TMI Blog2021 (11) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... debentures. It is clear that the English mortgage is created in favour of the debenture trustee for the benefit of debenture holders and therefore, the title, ownership possession, interest, benefits, claim and demand including and lease hold rights or for the mortgaged units were transferred to the debenture trustee absolutely - in terms of the debenture trustee-cum-mortgage deed, it is clear that the title of the mortgaged properties is transferred to the debenture trustee absolutely and upon the satisfaction of the secured obligations the debenture trustee shall reconvey that the property to the corporate debtor the clause of reconveyance. Upon perusal of the debenture trustee deed-cum-indenture of mortgage dated January 10, 2018 it is clear that the events of defaults envisage the realization of security upon happening events of defaults as a mechanism defined under the agreement in the particular manner, wherein he has power to sale the property, upon to receiver and make application to the court permanent receiver under clause 32. It also envisages a provision at clause 35.5, wherein it is agreed between the parties that the debenture holders and debenture trustee can t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor as on the debt and default on December 31, 2019. The particulars of principal amount and interest in default is as follows : Sl. No. Particulars Amount (Rs.) 1. Principal amount 25,00,00,000 2. Interest due at 16.5% P. A. 2,76,88,356 3. Default interest at 36% P. A. 4,31,88,093 Total amount due 32,08,76,450 5. The corporate debtor issued series A and series B debenture amount of ₹ 25,00,00,000 in offer past for the list of documents attached to the application are as follows : (a) Offer in pass-4 for issue of series A and series B debentures amounting to ₹ 25,00,00,000. (b) The allotment of series A and series B debentures amounting to ₹ 25,00,00,000 in pass-3. (c) Copy of debenture trust deed between financial creditor and corporate debtor. (d) The corporate debtor registered the secured charge with MCA in CHG-9 on Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understanding with respect to the debentures including the consequences of default and in redemption of debentures. The debenture trust deed-cum-indenture of mortgage is a complete understanding between the parties with sets out events of defaults at clause 17 events to reach is as follows : 17.1 : Event of default An event of default shell means the occurrence and continuance of any of the events as specified in the Schedule 7 (events of default) hereto (each an 'event of default'), weather voluntary or voluntary or resulting from the operation of law of otherwise subject to the applicable cure period, with each event being determined by the debenture trustee at its sole and absolute discretion. 17.2 : Remedies 17.2.1 The security created hereunder or any other transaction document in favour of the debenture trustee shall become enforceable by the debenture trustee upon the occurrence of an even of default. 17.2.2 In an event of default has occurred subject to the applicable to cure period, the debenture trustee may, without prejudice to any other rights it may have under applicable law : (a) To cause the promoter(s) to purchase the debentu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuting sale agreements in respect of thereof in favour of the debenture holders' ; (i) Enter into and take possession of the mortgaged properties in these presents and after the taking of such action the issuer and/or any security providers shall take no action inconsistent with or pre judicial to the rights of debenture trustee quietly to possess, use and enjoy the same and receive the income, profits and benefits thereof without interruption or hindrance by the issuer and/or the security providers or any person or persons whomsoever, and upon the taking of such action the debenture trustee shall be freed and discharged from or otherwise the issuer well and efficiently saved and kept harmless and indemnified of, from and against all former and other estates, titles, claims, demands and encumbrances whatsoever, unless caused by gross negligence and wilful misconduct of the debenture trustee, provided that debenture trustee may at any time afterwards give a possession of the mortgaged properties or any part or parts thereof to the issuer and/or any other security prover either unconditionally or upon such terms and conditions as they may be specified in such resolution or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to claim default as contemplated under the provisions of the IBC. In the event, after enforcing the security, if any amount is still due the corporate debtor, then it can be said it is default of receiving amount. However, until completion of process as contemplated in the debenture trust deed, the corporate debtor cannot be said to have committed default. 13. The corporate debtor further objected that the financial creditor cannot exceed authority under the debenture trust deed and that the trustee is liable to act, as per the provisions of clause 17.2 read with clause 19. A plain reading of debenture trust deed indicates that the financial creditor has recourse to the mortgage and in case of default and to recover the amount due and payable to the debenture holders. Rejoinder by the petitioner 14. The petitioner denied that the petition is not maintainable due to the authority of financial creditor is a feeble defense, as per the debenture of trust deed-cum-indenture of mortgage, it was agreed between the parties that the debenture trustee will have right to bring action against the defaulting party. 15. Clause 17.2.3 of read clauses to the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. In as per clause 13, it is clear that the English mortgage is created in favour of the debenture trustee for the benefit of debenture holders and therefore, the title, ownership possession, interest, benefits, claim and demand including and lease hold rights or for the mortgaged units were transferred to the debenture trustee absolutely. 21. The debenture trust deed-cum-indenture of mortgage, further envisages right to cause sale of certain mortgage property at clause 16.4 is as follows : The security providers agree and undertake that commencing from the occurrence of an event of default till the final settlement debt, if the business of the security providers is being carried out in a manner prejudicial to the interest of the debenture holders and/or the security interest in any manner as determined at the sole discretion of the debenture trustee, after giving a prior written notice as may be required under the applicable law to the issuer the debenture trustee (acting on the instructions of the majority debenture holders) shall have the right to cause the security providers to sell in whole or in part or in whatsoever manner determined at the sole discretion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trustee agrees and undertakes to execute all such deeds and documents that may be required for the purposes of the aforementioned release reconveyance and reassignment onto the issuer of the mortgaged property at the cast of the issuer. 22.2 The reconveyance and reassignment on the performance as stated hereinabove of the conveyance and other deeds, documents and writings in case of the mortgage property in exercise of the power of the sale herein contained or transfer of mortgage or other assurance required to be created by the debenture trustee acting for the benefit of the debenture holders shall if executed by any of the duly and validly authorized officers of the debenture trustee be deemed as good and effectual as if the same had been executed by the debenture trustee acting for the benefit of the debenture holders. 25. Further upon perusal of the debenture trustee deed-cum-indenture of mortgage dated January 10, 2018 it is clear that the events of defaults envisage the realization of security upon happening events of defaults as a mechanism defined under the agreement in the particular manner, wherein he has power to sale the property, upon to receiver and make ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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