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TMI Blog2023 (5) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... w Tribunal), Mumbai Bench, Court No. V admitting Section 7 application filed by the Financial Creditor - Catalyst Trusteeship Ltd. The Appellant, aggrieved by the order, has come up in this Appeal. Brief facts of the case necessary to be noticed for deciding this Appeal are: i. The Corporate Debtor and Altico entered and executed term sheet for a loan amount of Rs.650,00,00,000/- on 11.06.2018. On 21.06.2018, Debenture Trustee Appointment Agreement executed where Vistra ITCL was appointed as the Debenture Trustee. On 26.06.2018, a Debenture Trustee Document was executed between the Corporate Debtor, Promoters and Vistra ITCL under which 390 unlisted, secured, redeemable non-convertible debentures of aggregate value of Rs.390,00,00,000 were issued by the Corporate Debtor. ii. An Assignment Agreement dated 04.03.2021 was issued by Altico in favour of Respondent No.1 - Catalyst Trusteeship Ltd. and other. iii. Vide demand notice dated 13.07.2022, the Debenture Trustee called upon Respondent No.2 - Corporate Debtor to make outstanding payment due to Respondent No.1. The Corporate Debtor failed to make any payment of the outstanding amount. iv. The Corporate Debtor having commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed. Corporate Debtor did not issue any reply to Demand Notice dated 13.07.2022 or the Acceleration and Enforcement Notice dated 26.07.2022. The appointment of Debenture Trustee - Vistra ITCL (India) Ltd. does not detract or in any manner prejudice the rights of the Debenture Holders to take legal action. Clause 9.8 has been relied by learned counsel for the Respondent. Notice of payment default dated 13.07.2022 had been issued by Debenture Trustee on the instructions of Financial Creditors. Hence, the Corporate Debtor cannot raise any grievance regarding the locus standi of the Financial Creditor. The Corporate Debtor has no privity to Inter-Creditor Agreement. Only other creditor is Clearwater Capital Singapore Fund V Pvt. which has already filed its own Section 7 application against the Corporate Debtor. Under Clause 5.6 of the Inter-Creditor Agreement, rights of each Creditor to avail necessary legal proceedings had been preserved. Assignment Agreement dated 04.03.2021 categorically records that all rights, entitlements, and claims of the original Debenture Holder have been transferred to the Assignment Holder. In this Appeal, the Appellant also made statement, on 13.04.2023 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the Respondent No.1 in response to the submission of the Appellant has relied on Para 9.8, according to which the Financial Creditor, the lender which are entitled to take such remedy as are available to the Debenture Holder. Para 9.2 and Para 9.8 are as follows: "9.2 Consequences of Default On and at any time after the occurrence of a Default, in addition to the levy of Default Interest in accordance with Clause 9.5 (Default Interest), the Debenture Trustee may, upon the delivery of 1 (one) Business Day's notice, which notice the Issuer acknowledges herein as being reasonable, take any or all of the following actions: (a) declare that: (i) the Debentures shall automatically and without any further action, become due for redemption at the outstanding Redemption Amount and the accrued Interest; and (ii) all other Secured Obligations under the Debenture Document to be immediately due and payable, whereupon they shall become immediately due and payable; and/or (b) enforce all or any Security; and/or (c) enforce all rights of the Debenture Trustee under the Debenture Documents; and/or (d) invoke the Guarantee; and/or (e) notwithstanding any other provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice certain clauses of Inter-Creditor Agreement dated 26.06.2018 on which also reliance has been placed by learned counsel for the Appellant. The Inter-Creditor Agreement defines 'finance parties' in following words: ""Finance Parties" shall mean collectively: (a) The Debenture Trustees; (b) The Debenture Holders; and (c) Any agent of any Debenture Trustee as may be appointed by the relevant Debenture Trustee from time to time." 9. Inter-Creditor Agreement contemplated 'enforcement action', which is to the following effect: ""Enforcement Action" shall mean any action taken or proposed to be seen by any of the Finance Parties under the Debenture Documents or any other Finance Documents (including. without limitation, the acceleration of any Secured Obligations or the making of any declaration that any of the Secured Obligations are due and payable prior to their stated maturity) or any other action or proceeding taken or proposed to be taken by any of the Finance Parties against all or any of the Obligors, the Projects or all or any part of the Security, pursuant to any of the Finance Documents and this Agreement, for the purpose of: (a) enforcing or exercising all o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judice to the rights of any other Finance Party, subject to such Finance Party giving not less than 5 (five) Business Days' notice of its intention to exercise such rights or remedies, to the other Finance Parties including the Debenture Trustees. Provided however, subject to Section 5.2 (Enforcement), any Finance Party may exercise any rights or remedies it may have in relation to any Other Default upon the expiry of the 5 (five) Business Days' notice only if Majority Creditors have approved of such course of action." 11. Clause 5.1.4 reads 'actions under the finance documents', which is to the following effect: "5.1.4 Actions under the Finance Documents All items/actions which require an approval/instructions from the Majority Creditor as per any of the Debenture Documents shall be undertaken only after the relevant Debenture Trustee receives written instructions from such number of Debenture Holders as are required to qualify as Majority Creditors in accordance with this Agreement." 12. The present is a case where after event of default as per Debenture Trustee Document, Notice of Demand dated 13.07.2022 was issued by the Debenture Trustee himself. Demand Notice ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apore Fund V Pvt. having already initiated action under Section 7, both the creditors are unanimous in taking action against the Corporate Debtor. The submission of the Appellant that there is no majority opinion of the Financial Creditor to take action under Debenture Trust Document against the Corporate Debtor loses its significance. Furthermore, Clause 9.8 begins with the words "Notwithstanding anything to the contrary contained in this Deed....". Clause 9.8, thus has overriding effect which reserves rights in lender to take all action and seek remedy as available. We, thus, do not find any substance in submission of learned counsel for the Appellant that the Financial Creditor was not entitled to issue Acceleration Notice dated 26.07.2022. We do not find any infirmity in the initiating proceeding against the Corporate Debtor under Section 7, there being debt and default undisputed and clearly proved by the fact as noted above. The Financial Creditor stepped in the shoes of the Debenture Holder on the basis of Assignment Deed dated 04.03.2021. In view of the foregoing consideration, we do not find any substance in grounds raised by the Appellant to interfere with the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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