TMI Blog2023 (5) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present case, there is no dispute that event of default took place. After looking into the different clauses of the Debenture Trust Document and Inter-Creditor Agreement, it is clear that the Financial Creditor was fully entitled to issue Acceleration Notice issued on 26.07.2022. The Debenture Trustee having already issued Notice of Demand on 13.07.2022, the argument of the Appellant that action has to be taken by Debenture Trustee loses its significance - there are 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. There are no substance in grounds raised by the Appellant to interfere with the impugned order - appeal dismissed. - Company Appeal (AT) (Insolvency) No. 448 of 2023 - - - Dated:- 23-5-2023 - [Justice Ashok Bhushan] Chairperson And [Barun Mitra] Memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vii. The Adjudicating Authority vide order dated 21.03.2023 admitted Section 7 application. Aggrieved by which order, this Appeal has been filed. 2. We have heard learned counsel for the Appellant as well as learned counsel appearing for the Respondent No.1. 3. Learned counsel for the Appellant challenging the order passed by the Adjudicating Authority submits that application filed by Respondent No.1, Catalyst Trusteeship Limited under Section 7 was not maintainable and the application, if any, could have been filed only by the Debenture Trustee. Under the Debenture Trustee Document as well as the Enforcement Notice, proceedings against the Corporate Debtor can be initiated only by the Debenture Trustee. The Respondent No.1 in its reply suppressed various vital documents. The Debenture Trustee Document read with Inter-Creditor Agreement clearly provides that it is only the Debenture Trustee i.e. Vistra ITCL who is legally entitled to take any action or declare default against the Corporate Debtor either by itself or jointly with the Debenture Holder. The Respondent No.1 has invoked Enforcement Notice dated 26.07.2022 which notice is contrary to the terms of the Inter-Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed: ORDER 13.04.2023: Learned Counsel for the Appellant submits that after admission of the Section 7 Application, a substantial offer has been given earlier in January, 2023 and Appellant proposes to give a fresh offer to the Respondent No. 1 for Settlement. He prays for three weeks time to do the needful. 2. Let the Appellant give a substantial offer as submitted above within one week from today. List this Appeal on 04th May, 2023. We make it clear that in event of no settlement is made, the Appeal shall be heard on merit. 3. Issue notice to the Respondents through Speed Post as well as Email. Requisites along with process fee, if not filed, be filed within two days. Reply Affidavits may be filed within two weeks. In the meantime, in pursuance of the Order impugned, Committee of Creditors shall not be constituted. 7. After the aforesaid date, the Appellant neither submitted any proposal nor took any steps. The present is a case where in the reply filed before the Adjudicating Authority, the Corporate Debtor did not dispute the debt and default. In the reply filed by the Corporate Debtor, it was mentioned that due to COVID-19 there was standstill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly paid-up equity shares of the Issuer in accordance with Clause 9.7 (Conversion of outstanding debentures into shares) below and the Issuer shall forthwith take all necessary action to ensure that such conversion is in compliance with the Applicable Law; and/or (h) stipulate such other conditions or amend any terms of the Transaction Documents as the Debenture Trustee considers necessary, and/or (i) appoint such number of Nominee Director(s) as deemed necessary on the board of directors of any Obligor, at the Debenture Trustee's sole and absolute discretion; and/or (j) the Debenture Trustee may (but shall not be obliged to), at its sole discretion and option enter into, on behalf of the Obligors such third party arrangements with such parties as the Debenture Trustee deems fit, for the purposes including but not limited to: (i) completing the construction and development of the Projects; (ii) sale/disposal of units or plots in the Projects; or (iii) any other measures to ensure the servicing and repayment of the Secured Obligations. and/or (k) exercise such other rights as may be available to the Debenture Trustee and/or the Debenture Holders under the Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiated under or pursuant to any Applicable Law, any action to appoint a receiver or liquidator and any action to exercise any rights provided in the Debenture Documents or any other Finance Documents; (b) enforcing or exercising any right all or any of the rights or remedies of any Finance Party under or in respect of the Security created under the Finance Documents upon initiation or commencement of any insolvency process or proceeding (howsoever described) under any applicable law (including the Insolvency and Bankruptcy Code, 2016) in respect of any Obligor. exercising any right of set-off (c) combination of accounts or payment netting against any Obligor in respect of any Secured Obligations; and/or (d) adjudicating or seeking a judgment on a claim in respect of any Secured Obligations. 10. Inter-Creditor Agreement Clause 5.1.3 provides for consequences of events of default , which is to the following effect: 5.1.3 Consequences of Events of Default (a) Fundamental Default In the event that a Fundamental Default has occurred, any Finance Party may, subject to the provisions of Section 52 (Enforcement), exercise sy rights or remedies in rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structions of the Financial Creditor regarding default of approx. Rs.215 Crore, due to above, the Corporate Debtor cannot have any grievance regarding locus standi of the Financial Creditor and the Acceleration and Enforcement Notice was also not replied by the Corporate Debtor raising any grievance. 13. It is further submitted by learned counsel for the Respondent No.1 that only other creditor of the Corporate Debtor is Clearwater Capital Singapore Fund V Pvt. which has already initiated its own proceeding under Section 7 against the Corporate Debtor and also filed an Intervention Application. Learned counsel for the Respondent No.1 has also referred to Clause 5.6 of the Inter-Creditor Agreement, which is to the following effect: 5.6 Suits against Issuers Subject to the provisions of this Agreement, all or any one of the Finance Parties shall be entitled to bring a suit or other legal proceeding, or take or to instruct the Debenture Trustee(s) to take any steps for enforcement of the Security created in its or their respective favour or otherwise for realisation of its respective Security Interests created under the Debenture Documents or in respect of the Secured Obl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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