In the matter of Aqua Electronics & Solutions Private Limited

[DAY ONE OF FULL HYBRID HEARING] ORDER Ld. Counsels for the parties who are also the counsels for the parties in CP(IB)-127/ND/2024 are ad idem that the present petition arises out of the transaction from which the CP(IB)-127/ND/2024 could arise. Ld. Counsel for the Petitioner could draw our attention to Deed of Corporate Guarantee dated 10.04.2023, in terms of which the corporate guarantor/CD (Respondent) hereinbefore us agreed that in case Parivartan Buildcon Private Limited, the CD CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

in CP(IB)-127/ND/2024, defaults the payment/repayment of loan amount, the Respondent hereinbefore us shall pay on demand and without any demur. The relevant excerpt of Deed of Corporate Guarantee dated 10.04.2023 (ibid) reads thus:- “1. The Guarantor hereby agree that in case Parivartan defaults in payment/repayment of Secured Obligations, the Guarantor shall pay on demand and without any demur, presentment, protest or other notice of any kind to the OCD Holder all the Secured Obligation due and payable by Parivartan till the date of payment. (“Guaranteed Obligation”). Notwithstanding anything to the contrary contained in this Guarantee or any other Financing Document, the obligation of the Guarantor to guarantee under the terms hereof shall be limited to the Guaranteed Obligation and this Guarantee shall stand ended/ released on the payment of the Secured Obligation by the Parivartan. 2. The Guarantor shall, forthwith but in any case within 15 days from the date of demand in writing and without demur, presentment, protest or other notice of any kind, discharge the Guaranteed Obligations. Determination by the OCD Holder, of the amount of Guaranteed Obligations shall be conclusive and binding on the Parivartan and the Guarantor and they shall not dispute the same. 3. The Guarantor shall, indemnify and keep the OCD Holder indemnified against all financial losses and financial damages, if any, whether by way of costs, charges, claims, litigation, penalties and expenses whatsoever which the OCD Holder may suffer, pay or incur by reason of or in connection with any default on the part of the Guarantor in relation to the Guaranteed Obligations including legal proceedings taken against the Parivartan and/or the Guarantor for recovery of the Guaranteed Obligation. The Guarantor shall, pay to the OCD Holder, CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

without any demur, such losses and damages within 15 days from the date of the demand. 4. The Guarantor hereby agree that, without the concurrence of the Guarantor, Parivartan and the OCD Holder shall vary, alter or modify the security created and the terms and conditions of the OCD Agreement executed by Parivartan and in particular to defer, postpone or revise the payment of Interest and/or other money payable by the Parivartan to the OCD Holder on such terms and conditions as may be considered necessary by the OCD Holder including any increase in the rate of Interest. 5. This Guarantee shall be enforceable against the Guarantor notwithstanding that any undertaking, security or securities comprised in any instrument(s) executed or to be executed by the Parivartan in favour of the OCD Holder, shall, at the time when the proceedings are taken against the Guarantor on this Guarantee, be outstanding or unrealized or lost. 6. The Guarantor hereby agree and declare that the Parivartan will be free to avail further loans or other facilities from the OCD Holder or any other party in addition to OCDs in terms of the OCD Agreement and the Guarantee herein contained shall not be affected or vitiated in anyway whatsoever but will remain in full force and effect and binding on the Guarantor till redemption of OCDs and payment of Secured obligation. 7. The Guarantor hereby declare and agree that the Guarantor have not received and shall not receive any security or commission from the Parivartan for giving this Guarantee, or have any recourse to the any of the assets of the Parivartan, unless permitted by the OCD Holder. 8. The Guarantor shall not in the event of the liquidation of the Parivartan prove in competition with the OCD Holder, as the case may be, in the liquidation proceedings. CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

9. This Guarantee shall be irrevocable and the obligations of the Guarantor hereunder shall not be conditional on the receipt of any prior notice by the Guarantor or by the Parivartan and the demand or notice by the OCD Holder hereof shall be sufficient notice to or demand on the Guarantor. 10. The liability of the Guarantor under this Guarantee shall not be affected by: a. any change in the constitution or winding up of Parivartan or any absorption, merger or amalgamation of the Parivartan with any other company, corporation or concern; or b. any change in the management of the Parivartan or takeover of the management of Parivartan by the Central or State Government or by any Government Authority, or c. acquisition or nationalization of the Parivartan and/or of any of its undertaking(s) pursuant to any law or any change that would affect the rights of the Parivartan under the Project Documents; or d. the change in the constitution of any of the OCD Holder; or e. the insolvency or winding up of the Guarantor; or f. any change in the set up of the Guarantor, which may be by way of change in the constitution, winding up, voluntary or otherwise, absorption, merger or amalgamation or otherwise; or 11. The Guarantor hereby represents, undertakes and warrants that: a. it has full power, capacity and authority to execute, deliver and perform this Guarantee and has taken all necessary action (statutory or otherwise) to comply with the conditions and covenants contained herein; b. it shall provide to the OCD Holder such information about itself relevant to this Guarantee as the OCD Holder may from time to time require;

CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

c. it is in compliance with and shall continue to comply with all Applicable Laws and regulations and with the terms and conditions of all applicable consents and authorizations; d. this Guarantee constitutes a valid and legally binding obligation enforceable against the Guarantor in accordance with its terms.”

2. Indubitably, the FC (Petitioner) hereinbefore us invoked the deed of corporate guarantee in terms of the notice dated 01.12.2023 (ibid). The relevant excerpt of the notice reads thus:- “We are writing to bring to your attention an outstanding amount of Rs. 5,36,51,000 payable to us by Parivartan Buildcon Private Limited ("Parivartan") in respect of redemption of Optionally Convertible Debentures ("OCDs"). In this respect we bring to the notice the following facts; 1. Savitur Infrastructure Private Limited ("SIPL") had invested an amount of Rs. 5,36,51,000 in 53,651 Optionally Convertible Debentures ("OCDs") of Rs. 1000/- each of Parivartan. 2. The said OCDs were redeemable/convertible on demand at any time within a period of 20 years at the option of the OCD holder at its face value of Rs. 1000/-each. Further in case of default and redemption of OCDs and interest of 18% p.a. is liable to be paid from the date of default. 3. In view the immediate fund requirement by us for our business purposes, we had sent the demand letter to Parivartan on 30th June, 2023 for redemption the said OCDs. 4. Thereafter, Parivartan vide its letters dated 30th July, 2023 had sought 3 months' time to redeem the OCDs. 5. However, Privartan did not redeem the OCDs even after 3 months. Thereafter, we had sent another letter on 01st November, 2023 to Parivartan seeking redemption of OCDs. However, the OCDs are not

CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

redeemed till date. The Corporate Guarantor has been marked copy in all the communication regards redemption of OCDs. 6. As per the Corporate Guarantee Deed executed on 10th April, 2023 your Company had provided a Corporate Guarantee to secure the redemption of OCDs issued by Parivartan. 7. Parivartan has committed persistent breach and default in redemption of OCDs. Under the Corporate Guarantee Deed, you, the Guarantor, have unconditionally and irrevocably agreed that in the event of any default on the part of Parivartan in the redemption of OCDs, SIPL shall be entitled to demand the total outstanding amount from you, the Guarantor. 8. It is regrettable to inform you that Parivartan has defaulted in their repayment obligations under the terms of the OCD Agreement despite repeated reminders by SIPL. Due to this default, we are left with no choice but to exercise our right under the Corporate Guarantee and request the fulfillment of the guaranteed obligations. 9. We hereby formally invoke the Corporate Guarantee provided by your Company to cover the outstanding amount of the OCDs, along with interest of 18% p.a. from the date of default i.e. 31st July 2023. 10. In the circumstances, we hereby call upon you, the Guarantor and demand you, to pay SIPL within 15 (Fifteen) days from the date of receipt of this notice, the outstanding amount of Rs. 5,36,51,000 along with interest of Rs. 32,19,060 @ 18% p.a. from the date of default till 01.12.2023. Also, you are requested to pay additional interest till the date of payment. 11. In case you, the Guarantor fail to make the payments as aforesaid, within 15 (Fifteen) days, SIPL shall be constrained to take such steps and measures as may be permissible under law for recovery of all the monies due and payable by you including but not limited to initiating insolvency proceeding against the Company and the Corporate Guarantor.”

CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

3. It is not in dispute that the Respondent before us did not give any reply to the notice of invocation of bank guarantee.

4. The amount of debt defaulted to be paid and the date of default are mentioned in Part-IV of the petition which reads thus:-

CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

5. The CD has not rebutted the assertions made in the aforementioned part of the petition.

6. As has been noted in CP(IB)-127/ND/2024, while considering admission or rejection of an application filed under Section 7(2) of IBC, 2016, what we need to check is that there is amount of debt defaulted to be paid, the application is complete in all respect and no legal proceedings are pending against the IP proposed to be appointed as IRP by the Petitioner. As far as the amount of debt/default is concerned, apparently a reference has been made to the financial contract (Deed of Corporate Guarantee) (Exhibit A-7). For the purpose of the evidence regarding amount being drawn by the CD, a reference may be made to the Debenture Certificate reproduced in CP(IB)-127/ND/2024 (ibid).

7. Indubitably, despite invocation of bank guarantee in terms of the notice dated 01.12.2023 (Annexure A-13), the CD has not repaid the amount of financial liability. In the wake, the requirement of Section 7(3) & (5)(a) of IBC, 2016, Regulation 8(2)(b) of CIRP Regulations, 2016 are satisfied.

8. Although there is no specific plea raised on behalf of the CD in this regard, still one may wonder as to whether parallel CIRP can continue qua the corporate guarantor and the principal borrower. The proposition has been answered by Hon’ble Supreme Court in the case of Laxmi Pat Surana vs. Union Bank of India & Anr. (Civil Appeal No. 2734 of 2020). The relevant excerpt of the judgment reads thus: “40. ….. As aforesaid, the liability of the corporate guarantor (corporate debtor) is coextensive with that of the principal borrower and it gets triggered the moment the principal borrower commits default in paying CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

the debt when it had become due and payable. The liability of the corporate debtor (corporate guarantor) also triggers when the principal borrower acknowledges its liability in writing within the expiration of prescribed period of limitation, to pay such outstanding dues and fails to pay the acknowledged debt. Correspondingly, right to initiate action within three years from such acknowledgment of debt accrues to the financial creditor.”

9. In the wake of the aforementioned, we are left with no option but to admit the present petition. Order accordingly.

10. Thus, the moratorium as provided under Section 14 of IBC, 2016 is declared qua the CD and as a necessary consequence thereof the following prohibitions are imposed, which must be followed by all and sundry: (a) The institution of suits or continuation of pending suits or proceedings against the Respondent including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) Transferring, encumbering, alienating or disposing of by the Respondent any of its assets or any legal right or beneficial interest therein; (c) Any action to foreclose, recover or enforce any security interest created by the Respondent in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the Respondent.

CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.

11. As proposed by the Petitioner, Mr. Shamsher Bahadur Singh having Registration No. IBBI/IPA-003/0341/2021-22/13623 and Email id: shamsher_cs@yahoo.co.in) is appointed as IRP, subject to the condition that no disciplinary proceeding is pending against him and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week from this Order. It is further ordered that Mr. Shamsher Bahadur Singh having Registration No. IBBI/IPA-003/0341/2021-22/13623 shall take charge of the CIRP of the Corporate Debtor with immediate effect and would take steps as mandated under the IBC specifically under Section 15, 17, 18, 20 and 21 of IBC, 2016 read with extend provisions of IBBI (Insolvency Resolution of Corporate Persons) Regulations, 2016.

12. The Petitioner is directed to deposit Rs. 2,00,000/- only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Financial Creditor.

13. A copy of this Order shall immediately be communicated by the Registry/Court Officer of this Tribunal to the Petitioner /Financial Creditor, the Respondent/Corporate Debtor and the IRP mentioned above. In addition, a copy of this Order shall also be forwarded by the Registry/Court Officer of this Tribunal to the IBBI for their records.

Sd/- Sd/- (SUBRATA KUMAR DASH) (ASHOK KUMAR BHARDWAJ) MEMBER (T) MEMBER (J) Upasana/Ruchita CP(IB)-130/ND/2024 Savitur Infrastructure Pvt. Ltd. vs. Aqua Electronics & Solutions Pvt. Ltd.