, in addition to this personal guarantee of Mr. Manoj Kumar Agarwal. 32. From the pleadings of the parties, documents placed on record and the arguments advanced, we are of the considered view that this agreement can be referred to as a hybrid agreement. Though it is in fact an agreement of pledge but, for the convenience of the Financial Creditor the same is repeatedly being referred to by the Financial Creditor in its pleadings as Agreement of Pledge and Guarantee without there being any Guarantee explicitly or implicitly. This agreement cannot be interpreted as per the convenience of the Financial Creditor. The role of the Pledgers has been clearly specified from the very ..... X X X X Extracts X X X X X X X X Extracts X X X X
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