L&T FINANCE LTD. Vs. MANOJ PATHAK

JUDGEMENT

(1.) This order, by consent, and at the specific request of Mr Rebello for the Petitioners, made on instructions he received, addresses only one of the two preliminary objections raised by the Respondents. The Petition itself is under Section 9 of the Arbitration and Conciliation Act 1996. It is the usual Petition by a NBFC seeking interim protective orders pending arbitration against two persons, Manoj Pathak and Vinod Chaturvedi, both said to be guarantors for the repayment of a principal debtor's dues. We are not concerned with the principal debtor, Usher Agro Limited ('Usher Agro').

(2.) In February 2010, Usher Agro sought a loan of about Rs. 35 crores for a capacity expansion project in Uttar Pradesh from Axis Bank. Usher Agro entered into a Security Trustee Agreement dated 13th July 2012 with IDBI Trusteeship Services Limited ('ITSL'). This will become important shortly. In parallel the Petitioner, L&T Finance Limited ('L&T Finance') sanctioned a term loan to Usher Agro in the amount of Rs. 22,59,49,410/-. It did not actually disburse this amount. Instead, on 10th October 2013 there was a Deed of Assignment between Axis Bank and L&T Finance for the loan amount of Rs. 22,59,49,410/-. Then there was an Addendum No.1 to the Term Loan Agreement of 15th October 2013 by which Axis Bank, L&T Finance and Usher Agro made the terms and conditions of the original Loan Agreement applicable to the assigned loan i.e. the loan assigned to L&T Finance. The period of repayment of this assigned loan was 13 quarterly instalments at a floating interest rate of 13.25t per annum. Pathak and Chaturvedi issued two Deeds of Guarantees dated 15th October 2013. We will not be concerned with these because it is common ground that these guarantees were substituted by a later document jointly executed by Pathak and Chaturvedi.

(3.) In August 2014, there was a Working Capital Consortium Agreement dated 23rd August 2014. The Parties to this were Usher Agro, Axis Bank, ITSL and various other banks. L&T Finance does not seem to have been a party of this Consortium Agreement. At least paragraph 11 of the Petition does not say so clearly. Under this arrangement, Usher Agro took additional term loans and working capital facilities. It executed a Deed of Accession to the Security Trustee Agreement with ITSL (of 13th July 2012). The securities created by Usher Agro were extended to ITSL and, according to L&T Finance, this extension was for the benefit of the L&T Finance. There was also security in favour of L&T Finance under the Term Loan Agreement of 15th October 2013. The security cover is a charge on the movable and immovable assets, present and future, as also current assets.