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TMI Blog2022 (7) TMI 1492X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. In brief, the Appellant/Applicant 'IL & FS Financial Services Limited' (Financial Creditor) entered into a Loan Agreement on 27.02.2015 to extend a Term Loan Facility of up to Rs. 30,00,00,000/- towards Working Capital Requirements/General Corporate Purposes to Adhunik Meghalaya Steels Private Limited (the 'Borrower') and in pursuance thereof a sum of Rs. 24,44,44,456/- was disbursed to the Borrower on 17.03.2015. A Security Package was provided in the terms and conditions which read as under:- "15. Security : 1. Primary Security The Facility together with all amounts due and payable in terms of the Facility documents shall be secured by: (a) Pledge of shares of Adhunik Metaliks Limited (AML) at a cover of 2x margin i.e. 50%. The said shares to be de-materialized, unencumbered, freely transfereeable (without any lock in stipulations specified by the Securities and Exchange Board of India) The Borrower shall ensure that the necessary filing is made with the ROC in relation to the aforesaid security. The Borrower shall submit the necessary documents evidencing such filings with the Lender within 30 days from the date of creation of aforesaid security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited 2,000,000 Rs. 10/- 10040714/IN 302978 Mahananda Suppliers Limited Adhunik Meghalaya Steels Private Limited 143,485 Rs. 10/- 10040714/IN 302978 Adhunik Meghalaya Steels Private Limited Adhunik Meghalaya Steels Private Limited 810,804 Rs. 10/- 10309029/IN 302978 Total 25,217,391 4. Insofar as the default and remedies are concerned, Para 8.2 of the Facility Agreement deals with it which is reproduced as under:- "8.2 Remedies If one or more of the Events of Defaults shall have happened for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by the operation of law or pursuant to or in compliance with any judgment, decree, or order of any court, tribunal or other authority) then notwithstanding any other right available to IFIN under this Agreement or under any law for the time being in force. (a) IFIN shall by a Notice in writing to the Borrower be entitled at its sole discretion to exercise any of the powers mentioned below: (i) recall the whole or part of the principal amount of Facility together with accrued interest and other monies payable by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Agreement and/or the Facility Agreement; and/or (viii) exercise any and all rights specified in the documents executed with respect to the Security created; and/or (ix) exercise other remedies as may be available under the Facility Agreement and/or permitted under applicable laws." 6. The case set up by the Appellant is that the Borrower has failed to repay the loan amount and committed a default as a result of which it issued a notice of default on 10.07.2018 demanding payment of the outstanding dues. It also issued a notice on 20.08.2018 to the Respondent as a Corporate Guarantor recalling the term loan facility demanding payment of the outstanding dues. Thereafter, Section 7 application was filed, which has been contested by the Respondent, inter alia, on the ground that security for the loan facility was provided by the Borrower and the personal guarantee was given by Manoj Kumar Agrawal. It was denied that any guarantee was given to the Financial Creditor rather it is alleged that only the securities were pledged by the Pledge Agreement dated 27.02.2015. 7. According to the Appellant, Clause 5.1(g) of the Pledge Agreement is in fact a guarantee extended by the pledgor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge 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 include the Pledger Corporate Debtor herein as a Guarantor, a similar guarantee agreement would have been executed from the Corporate Debtor as well. An "unconditional and irrevocable personal guarantee of Mr. Manoj Kumar Agarwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement. It is vehemently argued that it has been agreed by all the pledgors that they would be jointly and severally liable as principal debtors without exclusion/preference to the other or others of them for the payment of the Borrowers and the Financial Creditor shall have the option to recover its amount from any one of the pledgors even without exercising or exhausting any other remedy/right, it has against the Borrower. 10. Counsel for the Appellant has also referred to Clause 8.1 pertaining to indemnify which read as under:- "The Borrower and the Pledgor(s) shall jointly and severally indemnify and keep indemnified IFIN from and against all suits/actions, proceedings, liabilities, accidents, claims, losses, damages, costs, charges and expenses whatsoever in respect of or in relation to, or arising out of, the obligations, performance and liabilities of the Borrower in connection with the Facility and/or the Pledged Securities and/or this Agreement." 11. It is further submitted that in Clause 6.2 pertaining to the remedies it can enforce any or all of the security, in part or whole as mentioned in this Agreement and/or the Facility Agreement, to realize either in part or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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