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Judgment
ORDER
I.A No.731 of 2022- By this Application, the Applicant has prayed for condonation of 14 days delay in filing the Appeal. The reasons given in the Application is that due to COVID Pandemic and non-availability of the Authorized Representative and his staff, the present Appeal was delayed. Delay of 14 days’ in filing the Appeal is hereby condoned.
Heard Learned Counsel for the Appellant in Appeal.
This Appeal has been filed against the order dated 07.01.2022 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi (Court No.III) by which order the Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“Code” for short) by the Respondent has been admitted.
The Appellant before us has given a guarantee with regard to facility agreement dated 10.10.2016. The facility agreement was subsequently renewed and extended. The submission pressed by the counsel for the Appellant is that no further guarantee was taken after the agreement dated 10.10.2016, hence, the Appellant guarantee shall not continue to the subsequent facility and the Application under Section 7 filed on the basis of the subsequent facility dated 14.12.2017 could not have been admitted.
We have considered the submissions of the Learned Counsel for the Appellant and perused the record.
In para 8 of the judgment, the Adjudicating Authority had made following observations:-
“8.Heard both the sides and perused the documents on record, it is beyond doubt that the default has occurred with respect to the payment of the financial debt due to the Applicant. We have also gone through the case laws relied upon by the financial creditor. It manifests that the deed of guarantee was executed into between the financial creditor and the respondent, wherein the respondent has failed in clearing the payment to the financial creditor. It can be thus inferred that there is no merit in the so-called dispute raised by the corporate debtor in reply to the application. Therefore, the arguments made by the applicant seems to be more convincing.”
The facility agreement dated 14.12.2017 has been placed on record, heading of which indicate that it is renewal for extension of the earlier facility agreement. Subject of the facility agreement is to the following effect:-
“RENEWAL TO THE RENEWED, AMENDED AND RESTATED FACILITY AGREEMENT DATED 10
OCTOBER 2016 BETWEEN LH ASIAN TRADE FINANCE FUND LTD AS THE LENDER AND EVEREST METALS FZE AS THE BORROWER”
The guarantee which was executed by the Appellant on 10.10.2016 has been brought on the record at Page 125 of the paper-book. Clause 3 deals with “preservation of guarantee”. Sub-clause 3.1 and 3.3 sub-clauses (f) & (h) which are relevant to the following effect:-
“3.1 Continuing guarantee
(a)This Guarantee is a continuing guarantee and will extend to the ultimate balance of the Guarantee Obligations regardless of any intermediate payment or discharge or settlement of account in whole or in part.
(b)The Lender may make multiple demands under this Guarantee.
(c)The Corporate Guarantor expressly and irrevocably acknowledges that the Lender may make a demand under this Guarantee even after the expiry of six months from the date on which the Guaranteed Obligations become due.
3.3 Waiver of defences
xxx xxx xxx
(f)any amendment (however fundamental), increase in waiver, release or replacement of any Facility Document or any other agreement, document or security. xxx xxx xxx
(i)Any variation, renewal, increase, extension, compromise, discharge, dealing with exchange or renewal of any right or remedy which the Lender may have now or after the date of this Guarantee against the Borrower or any other person,”
When we read the guarantee executed on 10.10.2016 by the Appellant and the facility agreement executed on 14.12.2017, we do not find any error in the view taken by the Adjudicating Authority that the guarantee executed by the Appellant shall continue even for the facility agreement dated 14.12.2017. No error has been committed by the Adjudicating Authority in the impugned order by admitting the Application under Section 7.
Learned Counsel for the Appellant submits that there is variation of the contract, therefore, the guarantee could not enure with regard to the subsequent contract.
We have looked into the facility agreement dated 14.12.2017 and guarantee dated 10.10.2016. We are of the view that the guarantee continues and also apply to subsequent renewal of the facility agreement. We do not find any substance in the arguments of the Learned Counsel for the Appellant. The Appeal is dismissed.