PUNJAB AND SIND BANK vs MS AMAN HOSPITALITY PVT LTD AND ORS on 7 October 2025

**FINAL ORDER**

1. This original application has been filed by the applicant bank, on 10.08.2021, through Mr. G. Parthiban, Assistant General Manager, being the authorized officer of the Applicant Bank, under Section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 against the defendants no. 1 to 3 for recovery of a sum of Rs. 136,15,29,225.55 (Rupees One Hundred Thirty Six Crore Fifteen Lakh Twenty Nine Thousand Two Hundred Twenty Five and Paise Fifty Five only) along with pendentelite and future interest @11.35% p.a. compounded monthly along with penal interest @2% simple from the date of the filing the present OA till realization along with all costs, charges, expenses & other relief(s).

1.2 It is pertinent to note here that this OA bearing no. 412/2021 was originally filed before Ld. DRT-II, Delhi, however, in pursuance to Gazette Notification No. 4718 (E) dated 04.10.2022 issued by Government of India, Department of Financial Services, Ministry of Finance, this case file was transferred by Ld. DRT-II, Delhi to this Tribunal in October 2022 and was numbered at TA-58/2022.

2. The brief facts of the case are that the Applicant Bank i.e. Punjab & Sind Bank, is one of the Public Sector Bank and body corporate constituted and functioning under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980. It is further stated that the Applicant Bank is filing the present OA through its Assistant General Manager, being the constituted attorney / Principal Officer of the bank, who is competent and authorized to institute, sign, verify the plaint and institute the OA and to compete all the legal formalities on behalf of the applicant bank by virtue of Power of Attorney dated 28.09.2011 executed by the Applicant Bank in his favour.

2.1 It is stated in the OA that the Defendant no. 1, is a Private Limited Company, registered under the Indian Companies Act, 1956 and defendant no.2 is the director of defendant no. 1 company and defendants no.2 & 3 stood as guarantors and executed their personal and continuing guarantees to secure the outstanding dues of the applicant bank.

So far as, defendants no. 4 to 9 are concerned, they are the Lender Banks who had also extended financial assistance along with Applicant Bank under the consortium led by the Jammu & Kashmir Bank / defendant no. 4 to the defendant no.1 company for construction and development of Five Star Deluxe Hotel Complex at Plot No. 1, CBD Shahdara, Delhi. As such, the mortgage / charge created by the defendant no. 1 company over its immovable properties and movable assets in favour of Jammu & Kashmir Bank Ltd. as lead Bank was for and on behalf of other Lender Banks i.e. defendants no. 5 to 9 including Applicant Bank. Therefore, defendants no. 4 to 9 are impleaded as Performa Defendants in the present OA against which no pecuniary relief is being claimed in the present OA by the applicant bank.

2.2 It is stated in the OA that defendant no. 1 company in the month of September 2011, had approached the Applicant Bank for sanction of Term Loan of Rs. 50.0 Crore to part finance the construction and development of Five Star Deluxe Hotel Complex at Plot No. 1, CBD Shahdara, Delhi having total project cost of Rs. 1272.90 Crore out of total Term Loan of Rs. 810.0 Crore in consortium arrangement with other Lender Banks i.e. defendants no. 4 to 9. As such, the Applicant Bank had granted following loan facility vide its Sanction Letter dated 28.09.2011:-

- (i) Term Loan – Rs. 50.0 crore (details given in Para V(5.5) of the OA.

In consideration of sanction of aforesaid Term Loan of Rs. 50.0 Crore, the defendant no. 1 company submitted Letter dated 29.09.2011 enclosed documents i.e. Certified copy of its Board Resolution dated 29.09.2011 along with Letter of Underling dated 29.09.2011 in compliance of the sanction terms, to the applicant bank. As such, following Loan and Security documents in favour of the applicant bank for securing the said Term Loan of Rs.50.0 Crore :-

- (i) Demand Promissory Note dated 29.09.2011 [(Form No.14 (R))] executed by defendant no. 1;

- (ii) Letter of Waiver for presentment of Demand Promissory Note dated 29.09.2011 (Form No. 106) executed by defendant no. 1;

- (iii) Loan Agreement dated 29.09.2011 with Schedule I, II & III executed by defendant no. 1;

- (iv) Bank's Form No.291 dated 29.09.2011 regarding payment of penal interest @2% in case of default / irregularity executed by defendant no. 1;

- (v) Bank's Form No. 412 dated 29.09.2011 regarding non-diversion of Funds executed by defendant no. 1;

- (vi) Bank's Form No.103 dated 29.09.2011 executed by defendant no. 1;

- (vii) Bank's Form No. 200 dated 29.09.2011 regarding rate of interest executed by defendant no. 1;

- (viii) Letter of Authorization dated 29.09.2011 for debiting expenses by the bank executed by defendant no. 1;

- (ix) Consent Letter dated 29.09.2011 executed by defendant no. 1 for disclosure to CIBIL in case of default;

- (x) Personal and Continuing Guarantees dated 29.09.2011 executed by defendants no. 2 & 3;

- (xi) Consent Letter dated 29.09.2011 executed by defendants no. 2 & 3 for disclosure to CIBIL in case of default committed by them.

In the meantime, the applicant bank had issued respective letters dated 28.09.2011 in favour of Term Lenders i.e. defendants no. 4 to 9, thereby, ceding Pari Passu charge in respect of the mortgaged immovable / movable properties of the defendant no. 1 company at Plot No. 1, measuring 20000 sq. mtrs. Central Business District, Shahdara, New Delhi, together with building and other structures, fixed plant and machinery, fixtures and fitting etc. etc. As such the applicant bank also requested the Term Lenders to issue similar letters in favour of the applicant bank for ceding pari-passu charge on the aforesaid assets of the defendant no. 1 and the applicability and validity of said letter of the applicant bank was to take effect from the date of issuance of similar letter by the other Term Lenders in favour of the applicant bank.

As such, the applicant bank had disbursed the aforesaid Term Loan of Rs. 50.0 Crore to the defendant no. 1 company on 29.09.2011.

Further, the other Term Lenders / consortium member banks i.e. defendants no. 4 to 9 had executed / issued similar letters dated 31.10.2011, 02.11.2011, 27.10.2011, 16.11.2011, 02.11.2011 and 01.11.2011 respectively ceding pari passu charge over the assets of defendant no. 1 company i.e. Project Land and Building and other Fixed Assets, mortgaged with said Term Lenders Banks, security deposits and lease rentals from the lessors of shops / spaces of the complex both present and future and all other current assets of the project, in favour of the applicant bank.

It is stated in the OA that the Lead Bank i.e. Jammu & Kashmir Bank Ltd. vide its letter dated 05.11.2011, had extended / ceded the first Pari Passu charge on the Project Land and Building and other fixed assets of Hotel Complex at Plot No. 1 admeasuring 20,000 sq. mtr. Central Business District, Shahdara, Delhi and also ceded first pari passu charge on future lease rentals from the property to be leased out and all other current assets including available balance in the designated / Escrow Account maintained with it during the construction of the Project in favour of the Applicant Bank as security for Term Loan of Rs. 50.0 crore sanctioned by the Applicant Bank in favour of defendant no. 1 company along with other participating Term Lenders to the project within total Term Loan of Rs. 810.0 crore and Bank Guarantee Limit of Rs. 60.0 Crore. As such, the Jammu & Kashmir Bank Ltd. had provided the certified true copy of the MOE Register containing the Memorandum of Entry at Sl. No. 37 & 38 on 05.11.2011 along with copies of Title Documents i.e. copy of Lease Deed dated 11.02.2010 executed between President of India on the one Part and M/s Aman Hospitality Pvt. Ltd. on the Other Part and copy of Possession Certificate dated 08.02.2010 issued by DD in favour of M/s Aman Hospitality Pvt. Ltd. [details given in Para V(5.11) of OA] to the applicant bank in respect of creation of equitable mortgage by the defendant no. 1 company over its immovable properties and movable assets, as described above, on pari passu basis in favour of the Consortium Member Banks including the Applicant Bank. However, the said original Title Documents of the mortgaged property are in possession and custody of defendant no. 4 / Jammu & Kashmir Bank Ltd. being Lead Bank.

2.3 It is stated in the OA that the loan / credit facilities granted to the defendant no. 1 company by the applicant bank were under the Consortium arrangement letter with other Lender Banks as members of the Consortium. As such, the defendant no. 1 company had submitted certified copies of the Board Resolutions dated 13.01.2012 and 15.03.2012 to the consortium member banks including applicant bank whereby the defendant no. 1 company had acknowledged the receipt of Loan Facilities i.e. Term Loan of Rs. 810.0 crore and Bank Guarantee Limit of Rs. 60.0 Crore from different Lender Banks as being members of the Consortium and also acknowledged that Jammu & Kashmir Bank Ltd. would act as a Lead Bank, Escrow Agent and Security Trustee of the Project. The defendant no. 1

company had further undertaken to execute Loan and Security documents by way of joint documentation for the aforesaid Loan Facilities in favour of the Consortium Member Bank including Applicant Bank.

2.4 It is stated in the OA that defendant no. 1 company had executed following Loan and Security documents dated 17.03.2012 by way of Joint Documentation in favour of the Member Banks of the Consortium including Applicant Bank on 17.03.2012 :-

- (i) Inter-se Agreement dated 17.03.2012 executed by defendant no. 1;

- (ii) Joint Deed of Hypothecation dated 17.03.2012 executed by defendant no. 1;

- (iii) Security Agent Appointment Agreement dated 17.03.2012 executed by defendant no. 1;

- (iv) Escrow Account Agreement dated 17.03.2012 executed by defendant no. 1;

- (v) Master Joint Lenders Forum Agreement dated 17.03.2012 executed by defendant no. 1.

The details of the facilities availed by the defendant no. 1 company with the Consortium Member Bank including the Applicant Bank are as under:-

<thead> <tr> <th>S. No.</th> <th>Name of the Bank</th> <th>Term Loan</th> <th>Bank Guarantee Limit</th> </tr> </thead> <tbody> <tr> <td>1.</td> <td>The Jammu &amp; Kashmir Bank Ltd.</td> <td>227.00</td> <td>15.00</td> </tr> <tr> <td>2.</td> <td>Bank of India</td> <td>133.00</td> <td>-</td> </tr> <tr> <td>3.</td> <td>Oriental Bank of Commerce</td> <td>100.00</td> <td>-</td> </tr> <tr> <td>4.</td> <td>Union Bank of India</td> <td>80.00</td> <td>8.00</td> </tr> <tr> <td>5.</td> <td>United Bank of India</td> <td>75.00</td> <td>15.00</td> </tr> <tr> <td>6.</td> <td>Indian Bank</td> <td>70.00</td> <td>7.00</td> </tr> <tr> <td>7.</td> <td>Punjab &amp; Sind Bank</td> <td>50.00</td> <td>-</td> </tr> </tbody> </table>

<tr> <td>8.</td> <td>Central Bank of India</td> <td>75.00</td> <td>15.00</td> </tr> <tr> <td></td> <td>Total</td> <td>810.00</td> <td>60.00</td> </tr> </table>

As such, the abovementioned credit facilities were secured by the defendant no. 1 by (a) First Charge by way of Hypothecation; (b) First pari passu charge on all present and future fixed / block assets of the Project including mortgage of the Project Land measuring 20,000 sq. yards and the building standing thereon. (c) First parti passu charge by way of assignment of future lease rentals of the office spaces in the Project proposed to be leased out and (d) First pari passu charge on all the present and future current assets related to the Project including available credit balances to "Escrow Account" during the construction of the Project [details given in Para V (5.15) (a) to (d) of the OA].

2.5 It is stated in the OA that the defendant no. 1 company had again approached the applicant bank for grant of Cash Credit Hypothecation Limit of Rs. 35.0 crore with sub-limit of Inland Letter of Credit / Foreign Letter of Credit of Rs. 10.0 crore to meet its working capital requirement of Five Star Deluxe Hotel at Plot No. 1, CBD, Shahdara, Delhi.

As such, the Applicant Bank had sanctioned the following Fresh Credit Limit of Rs. 35.0 crore as well as renewed the existing Term Loan of Rs. 50.0 crore vide Sanction Letter dated 04.09.2012 :-

- (i) Cash Credit (Hypothecation Limit with sub Limit of ILC / FLC of Rs. 10.0 Crore) - Rs. 35.0 Crore

- (ii) Term Loan (by way of renewal) - Rs. 50.0 Crore [details given in Para V(5.17) of OA].

In consideration of sanction of above-said fresh Cash Credit (Hypothecation) Limit of Rs. 35.0 crore with sub-limit of ILC / FLC of Rs. 10.0 crore by the applicant bank, the defendant no. 1 company had submitted certified copy of its Board Resolution dated 04.09.2012 and list of its Directors vide certificate dated 04.09.2012 to the applicant bank. As such the defendant no. 1 company had executed and delivered following Loan and Security documents in favour of the applicant bank on 04.09.2012:-

- (i) Demand Promissory Note dated 04.09.2012 [Form No. 14(R)] executed by defendant no. 1;

- (ii) Letter of Waiver for presentment of Demand Promissory Note dated 04.09.2012 [Form No. 106] executed by defendant no. 1;

- (iii) Bank's Form No. 103 dated 04.09.2012 executed by defendant no. 1;

- (iv) Hypothecation Agreement dated 04.09.2012 executed by defendant no. 1;

- (v) Bank's Form No.291 dated 04.09.2012 regarding payment of penal interest @2% in case of default / irregularity executed by defendant no. 1;

- (vi) Bank's Form No. 412 dated 04.09.2012 regarding non-diversion of Funds executed by defendant no. 1;

- (vii) Bank's Form No. 200 dated 04.09.2012 regarding rate of interest executed by defendant no. 1;

- (viii) Letter of Authorization dated 04.09.2012 for debiting expenses by the bank executed by defendant no. 1;

- (ix) Stamped Undertaking dated 04.09.2012 for sublimit of ILC/FLC Limit of Rs. 10.0 crore executed by defendant no. 1;

- (x) Letter of Undertaking dated 04.09.2012 executed by defendant no. 1;

- (xi) Consent Letter dated 04.09.2012 for disclosure to CIBIL in case of default (Annexure -1) executed by defendant no. 1;

- (xii) Stamped Undertaking dated 04.09.2012 executed by defendant no. 1.

In order to secure the outstanding dues of the applicant bank as well as to secure the total credit / loan limits of Rs. 85.0 crore together with interest, cost and other charges, the defendants no. 2 & 3 had executed / extended their personal and continuing Guarantees in favour of the applicant bank on 04.09.2012. Moreover, defendants no. 2 & 3 had also executed Letter of Undertaking dated 04.09.2012 as well as Consent Letter dated 04.09.2012 for disclosure to CIBIL in case of default committed by them. [details given in Para V(5.19) of OA].

Further more, defendants no. 1 to 3 had jointly executed Stamped Undertaking (form No. 199) dated 04.09.2012 thereby accepting and recognizing the right of the applicant bank to scrutinize or sell or transfer or assign in any manner all or any of the credit facilities either with or without the underlying securities in favour of any third parties or banks or financial institutions.

Further more, in order to further secure the Cash Credit Hypothecation Limit of Rs. 25.0 crore with sub-limit of IL/FLC of Rs. 10.0 crore with interest and other charges thereon, the defendant no. 1 company had created / extended the equitable mortgage w.r.t. its immovable property i.e. Plot No. 1, admeasuring 20000 sq. mtrs. and building of Five Star Deluxe Hotel at CBD, Shahdara, Delhi in favour of the applicant bank as a collateral security by way of second charge as first charge was already created in favour of the Project Term Lenders including applicant bank for its Term Loan of Rs. 50.0 crore. As such, the defendant no. 1 had executed and delivered Bank's Form No. 84A dated 04.09.2012 in favour of the applicant bank.

However, the defendant no. 1 company had acknowledged the outstanding debt / liability of the applicant bank in the Term Loan Account and Cash Credit Account on 05.04.2013 by executed respective Revival Letters dated 05.04.2013 in favour of the applicant bank.

Further, the defendants no. 4 to 9 as Term Lenders / Consortium Member Banks had ceded second charge on the assets of defendant no. 1 company i.e. Project Land & Building and other fixed assets of the property at Five Star Deluxe Hotel at Plot No. 1, CBD, Shahdara, Delhi by way of their respective Letters dated 04.10.2012, 06.04.2013, 16.04.2013, 10.10.2013 and 31.07.2013 in favour of the applicant bank towards sanction of fresh cash credit limit of Rs. 35.0 crore with sub-limit of ILC/FLC of Rs. 10.0 crore to the defendant no. 1 company for their working capital requirements for the operation of Five Star Deluxe Hotel at Plot No. 1, CBD, Shahdara, Delhi.

2.6 It is further stated in the OA that on the request of the defendant no. 1 company, the applicant bank had renewed the existing Term Loan facility of Rs. 50.0 crore and Cash Credit Limit of Rs. 35.0 crore vide its Sanction dated 24.04.2014. As such, the defendant no. 1 company had submitted its Covering Letter dated 07.06.2014 acknowledging the Sanction dated 24.04.2014 of the applicant bank thereby enclosing the Certified copy of its Board Resolution dated 04.06.2014 and duly signed copy of the Sanction Letter dated 24.04.2014 by the authorized signatory / director of the defendant no. 1 company, thereby accepting the terms of the sanction by the defendant no. 1 company.

2.7 It is stated in the OA that the defendant no. 1 was required to maintain the financial discipline of the applicant bank but failed to do so. Hence, the loan / credit facilities became overdrawn / outstanding. Moreover, the Loan / Credit facilities being availed by defendant no. 1 company from other Lender banks had also become irregular / overdrawn.

2.8 It is further stated in the OA that as such the Defendant no. 1 company had approached the consortium Lender Banks including applicant bank, thereby making a request for rephasing by way of deferment of instalments of the Term Loan Facility and sanction of Funded Interest Term Loan (FITL) for interest amount from 01.04.2014 to 31.03.2016. As such, a Joint Lender Forum (JLF) was constituted amongst Lender Banks with Jammu & Kashmir Bank Ltd. as the lead bank wherein the restructuring proposal of the defendant no. 1 company was evaluated and Corrective Plan was approved. Moreover, the defendant no. 1 company had submitted a letter dated 26.12.2014 to the applicant bank for restructuring of instalments etc. Accordingly, the applicant bank sanctioned the restructuring of the existing credit facilities in line with the lead bank i.e. Jammu & Kashmir Bank Ltd. and other consortium member banks as per its Sanction dated 30.12.2014 read with Letter dated 30.12.2014 of the applicant bank and same were duly accepted and acknowledged by the defendant no. 1 company. The details of the sanction are as under:- <table> <tr> <td>Term Loan</td> <td>-</td> <td>Rs. 50.0 Crore</td> </tr> <tr> <td>Funded Interest Term Loan (FITL)</td> <td>-</td> <td>Rs. 10.85 crore</td> </tr> <tr> <td>Cash Credit (Hypothecation) Limit<br/>With sublimit of ILC/FLC of<br/>Rs. 10.0 Crore</td> <td>-</td> <td>Rs. 35.0 crore<br/>(by way of<br/>renewal)</td> </tr> </table>

[details given in Para V(5.26) of OA].

As such the abovementioned credit facilities were continued to the secured by way of various Primary and Collateral Securities by the Defendant no. 1 company, as detailed in Para V(5.27) (a) to (c) of the OA.

In consideration of sanction of restructuring of the existing credit / loan facilities by the applicant bank, the defendant no. 1 company had submitted certified copy of its Board Resolution dated 30.12.2014, to the applicant bank and executed following Loan and Security documents in favour of the applicant bank on 30.12.2014:-

- (i) Demand Promissory Note dated 30.12.2014 [Form No. 14 (R)];

- (ii) Letter for Waiver for presentment of Demand Promissory Note dated 30.12.2014 (Form No. 106);

- (iii) Supplementary Term Loan Agreement dated 30.12.2014;

- (iv) Funded Interest Term Loan Agreement dated 30.12.2014;

- (v) Bank's Form No. 103 dated 30.12.2014;

- (vi) Bank's Form No. 126 dated 30.12.2014;

- (vii) Bank's Form No. 200 dated 30.12.2014;

- (viii) Bank's Form No. 291 dated 30.12.2014 regarding payment of penal interest @2% in case of default / irregularity;

- (ix) Bank's Form No. 412 dated 30.12.2014 regarding non-diversion of Funds;

- (x) Letter of Authorization dated 30.12.2014 for debiting expenses by the bank;

- (xi) Consent Letter dated 30.12.2014 for disclosure to CIBIL in case of default (Annexure-1);

- (xii) Stamped Undertaking dated 30.12.2014.

Furthermore, in order to secure the restructured loan facilities as per the sanction dated 30.12.2014 of the applicant bank, Defendant no. 2 had executed his personal and continuing guarantee in favour of the applicant bank. Defendant no. 2 also executed stamped Undertaking dated 30.12.2014 in favour of the Applicant Bank as well as Consent Letter dated 30.12.2014 (Annexure-II) for disclosure to CIBIL in case of default committed by him.

Further, defendants no. 1 & 2 had executed and delivered Undertaking (Form No. 199) on 30.12.2014 in favour of the applicant bank thereby recognizing and accepting the right of the applicant bank to scrutinize or sell or assign or transfer the Loan Account with securities.

It is also stated in the OA that in order to secure the restructured Limits totally to Rs. 60.85 Crore with interest and other charges thereon, the defendant no. 1 company had extended the equitable mortgage w.e.t. its immovable property i.e. Plot No. 1, admeasuring 20000 sq. mtrs. and building of Five Star Deluxe Hotel at Plot No. 1, CBD, Shahdara, Delhi in favour of the applicant bank by way of pari passu charge with other lenders. The defendant no. 1 company had executed and delivered Bank's Form No. 84A dated 30.12.2014 in favour of the applicant bank.

It is stated in the OA that in order to secure the restructured loan / credit facilities sanctioned to defendant no. 1 company as per restructure package approved as per the Corrective Action Plan of the Joint Lenders Forum of member banks including the Applicant Bank, the lead Bank i.e. Jammu & Kashmir Bank Ltd. had confirmed the extension of equitable mortgage over the immovable property of the defendant no. 1 company i.e. Land measuring 20000 sq. mtrs. and building of Five Star Deluxe Hotel thereupon at Plot No. 1, CBD, Shahdara, Delhi by way of pari passu charge in favour of Lender Banks including applicant bank in terms of its Letter dated 20.01.2015 containing Schedule-I to IV as well as providing attested copy of its MOE Register, recording the entry of extension of equitable mortgage towards restructured loan facilities sanctioned to defendant no. 1 company.

2.9 It is stated in the OA that in order to secure the restructured loan / credit facilities, including Fresh Funded Interest Term Loan Facility (FITL) by the consortium member banks with Jammu & Kashmir Bank Ltd. as the lead bank, the defendant no. 1 company had submitted certified copy of its Board Resolution dated 28.03.2015 to the Lead Bank i.e. Jammu & Kashmir Bank Ltd. and further executed following Loan and Security documents by way of joint documentation in favour of the Jammu & Kashmir Bank Ltd. as lead bank on 31.03.2015:-

- (i) Letter of Undertaking dated 31.03.2015;

- (ii) Undertaking dated 31.03.2015;

- (iii) Letter ceding Pari Passu charge dated 31.03.2015;

- (iv) First Supplementary Joint Deed of Hypothecation dated 31.03.2015;

- (v) First Supplemental Security Agent Appointment Agreement dated 31.03.2015;

- (vi) First Supplemental Inter-se Agreement dated 31.03.2015;

- (vii) First Supplemental Escrow Agreement dated 31.03.2015;

- (viii) Joint Master Restructuring Agreement dated 31.03.2015;

- (ix) Letter of Undertaking dated 31.03.2015.

Furthermore, in order to secure the Restructured Credit / Term loan facilities in favour of the Consortium member Banks led by the Jammu & Kashmir Bank Ltd., the Defendant no. 2 had executed his personal and continuing guarantee on 31.03.2015.

2.10 It is further stated in the OA that defendant no. 1 company, as borrower and defendants no. 2 & 3 as guarantors had acknowledged the outstanding debt / facility in the Term Loan Account, Cash Credit Account and FITS Account on 29.02.2016 by executing respective Revival Letters dated 29.02.2016 in favour of the applicant bank.

Moreover, defendant no. 1 company, as borrower and defendant no. 2 as guarantor had acknowledged the outstanding debt / facility in the Term Loan Account, Cash Credit Account and FITS Account on 30.06.2017 by executing respective Revival Letters dated 30.06.2017 in favour of the applicant bank.

2.11 Thereafter, Lenders of the Project including the Applicant Bank during the JLF meeting held on 18.07.2017 & 26.07.2017 had approved the Strategic Debt Restructuring (SDR) with reference date of 18.07.2017 for invocation / implementation of SDR in compliance with the guidelines issued by Reserve Bank of India in terms of its circulars dated 08.06.2015 and 25.02.2016. Pursuant to the approval of the SDR, the Lenders including applicant Bank had converted part of the credit facilities amounting to Rs. 666.13 crore into equity shares of the defendant no. 1 company to enable the Lenders to hold cumulative 15% equity shareholdings in the company in following manner:-

<thead> <tr> <th>Name of the Lender</th> <th>Number of Equity Shares to be issued</th> <th>% share in the aggregate</th> <th>% shareholdings of each of the</th> </tr> </thead> </table>


<table border="1"> <thead> <tr> <th></th> <th>post conversion</th> <th>debt being converted</th> <th>Lender in the Company post conversion</th> </tr> </thead> <tbody> <tr> <td>J&amp;K</td> <td>18,27,46,900</td> <td>27.43</td> <td>13.99</td> </tr> <tr> <td>BOI</td> <td>10,33,17,496</td> <td>15.51</td> <td>7.91</td> </tr> <tr> <td>OBC</td> <td>8,41,31,669</td> <td>12.63</td> <td>6.44</td> </tr> <tr> <td>PSB</td> <td>6,59,70,785</td> <td>9.90</td> <td>5.05</td> </tr> <tr> <td>UBoI</td> <td>6,31,54,149</td> <td>9.48</td> <td>4.84</td> </tr> <tr> <td>UBI</td> <td>5,67,29,563</td> <td>8.52</td> <td>4.34</td> </tr> <tr> <td>IB</td> <td>5,50,88,646</td> <td>8.27</td> <td>4.22</td> </tr> <tr> <td>CBI</td> <td>5,49,90,797</td> <td>8.26</td> <td>4.21</td> </tr> <tr>

<td><b>66,61,30,005</b></td> <td><b>100</b></td> <td><b>51</b></td> </tr> </tbody> </table>

It is also stated in the OA that the Lenders of the Project including Applicant Bank had converted the Loan Conversion amount into equity shares of the defendant no. 1 company and the balance outstanding amount of the Participating Banks / Lenders is as under:-

<table border="1"> <thead> <tr> <th>Name of the Lender</th> <th>Total Loan amount outstanding as on July 18, 2017</th> <th>Loan Conversion Amount</th> <th>Balance Loan Amount</th> </tr> </thead> <tbody> <tr> <td>J&amp;K</td> <td>261.47</td> <td>182.75</td> <td>78.72</td> </tr> <tr> <td>BOI</td> <td>147.83</td> <td>103.22</td> <td>44.51</td> </tr> <tr> <td>OBC</td> <td>120.37</td> <td>84.13</td> <td>36.24</td> </tr> <tr> <td>PSB</td> <td>94.39*</td> <td>65.97</td> <td>28.42</td> </tr> <tr> <td>UBoI<br/>(Union Bank of India)</td> <td>90.36</td> <td>63.15</td> <td>27.21</td> </tr> <tr> <td>UBI<br/>(United Bank of India)</td> <td>81.17</td> <td>56.73</td> <td>24.44</td> </tr> <tr> <td>IB</td> <td>78.82</td> <td>55.09</td> <td>23.73</td> </tr> <tr> <td>CBI</td> <td>78.68</td> <td>54.99</td> <td>23.69</td> </tr> <tr>

<td><b>953.99</b></td> <td><b>666.13</b></td> <td><b>286.96</b></td> </tr> </tbody> </table>

Note : \*Including outstanding balance of Rs. 34.36 crore in the Cash Credit Limit.

2.12 It is further stated in the OA that the defendant no. 1 company had executed and delivered second Supplemental Term Loan Agreement dated 08.03.2018 in favour of the Applicant Bank. Accordingly, the defendant no. 1 company had agreed to repay Rs. 28.42 crore (including Cash Credit Limit of Rs. 11.59 crore in the total of Rs. 28.42 crore) alongwith interest and other charges as stated in the Term Loan Agreements and / or Joint Master Restructuring Agreement as directed by the Competent Authorities of the Applicant Bank and in terms of the RBI guidelines on SDR, as amended from time to time. It was further agreed by the defendant no. 1 company that all other Terms and Conditions applicable to the loans as already agreed to and mentioned in the Term Loan Agreements in respect of the Original Loan and or FITL as provided for in the Term Loan Agreements would continue to be applicable and remain in force. It was further confirmed by the defendant no. 1 company that the security viz. hypothecation and / or mortgage granted to the loans would continue and remain in force.

2.13 It is stated in the OA since the defendant no. 1 company failed to adhere to the terms and conditions of the SDR in as much as neither the interest nor the instalments were repaid as per the Term Loan Agreements and/or Joint Master Restructuring Agreement, vide Notification No. RBI/2017/2018/131/DBR.No.>BP.BC.101/21.04.048/2017-18 dated 12.02.2018, the RBI had withdrawn all the schemes of restructuring including the SDR. As such, the Applicant Bank had declared the Loan Accounts of defendant no. 1 company as NPA on 30.06.2018 (w.e.f. July 2017) as per Central Statutory Auditor in accordance with the RBI Directives and Guidelines. Thereafter, the Applicant Bank had issued Demand Notice under Section 13(2) of SARFAESI Act dated 18.09.2018 to the defendants no. 1 to 3 as borrowers and guarantors respectively calling upon them to pay the outstanding loan amount of the applicant bank which they failed to comply. Instead, a false and frivolous objection dated 15.11.2018 was received by the Applicant Bank on 07.12.2018 beyond the statutory period of 60-days. However, the said objection was replied by the applicant bank vide its Reply dated 27.02.2019, thereby rejecting the said frivolous objection of defendant no. 1.

2.14 Thereafter, the defendant no. 1 company through its authorized signatory had approached the applicant bank and acknowledged the outstanding debt / liability of the applicant bank in the Term Loan, Cash Credit and FITL Accounts by executing respective Balance and Security Confirmation Letters dated 06.06.2020 in favour of the applicant bank.

2.15 It is also stated in the OA that the applicant bank had disbursed / granted loan / credit facilities to the defendant no. 1 company in consortium arrangements with other Lender Banks being arrayed as the defendants no. 4 to 9 and defendant no. 4 is the Lead Bank which holds the security in trust for and on behalf of the other Lenders including the applicant bank. Moreover, defendant no. 4 / J&K Bank Ltd, is in possession of original Loan & Security documents by way of Joint documentation and relating to restructuring including Master Restructuring Agreement dated 31.03.2015. The defendant no. 4 is also in possession of original title documents of the mortgage property in question which may be summoned by the applicant bank with the permission of this Tribunal during the course of the proceedings of the present OA.

2.16 It is stated in the OA that the Loan Accounts of the defendant no. 1 company was classified as NPA on 30.06.2018 (w.e.f. July 2017), therefore, the applicant bank legally became entitled to and has right to recover the interest / unapplied interest from the defendants no. 1 to 3, jointly and severally, in the present OA. Accordingly, the unapplied interest has been included in the claim / OA of the applicant bank.

It is further stated in the OA that on failure of Strategic Debt Restructuring (SDR), the applicant bank is entitled to claim its debt against defendants no. 1 to 3 alongwith interest and other charges which stood as on 18.01.2018 i.e. prior to implementation of SDR by recovering the equity shares into debt against the defendants no. 1 to 3. Therefore, besides the amount of debt as on the date of NPA i.e. 30.06.2018 (w.e.f. July 2017), the applicant bank is entitled to recover / claim an amount of Rs. 65,97,07,850/- being equivalent to 5.05% of its shareholding before conversion and part amount of Debt converted into Equity on 19.01.2018 in each of the Cash Credit / Term Loan accounts and after adding interest upto filing of the present OA i.e. 06.08.2021, the same amounts to Rs. 97,03,32,646.74 which the defendants no. 1 to 3 are jointly and severally liable to pay to the applicant bank.

The Details of total outstanding amount due in all the loan accounts is as follows :- <table><tr><td>(i)</td><td>Term Loan Account</td><td>Rs. 28,57,23,428.59</td></tr><tr><td>(ii)</td><td>Funded Interest From Loan (FITL)</td><td>Rs. 66,60,214.77</td></tr><tr><td>(iii)</td><td>Cash Credit Account</td><td>Rs. 9,88,12,935.45</td></tr><tr><td>(iv)</td><td>Debt converted into equity</td><td>Rs. 97,03,32,646.74</td></tr><tr><td colspan="2"><b>Total</b></td><td><b>Rs.136,15,29,225.55</b></td></tr></table>

2.10 It is further stated in the OA that since the defendants no. 1 to 3 failed to pay the dues of the applicant bank, hence, the applicant bank has been compelled to file this Application before this Tribunal.

3. Notices of this O.A. were issued to the defendants, and defendants no. 1 & 3 as well as performa defendants no. 4, 6, 7 and 8 appeared through their respective counsels.

3.1 So far as, defendants no. 1 & 3 are concerned, they filed their common WS.

3.2 So far as, defendant no. 2 is concerned, initially he neither appeared before the Tribunal nor any WS was filed by him, hence, the case was proceeded ex parte vide order dated 23.09.2022. Subsequently, defendant no. 2 filed an application being IA no. 259/2023 for setting aside ex parte order dated 23.09.2022 which was allowed vide order dated 22.11.2023 passed by the Tribunal. Thereafter, defendant no. 2 filed his WS.

3.3 As regard performa defendants no. 4 & 8 are concerned, they also filed their respective WS(s), however, no relief has been claimed by the applicant bank qua these defendants.

3.3 So far as, rest of the performa defendants i.e. defendants no. 5, 6, 7 and 9 are concerned, though defendants no. 6 & 7 appeared through their respective counsels but they did not chose to file any WS. However, defendant no. 5 neither appeared through any counsel nor filed any WS.

4. In their common WS filed by defendants no. 1 & 3, they have denied each and every averment, contention, allegation and submission made by the Applicant in its entirety as if specifically traversed, save and except to the extent specifically admitted in the WS/Reply.

It is stated in the WS that the Consortium, including the Applicant has agreed to Defendant No. 1's offer of One Time Settlement (OTS) which includes payment of 100% debt owed to the Applicant. The said agreement is in terms of the discussion of the Consortium in the meeting dated 06.01.2021, wherein the Applicant agreed to Defendant no. 1's OTS, subject to conducting a Swiss Challenge and allowing Defendant no. 1 to match the offer received in Swiss Challenge, if higher than the OTS amount. It is further stated that irrespective of the outcome of the Swiss Challenge the debt owed to the Applicant will be fully repaid to it, either by defendant no. 1 as part of its current OTS, or at a higher price, if the Defendant no. 1 matches a higher offer received in Swiss Challenge or by the higher offeror in Swiss Challenge Proceedings. The OTS of Rs. 470.0 crore is the lowest assured amount that the Consortium of Banks, including the Applicant will thus get, which itself caters for 100% of the debt owed to it, subject to reconciliation of the arithmetical calculation of dues and waiver of any penal charges in terms of its sanction. As per the said agreed and approved OTS, Defendant no. 1 reiterates that it will pay the Applicant, 100% of the principal amount owed to the Applicant i.e. Rs. 28.42 crore and a further sum of Rs. 18.12 crore for the equity shares of Defendant no. 1 held by the Applicant. Together, Defendant no. 1 undertakes to pay the Applicant Rs. 46.54 crore as opposed to the debt of Rs. 28.42 crore owed to the Applicant. In fact, the Consortium has expressly accepted the Defendant no. 1's offer to repay and settle the debt and purchase the shares is far more than any offer likely to be achieved either through an open market auction or through DRT proceedings, as will be indicated below.

**Initial debt**

It is stated in the WS that defendant no. 1 company acquired a plot in Shahdara, Delhi admeasuring 20,000 sq. m. by open auction by the DDA on 03.03.2006, for the purchase of development of a hotel at the highest bid price of Rs. 170.0 crore and after payment of the bid amount, it took over the possession of the auctioned plot of land from DDA. The cost of construction of the Project came to Rs. 1204.0 crore, which was financed by way of contrition by the defendant no.1's Promoters i.e. Rs. 394.79 crore and loans from the Banks including the Applicant bank ie. Rs. 810.0 crore. Term Loans totaling Rs. 810.0 crore were received from the eight banks, as per Para 12 at Page 11 of WS. The Applicant Bank had granted Term Loan in the sum of Rs. 50.0 crore by Sanction Letter dated 28.09.2011. Thereafter, the applicant bank granted fresh Cash Credit Hypothecation Limit of Rs. 35.0 crore vide Sanction Letter dated 04.09.2012. The defendants completed the development and construction of the luxury hotel "Leela Ambience Convention Hotel, New Delhi" at Shahdara and the hotel was made operational in time from the financial year 2012-13. However, the hotel could not achieve the projected revenue, *inter alia*, due to delays in development of essential and projected infrastructure such as the Barapulla Elevated road, widening of NH-24 and airport at Greater Noida and Hindon, Ghaziabad. But the Promoters brought in funds to the extent of Rs. 245.0 crore from their own sources to service the interest and instalments of the loans. The loan accounts of the Consortium members including of the Applicant were maintained standard and performing till the cut off date of SDR i.e. 30^th June, 2017 and as such account was not an NPA.

**First Restructuring of Defendant no. 1's debt**

It is further stated that in view of market recession in the real estate market, the defendant no. 1 requested the banks to restructure the term loans. The banks formed a Joint Lenders Forum (JLF) by way of Master Joint Lenders Forum Agreement dated 18.09.2014 and the banks provided for the following matters:-

- (i) appointment of J&K Bank as the lead Bank

- (ii) Specific authorization to the JLF to decide the resolution, restructuring or recovery process to be followed.

Thus, the JLF approved the request of the defendant no. 1 and accordingly, the applicant bank and defendant no. 1 executed a Funded Interest Term Loan Agreements dated 30.12.2014 wherein the Applicant Bank deferred repayment of the term loans by 2-years and sanctioned Funded Interest Term Loan in the sum of Rs. 10.85 crore.

**Second Restructuring by Partial conversion of the Defendant no. 1's debt into equity shares in Defendant no. 1.**

The JLF met on 20.06.2017 and since Defendant no. 1's accounts were going through cash flow stress, the JLF appointed SBI Capital Markets Ltd. (SBICAPS) to prepare options for resolution of Defendant no. 1's loans.

Thereafter, the JLF then met on 18.07.2017 and it was stated that all banks had written to their competent authorities for approval of the Strategic Debt Restructuring (SDR) Scheme pursuant to RBI guidelines. The SBI Cap also procured the services of external valuers for the purposes of valuing the property of defendant no. 1 in order to complete the SDR mechanism.

On 26.07.2017, a joint site inspection of the hotel was conducted by the JLF, and a meeting was held, which included SBICAPS. At the meeting, the JLF decided to invoke the SDR mechanism vide RBI circular dated 08.06.2015, to convert their debt into equity shares in the defendant no. 1 company.

Accordingly, a Share subscription-cum-conversion agreement dated 09.01.2018 and a Shareholder Agreement dated 09.01.2018 was entered into between the Applicant, other members of the consortium Banks, defendant no. 1 company and the then existing shareholders of defendant no. 1.

In accordance with the said agreements, Rs. 666.13 crore of debt of the Banks was converted into equity of 51% shareholding in Defendant no. 1, in the manner, as detailed in Para 24 at Page 13 of the WS. As a result, the debt owed to the Applicant Bank was discharged to the extent of Rs. 65.97 crore and the outstanding principal debt to the Applicant Bank now reduced to a sum of Rs. 28.42 crore, after also accounting for repayments already made to the applicant earlier. The total outstanding principal debt to all the banks was thus reduced to Rs. 286.96 crore in the manner as detailed in Para 25 at Page 14 of WS. The amount of principal debt outstanding post conversion to equity is recorded in various minutes of meeting issued by the banks, including Minutes of Meeting dated 18.06.2019.

**Discussions and proposals to settle the debt made by the defendant no. 1**

It is stated in the WS that on 12.02.2018, the RBI withdrew its existing SDR Circulars. On 26.03.2018, the Banks called for a meeting which included SBICAPS and SBICAPS gave a presentation wherein, it was recorded that the Enterprise Value of the defendant no. 1 was Rs. 245.0 crore (approx.). SBICAPs also suggested three options to the Banks i.e. Engaging OTS with the defendant no. 1, change in ownership and reference to NCLT.

On 05.04.2018, defendant no. 1 submitted an offer of M/s Shyam Telecom Ltd., a third party investor, offering to settle full outstanding debt of Rs. 287.0 crore.

On 25.06.2018, the Banks again met, including SBICAPs, wherein it reiterated the three options available to the Bank and a "Core Committee of lenders" were formed, which comprised of Bank of India, Oriental Bank of Commerce and J&K Bank.

On issuance of notice under SARFAESI by one of the lenders, it was proposed to raise funds through Rights Issue of Rs. 350.0 crore to pay off the loan amount of the participating term lenders. It was also proposed that the Right Issue of Rs. 350.0 crore would be subscribed by the member banks proportionately and in case banks are not willing to subscribe then the promoters of the company would arrange to subscribe the Rights Issue by arranging funds through some investor to avoid the intending threat under SARFAESI. On 23.07.2018, the Core Committee called for a meeting, including SBICAPS, wherein (i) defendant no. 1 reiterated the offer to settle the full debt of Rs. 287.0 core upon investment to be made by a third party investor, M/s Shyam Telecom Ltd. which was represented at the meeting by its promoter, Mr. Ajay Khanna (ii) defendant no. 1 offered a fresh rights issue of equity shares to the tune of Rs. 350.0 crore and sought the bank's approved to settle the full debt through infusion of fresh equity into the company (iii) the Banks rejected the above offers, stating untenable reasons for rejection of each option; (iv) frustrated with the non-cooperation of the consortium, promoters of defendant no. 1 offered to transfer their 49% equity to the consortium in lieu of Re. 1 and release of

personal guarantee of promoter / director of defendant no 1 company / corporate debtor. Thus, despite multiple proposals by the Defendant no. 1, the Banks rejected the offers made to settle the debt.

On 17.09.2018, the Core Committee met wherein (i) Core Committee reiterated its decision of its rejection of defendant no. 1's earlier offer to settle by way of investment by third party inventory through Swiss Challenge Method and the offer of raising funds to the tune of Rs. 350.0 crore by way of right issue to be subscribed by the promoters and their associates; (ii) on the offer of the Core Committee, Defendant no. 1 agreed to a OTS offer of Rs. 470.0 crore, which included a full discharge of the Banks' debt of Rs. 287.0 crore; and (iii) after deliberations, the Core Committee agreed to recommend the OTS settlement of Rs. 470.0 crore to all other Banks and their respective authorities.

All the Banks convened a meeting on 09.10.2018 wherein (i) the prior proposals and offers to settle by defendant no. 1 were recorded; (ii) the Banks accepted the proposal and agreed to recommend the acceptance of the OTS offer of Rs. 470.0 crore, which included full discharge of the principal debt of Rs. 287.0 crore, to their competent authorities; (iii) 20% of the OTS amount was to be paid upfront and balance 80% by 31.03.2019, provided the banks accorded approval by 31.10.2018. Therefore, a period of 5-months was agreed as the period of payment of the OTS amount and (iv) approval was subject to receipt of satisfactory report of the Forensic Audit to be got done by the consortium.

The Lead Bank accorded its approval of the OTS offer of Rs. 470.0 crore before 31.10.2018. The forensic auditor submitted their report to the lead bank which was circulated to all the member banks on 22.01.2019 and after that the Lead Bank released its sanction letter vide its letter dated 31.01.2019 and accepted the OTS offer wherein it sought payment of 20% of the OTS amount by 15.02.2019 and of the remaining amount by 31.03.2019. On 05.02.2019, the defendant no. 1 wrote a letter to the Lead Bank in the Consortium, seeking clarification as to whether bilateral settlement could be made with the Lead Bank alone and also sought clarification on the timeline of payment, since the timeline stated for payment in the meeting dated 09.10.2018 were based on the assumption that approval of the OTS offer by all the banks would be received by 31.10.2018. Accordingly, defendant no. 1 sought an extension in the timeline.

In the consortium meeting held on 11.02.2019, the member banks decided to take three fresh valuations of the hotel under Land & Building Approach and Enterprise Value of the hotel from the panel valuer of three largest lenders i.e. J&K Bank, Bank of India and Oriental Bank of Commerce. On 13.03.2019, one of the member of the Consortium, the Central Bank of India, sanctioned the OTS of the defendant no. 1 on bilateral basis with the stipulation that their proportionate share of Rs. 38.80 crore in the total OTS offered amount of Rs. 4700 crore be paid before 31.03.2019 in full discharge of its debts in terms of the approval and in case in future any higher amount is paid by the defendant no. 1 to any other member of consortium then proportionate higher amount after allowing interest at the agreed rate out of it would be paid to it i.e. Central Bank of India. Defendant no. 1 paid the said sum of Rs. 38.80 crore on 30.03.2019 in full discharge of dues of that bank and bank transferred its equity shareholding banks to M/s Apex Capital and Finance Ltd. Thus, the defendant no. 1, accordingly, acted on the sanction of the Central Bank of India in terms of the settlement contemplated in the meeting dated 09.10.2018, with an overall OTS of Rs. 470.0 crore.

Panel valuers of Bank of India, OBC and J&K Bank submitted their respective valuation reports on 20.02.2019 & 30.03.2019 after taking lot of time and as per that valuations of the property were worked out under various methods i.e. Enterprise Value and Valuation under Cost Approach [as per Para 27 at Page 19 of WS].

Subsequently, despite two banks, including the Lead Bank, having already accorded approval to the OTS offer of Rs. 470.0 crore in terms of the meeting dated 09.10.2018, on 18.06.2019, all banks called for a meeting wherein it was agreed that (i) recovery proceedings for the debts, either under SARFAESI or under the IBC "would not yield any higher amount than the OTS amount already offered by the company"; (ii) prior discovery by inviting bids under Swiss Challenge Method from third parties "would be lower than the OTS" offered by the company; (iii) they agreed that a OTS offer from the promoters was the only remaining visible solution; (iv) upon discussion of three different valuation reports obtained by the banks, the banks asked the defendant no. 1 to revise its OTS offer to Rs. 510.0 crore, which included a full discharge of the debt of Rs. 287.0 crore and (v) all the banks including the applicant bank agreed to recommend to their respective competent authorities, for the approval of the OTS of Rs. 510.0 crore. The member banks discussed and found the report of forensic auditor satisfactory which was accepted formerly.

Although the Banks had already agreed to recommend the approval of and the defendant no. 1 had already acted on the basis of, the offer of OTS of Rs. 470.0 crore, as confirmed in the meeting 09.10.2018, and had already paid Central Bank of India, in order to expedite the resolution of the debt, on 29.07.2019, after strenuous arrangement, and despite the far lower enterprise value of the hotel at Rs. 240.0 crore – made a conditional offer, without prejudice to the existing OTS agreement of Rs. 470.0 core – to increase the OTS amount to Rs. 510.0 crore. Accordingly, the agreement for OTS of Rs. 470.0 crore subsists between the Applicant Bank & defendant no. 1 and the defendant no. 1 has been willing to service the entire principal debt owed to the Applicant Bank.

On 01.11.2019, the Lead Bank by a one-line email communicated its arbitrary and unilateral rejection of the OTS offer of Rs. 510.0 crore.

In the month of January 2020, another member of consortium United Bank of India has asked the defendant no. 1 to deposit 10% of the proportionate amount due to it (Rs. 43.0 crore) on the basis of the total OTS offer of Rs. 510.0 crore in order to take up the proposal for formal approval of its competent authority. The defendant no. 1 deposited the amount of Rs. 4.34 crore on 03.02.2020, however, later on the amount was returned by the bank.

Vide letter dated 03.01.2020, defendant no. 1 has offered to all the consortium members including the applicant bank 100% of the principal debt amount and asked the permission of the consortium members including the applicant to allow the defendant no. 1 to raise the funds by way of loan or equity.

Consortium members including applicant bank in its meeting dated 23.01.2020 failed to approve the proposal of the Defendant no. 1 inspite of knowledge of the fact that the OTS amount of Rs. 470 / 510 crore was the best price offered.

Once again, by Minutes of Meeting dated 21.11.2020, the Applicant and the consortium have agreed to the proposal of the defendant no. 1 to settle the dues pursuant to the previously agreed OTS of Rs. 470.0 crore. However, the applicant bank and the consortium have subjected their agreement to a swiss challenge method, using the OTS of Rs. 470.0 crore. Thereby, the applicant bank has agreed to allow the defendant to settle its dues, if the defendant no. 1 matches the price arrived at the Swiss Auction, or if such price is lesser than the defendant no. 1's OTS of Rs. 470.0 crore.

Subsequent to that, meeting of the consortium was convened by Applicant on 06.01.2021 which was attended by all the participating lenders part of the consortium and after due deliberations and discussions, Promoter Director and Vice President Finance of Defendant no. 1 were taken on board and on the Banks' query. Defendant no. 1 agreed to submit OTS proposal of Rs. 470.0 crore under Swiss Challenge Method and accordingly letter dated 08.01.2021 was submitted to all the participating lenders part of the consortium including the Applicant Bank.

**Objections / Grounds taken in the WS**

- (i) That once the applicant bank itself has agreed to allow settlement of the dues by defendant no. 1, subject to actions pending at their end, the applicant bank cannot simultaneously allege default and proceed with the present OA. Moreover, this Tribunal has no jurisdiction to entertain this OA as the applicant bank has already approved the OTS proposal and in terms of the OTS, the applicant is bound to withdraw the present OA;

- (ii) That the Applicant has specified the amount of debt by wrongfully ignoring the Shares Subscription cum Conversion Agreement and Shareholders' Agreement executed by the Applicant and Defendant no. 1 on 09.01.2018. In terms of the Shareholders' Agreement, the Applicant's debt in the sum of Rs. 65.97 crore was converted to 5.05% equity shareholding in defendant no. 1 and Applicant became an equity shareholder of defendant no. 1. Thus, once applicant's debt was converted into equity, it ceased to continue as debt either in the books of Applicant or in the books of defendant no. 1. Post execution of the Shareholders' Agreement, the amount of debt to the sum of Rs. 65.97 crore stood discharged by its conversion into equity and the outstanding debt due to the applicant was reduced to Rs. 28.42 crore. It is also stated that the action of conversion of debt into equity is irreversible and once having chosen to convert its debt into equity, the applicant bank cannot initiate the debt recovery proceedings before this Tribunal for the amount which was converted to equity;

(iii) That after conversion of debt into equity by the applicant bank vide Shareholders' Agreement dated 09.01.2018, the repayment schedule of the Term Loan was effectively deferred and repayment of the remaining dues in the sum of Rs. 28.42 crore was to commence only from 2023-24 and no installments are due to the applicant bank before 2023. It is stated in the WS that in terms of Clause 2.4 of the Shareholders' Subscription cum Conversion Agreement, the loan conversion amount was to be adjusted firstly towards outstanding amount of FITL, and lastly towards outstanding amounts of the original Term Loans. Thus, on execution of the Shareholders' Agreement, Applicant's total debt in the sum of Rs. 10.85 crore under the Funded Interest Term Loan stood completely discharged and a further sum of Rs. 55.12 crore under the Term Loan Agreements also stood repaid. However, the Applicant has arbitrarily calculated the dues on the basis of repayment schedule in its sanction letter dated 08.03.2017 which stood deferred by the execution of the Shareholders' Agreement, as demonstrated above. As per the sanction letter read with the Shareholders' Agreement, the time period for payment of the remaining debt has not arisen as yet and only begins in FY 2023-24. Thus, as on date there is no legally recoverable debt due to the applicant bank and hence, the OA ought to be dismissed;

- (iv) That the Applicant has also wrongly declared the account of defendant no. 1 as NPA on 30.06.2018 as the standstill period of 18-months commencing from 18.07.2017, in terms of the SDR, was in operation when the account was wrongfully declared as NPA;

- (v) That the consortium failed in its responsibility of exiting defendant no. 1 in terms of the SDR and consequently cannot hold the defendant liable for its failure;

- (vi) That the personal guarantee of Defendant no. 3 was subsequently discharged in terms of the Joint Restructuring Agreement pursuant to which only the personal guarantee of defendant no. 2 was retained;

- (vii) That the account of defendant no. 1 was declared as NPA in violation of the relevant SDR Guidelines.

In the light of above, it has been prayed to dismiss the OA.

**Documents relied by defendants no. 1 & 3.**

- (i) Sanction Letter dated 28.09.2011 of applicant bank (R-1A);

- (ii) Sanction Letter dated 04.09.2012 of applicant bank (R-2)

- (iii) Master Joint Lenders Forum Agreement dated 18.09.2014 (R-3).

- (iv) Funded Interest Term Loan Agreements dated 30.12.2014 (R-4)

- (v) Minutes of Meeting dated 20.06.2017 (R-5)

- (vi) Minutes of Meeting dated 18.07.2017 (R-6)

- (vii) Minutes of Meeting dated 26.07.2017 (R-7)

- (viii) Minutes of Meeting dated 04.01.2018 (R-8)

- (ix) Share subscription-cum-conversion agreement dated 09.01.2018 and a Shareholder Agreement dated 09.01.2018 was entered into between the Applicant, other members of the consortium Banks, defendant no. 1 company and the then existing shareholders of defendant no. 1 (R-9 & R-10).

- (x) Minutes of Meeting dated 18.06.2019 (R-11)

- (xi) Minutes of Meeting dated 26.03.2018 (R-12)

- (xii) Offer of M/s Shyam Telecom submitted by defendant no. 1 on 05.04.2018 (R-13)

- (xiii) Minutes of Meeting dated 25.06.2018 (R-14)

- (xiv) Minutes of Meeting dated 23.07.2018 (R-15)

- (xv) Minutes of Meeting dated 17.09.2018 (R-16)

- (xvi) Minutes of Meeting dated 09.10.2018 (R-17)

- (xvii) Minutes of Meeting dated 09.10.2018 (R-18)

- (xviii) Lead Bank's Sanction Letter dated 31.01.2019 (R-19).

- (xix) Letter dated 13.03.2019 issued by Central Bank of India (R-20);

- (xx) Acknowledgement of receipt of payment dated 02.04.2019 (R-21);

- (xxi) Valuation Reports of Bank of India, OBC and J&K Bank (R-22, R-23 & R-24);

- (xxii) Minutes of Meeting dated 18.06.2019 (R-25)

- (xxiii) Lead Bank's email dated 01.11.2019 (R-26)

- (xxiv) Letter dated 03.01.2020 (R-27)

- (xxv) Minutes of Meeting dated 23.01.2020 (R-28)

- (xxvi) Minutes of Meeting dated 21.11.2020 (R-29)

- (xxvii) Minutes of Meeting dated 06.01.2021 (R-30)

5. So far as, defendant no. 2 is concerned, in his separate WS, though he has raised more or less similar objections, as raised by defendants no. 1 & 3 in their common WS, however, he has discussed certain other issues in his WS as detailed below :- Defendant no. 2 has stated in the WS that the Applicant has wrongly sought recovery of Rs. 136,15,29,255/- in the present OA arbitrarily and illegally by claiming compound interest and penal interest from the period from July 2017 upto August 2021 in complete violation of terms of its various sanction to the loan, subsequent sanctions to restructure and Strategic Debt Restructuring (SDR), payment made by the defendant no. 1 to the Applicant over the year 2011 to 2018, and banking and accounting norms. It is further stated that the Applicant has ignored the payment of following amounts made by the defendant no. 1 to the Applicant over the period 2011 to 2018:-

- (a) Interest of Rs. 13.11 crore paid during the period of construction and development from 2011 to 31.03.2013;

- (b) Interest of Rs. 10.89 crore after commencement of commercial operation from 01.04.2013 to 31.03.2014;

- (c) Interest of Rs. 11.84 crore during the period 01.04.2014 to 31.03.2016;

- (d) Interest of Rs. 14.03 crore during the period 01.04.2016 to 30.06.2017;

- (e) Instalment of Rs. 0.10 crore paid during the period 01.04.2013 to 30.06.2017 in terms of sanction of the loan by the applicant for the construction and development of the Hotel in question;

- (f) Other payments of Rs. 0.46 crore during the period 2011 to 2018;

- (g) Repayment of Rs. 65,97,07,850/- towards interest and part of principal loan amount in the form of consideration for issuing of 6,59,70,785 equity shares in the borrower company M/s Aman Hospitality Pvt. Ltd. / defendant no. 1 to the Applicant in terms of approval and dated 30.12.2017 of the Applicant.

It is stated in the WS that a shareholder is not entitled to claim any liability against the company for the investment made by the shareholder in the company towards acquiring of equity in the company. Thus, any of the rights of the shareholders against the company cannot be a subject matter of adjudication before this Tribunal and can only be governed in accordance with the Articles of Association and in terms of Shareholder Agreement.

It is also stated in the WS that the JLF has convened meetings on 23.08.2022 and 30.08.2022 of all the member banks with the officials of defendant no. 1 and perusal of the minutes of meetings clearly shows that the lender banks including the Applicant, on one hand, are taking steps to consider the OTS proposal offered by defendant no. 1 but on the sideways pursuing the litigious application. In the said meetings, once again officials of defendant no. 1 reiterated that defendant no. 1 intends to resolve the deadlock created by the lender banks and is willing to clear in full the outstanding debt of the lender banks. Further, the defendant no. 1 once again addressed a letter on 22.11.2022 to the Applicant offering to clear the outstanding debt on a bilateral basis wherein the defendant no.1 offered to pay Rs.

46.54 crore as opposed to Rs. 28.42 crore as outstanding of the applicant within four months of receiving the formal acceptance from the applicant.

Moreover, Defendant no. 1, in line with its commitment to the JLF, also offered an OTS proposal to the lead bank on 22.11.2022 which was later revised by defendant no. 1 on the request of Lead Bank. In view of the same, defendant no. 1 revised the OTS amount by 20% and issued a modified proposal by letter dated 07.12.2022. Thereafter, the Lead Bank withdrew the Company Petition pending against defendant no. 1 before NCLT on 08.12.2022 and in this regard, the order dated 08.12.2022 was passed in CP(IB) 1086 of 2020 by NCLT, Principal Bench, New Delhi.

Thereafter, on 16.12.2022, Applicant along with other lender banks convened a meeting wherein, the Lead bank informed that an OTS proposal was submitted by defendant no. 1, which had been up up before their competent authority for consideration. It was also noted that defendant no. 1 is willing to extend the OTS offer on the same payment terms to all the lender banks, if they are willing to give their sanction to the OTS offer.

Thus, defendant no. 1, to show its bonafide, offered a proposal of OTS to the Applicant on 24.01.2023 wherein it undertook to pay a sum of Rs. 46.54 crore within four months from receiving approval of the OTS proposal by the Applicant.

On 04.02.2023, the Applicant rejected the OTS proposal of defendant no. 1 (sent through email) and requested to enhance the OTS offer by offering an additional sum for time value of money with the OTS amount and advised to deposit an upfront 10% OTS amount with the bank. Thereafter, in line with the JLF approved OTS proposal of Rs. 564.0 crore as opposed to Rs. 470.0 crore in lieu Rs. 46.54 crore. The enhanced / improved OTS proposal is pending with the Applicant.

It is also stated that the OTS proposal dated 07.12.2022 submitted by Defendant no. 1 has been kept pending by the applicant with its competent authority for over 5-months, hence, on account of the delay by the Applicant's competent authority, the defendant no. 1 issued a letter dated 25.05.2023 requesting the Applicant to give the sanction to the OTS proposal or in the alternative, and on a without prejudice basis, to permit the Promoter / Personal Guarantor i.e. defendant no. 2 to deposit the entire outstanding principal debt with applicable interest in a 'no lien account' with the bank which may be adjusted towards outstanding debt alongwith applicable interest after reducing any amounts already recovered by the applicant, upon 15-days from receiving the approval from the bank. The said representation is still pending with the applicant.

**Objections / Grounds taken in the WS**

- (i) That the defendants with bona fide has always been willing to pay the debt of the Applicant but is not able to pay due to unjustifiable, arbitrary rejections of the various offers on the part of the Applicant in the capacity of the lender, shareholders in majority and in view of terms of shareholder Agreement dated 09.01.2018;

- (ii) That after conversion of debt into equity by the applicant bank vide Shareholders' Agreement dated 09.01.2018, the repayment schedule of the Term Loan was effectively deferred and on discharge of debt in the sum of Rs. 65.97 crore, repayment of remaining dues in the sum of Rs. 28.42 crore was to commence only as per the terms of the RBI guidelines on SDR. In terms of Clause 2.4 of the Shareholders' Subscription cum Conversion Agreement, the loan conversion amount was to be adjusted firstly towards repayment of instalments which had already become due and remained unpaid, then towards outstanding amount of FITL, and lastly towards outstanding amounts of the original Term Loans. Thus, on execution of the Shareholders' Agreement, Applicant's total debt in the sum of Rs. 65.97 crore stood repaid. However, the Applicant has arbitrarily calculated the dues on the basis of repayment schedule in its sanction letter dated 06.03.2017 which stood deferred by the execution of the Shareholders' Agreement. As per the sanction letter read with the Shareholders' Agreement, the time period for payment of the remaining debt has not arisen as yet. Thus, as on date there is no legally recoverable debt due to the applicant bank and hence, the OA ought to be dismissed;

- (iii) That the Applicant has also wrongly declared the account of defendant no. 1 as NPA on 30.06.2018 as the standstill period of 18-months commencing from 18.07.2017, in terms of the SDR, was in operation when the account was wrongfully declare as NPA;

- (iv) That the JLF failed in its responsibility of exiting defendant no. 1 in terms of the SDR and consequently cannot hold the defendant liable for its failure;

- (v) That this Tribunal has no jurisdiction to entertain this OA as the total outstanding in the Term Loan, Cash Credit Facility and FITL after invocation of SDR Scheme was Rs. 28.42 crore for which the Defendant no. 1 has already proposed an OTS which is pending consideration with the Applicant;

- (vi) That no cause of action arose in favour of the applicant, hence, the question of being filed within the limitation period does not arise;

- (vii) That the Applicant did not retain the personal guarantee of defendant no. 2 after the implementation of Strategic Debt Restructuring in accordance with the First Supplemental Joint Master Restructuring Agreement dated 28.03.2018, the applicant only retained securities as stipulated in Recital E of the Agreement and was obligated to enforce its rights as per the terms of the said Agreement;

- (viii) That the personal guarantee of Defendant no. 3 was subsequently discharged in terms of the Joint Restructuring Agreement pursuant to which only the personal guarantee of defendant no. 2 was retained. But after the implementation of Strategic Debt Restructuring, personal guarantee of defendant no. 2 stood discharged as well in terms of the First Supplemental Joint Master Restructuring Agreement dated 28.03.2018;

- (ix) That the Applicant herein has relied on the RBI Circular dated 12.02.218 to allege that the SDR

Scheme has been revoked but the said revocation only applies where SDR had not been fully implemented. In the instant case, the SDR Scheme was implemented and the Banks already took over the majority equity shareholdings in defendant no. 1. However, in any event, the subsequent RBI Circular dated 12.02.2018 was later on set aside by Hon'ble Supreme Court in the judgment of *Dharani Sugar and Chemicals Vs. Union of India* [(2019) 5 SCC 480]. Therefore, the argument of the Applicant that the SDR Scheme was recalled is in the teeth of Hon'ble Supreme Court's decision in *Dharani Sugar case*;

- (x) That the Demand Notice dated 18.09.2018 relied by the applicant is not issued in terms of the provisions of the SARFAESI Act, 2002 as the loan account of defendant no. 1 was regular when the said notice was issued. It is stated that in terms of the SDR implemented by the JLF, there shall be a standstill on account classification for a period of 18-months starting from the effective date of SDR implementation i.e. 18.07.2017, hence, in terms of the SDR guidelines issued by RBI, the loan account of the defendant no. 1 was regular when the demand notice was issued. Therefore, the said Demand Notice is not a valid demand against the defendants. There being no demand or invocation of personal guarantee, assuring without admitting that the guarantee is valid, the present OA is not maintainable against the answering defendant.

In the light of above, it has been prayed to dismiss the OA.

**Documents relied by defendant 2**

- (i) Sanction Letter dated 30.12.2017 of the Applicant (D-1);

- (ii) Minutes of the JLF Meeting dated 04.01.2018 (D-2);

- (iii) Minutes of the JLF Meeting 17.09.2018 (D-3);

- (iv) Sanction Letter dated 28.09.2011 and 04.09.2012 of applicant bank (D-4-colly)

- (v) Master Joint Lenders Forum Agreement dated 18.09.2014 (D-5).

- (vi) Sanction Letter dated 30.12.2014 for restructuring of the Term Loan as per the Corrective Action Plan (D-6)

- (vii) Minutes of the JLF Meeting dated 20.06.2017 (D-7)

- (viii) Minutes of the JLF Meeting dated 18.07.2017 (D-8)

- (ix) Minutes of the JLF Meeting dated 26.07.2017 (D-9)

- (x) Share subscription-cum-conversion agreement dated and Shareholder Agreement dated 09.01.2018 (D-10-colly);

- (xi) First Supplemental Joint Master Restructuring Agreement dated 28.03.2018, Second Supplemental Escrow Agreement dated 28.03.2018, Second Supplemental Inter-se Agreement dated 28.03.2018, Second Supplemental Security Agent Agreement dated 28.03.2018 (D-11-colly);

- (xii) Minutes of the JLF Meeting dated 18.06.2019 (D-12);

- (xiii) RBI Notification dated 12.02.2018 (D-13);

- (xiv) Minutes of the JLF Meeting dated 26.03.2018 (D-14);

- (xv) Letter dated 05.04.2018 from defendant no. 1 proposing an offer on behalf of 3^rd party investor M/s Shyam Telecom (D-15);

- (xvi) Minutes of the JLF Meeting dated 25.06.2018 (D-16);

- (xvii) Minutes of the JLF Meeting dated 23.07.2018 (D-17);

- (xviii) Minutes of the JLF Meeting dated 17.09.2018 (R-18);

- (xix) J&K Bank's Sanction Letter dated 31.01.2019 to the OTS proposal submitted by defendant no. 1 (D-19);

- (xx) Letter dated 13.03.2019 issued by Central Bank of India approving the OTS proposal submitted by defendant no. 1 (D-20);

- (xxi) Letter dated 02.04.2019 issued by Central Bank of India acknowledging receipt of payment in terms of the OTS proposal (D-21);

- (xxii) Valuation Reports of Bank of India, OBC and J&K Bank (D-22-colly);

- (xxiii) Minutes of the JLF Meeting dated 18.06.2019 (D-23);

- (xxiv) J&K Bank's email dated 01.11.2019 rejecting the OTS proposal submitted by defendant no. 1 (D-24);

- (xxv) Letter dated 03.01.2020 of Defendant no. 1 proposing to pay 100% outstanding debt of each lender of JLF (D-25);

- (xxvi) Minutes of the JLF Meeting dated 23.01.2020 (D-26);

- (xxvii) Minutes of the JLF Meeting dated 21.11.2020 (D-27);

- (xxviii) Minutes of the JLF Meeting dated 06.01.2021 (D-28-colly);

- (xxix) Minutes of the JLF Meeting dated 23.06.2022 & 30.08.2022 (D-29-colly);

- (xxx) Letter dated 22.11.2022 from defendant no. 1 to the Applicant (D-30);

- (xxxi) Letter dated 07.12.2022 from Lead Bank requesting defendant no. 1 to enhance the OTS proposal and a copy of the letter dated 07.12.2022 from defendant no. 1 to Lead Bank with an enhanced proposal (D-31-colly);

- (xxxii) Order dated 08.12.2022 passed in C.P. (IB) 1086 of 2020 by NCLT, Principal Bench, New Delhi (D-32);

- (xxxiii) Minutes of the JLF Meeting dated 16.12.2022 (D-33);

- (xxxiv) Letter dated 24.01.2023 from defendant no. 1 proposing an OTS to Applicant (D-34);

- (xxxv) Email dated 04.02.2023 from Applicant rejecting the OTS proposal of defendant no. 1 (D-35);

- (xxxvi) Letter dated 11.02.2023 from defendant no. 1 proposing an enhanced OTS to Applicant (D-36);

- (xxxvii) Defendant no. 1's representation by Letter dated 25.05.2023 to the Applicant (D-37).

6. So far as, defendant no. 4 / Jammu & Kashmir Bank Ltd. is concerned, it is a performa defendant and no relief has been claimed against this defendant by the applicant bank.

6.1 It the WS, defendant no. 4 has not denied the averments made in the OA. In fact, defendant no. 4 has admitted that the answering defendant bank is Lead Bank of the consortium lenders of the defendant no. 1 company and has given the details of loan sanctioned by it to the defendants no. 1 & 2 as well as documents executed in this regard.

Now, it has been prayed in the WS that while passing the final order in the present OA, this Tribunal may direct that the sale proceeds of the mortgaged properties and hypothecated assets shall be disbursed amongst the answering defendants as well as other applicant banks on the basis of their respective ranking of charges and on pro-rate basis and also pass such order(s) as may be deemed fit and proper in the facts and circumstances of the present case.

7. So far as, defendant no. 8 / Indian Bank is concerned, it is also a performa defendant and no relief has been claimed against this defendant by the applicant bank.

7.1 It the WS, defendant no. 8 has stated that it has also filed OA No. 61/2021 (Indian Bank Vs. Aman Hospitality Private Limited & Ors.) before this Tribunal for recovery of more than Rs. 72.0 crore against defendants no. 1 & 3. It is also admitted that the answering defendant bank is one of the consortium lenders of the defendant no. 1 company with the lead bank as well as monitoring bank J&K Bank Ltd. / defendant no. 4. It has also given the details of loan sanctioned by it to the defendants no. 1 to 3 as well as documents executed in this regard.

Now, it has been prayed in the WS that this OA of applicant may be decided by this Tribunal without hampering the legal rights of the answering defendant and its leader bank / J&K Bank Ltd. and also allow the answering defendant to proceeding with the enforcement measures in order to recover its dues against the defendants no. 1 to 3, as per law.

8. Applicant bank has also filed the Rejoinder to the WS filed by defendants no. 1 & 3 denying the allegations levelled against it and retieating the averments made in the OA.

9. To prove its case, the Applicant Bank leads its evidence by filling the affidavit of Sh. Rakesh Kumar,, Senior Manager of the Applicant bank.

9.1 Sh. Rakesh Kumar, officer of applicant bank has placed reliance upon the documents filed by the Applicant Bank which includes:-

- (i) Power of Attorney dated 07.01.2020 executed by the Applicant Bank in his favour [Ex. AW1/1(OSR)];

- (ii) Sanction Letter dated 28.09.2011 issued by applicant bank for Term Loan of Rs. 50.0 crore (Ex. AW1/2);

- (iii) Letter dated 29.09.2011 executed by defendant no. 1 enclosing documents i.e. Certified copy of its Board Resolution dated 29.09.2011 along with Letter of Underling dated 29.09.2011 (Ex. AW1/3 to AW1/5);

- (iv) Demand Promissory Note dated 29.09.2011 [(Form No.14 (R))] executed by defendant no. 1 (Ex. AW1/6);

- (v) Letter of Waiver for presentment of Demand Promissory Note dated 29.09.2011 (Form No. 106) executed by defendant no. 1 (Ex. AW1/7);

- (vi) Loan Agreement dated 29.09.2011 with Schedule I, II & III executed by defendant no. 1 (Ex. AW1/8);

- (vii) Bank's Form No.291 dated 29.09.2011 regarding payment of penal interest @2% in case of default / irregularity executed by defendant no. 1 (Ex. AW1/9);

- (viii) Bank's Form No. 412 dated 29.09.2011 regarding non-diversion of Funds executed by defendant no. 1 (Ex. AW1/10);

- (ix) Bank's Form No.103 dated 29.09.2011 executed by defendant no. 1 (Ex. AW1/11);

- (x) Bank's Form No. 200 dated 29.09.2011 regarding rate of interest executed by defendant no. 1 (Ex. AW1/12);

- (xi) Letter of Authorization dated 29.09.2011 for debiting expenses by the bank executed by defendant no. 1 (Ex. AW1/13);

- (xii) Consent Letter dated 29.09.2011 executed by defendant no. 1 for disclosure to CIBIL in case of default (Ex. AW1/14);

- (xiii) Agreement of Guarantee dated 29.09.2011 (Form No. 255) executed by defendants no. 2 (Ex. AW1/15);

- (xiv) Agreement of Guarantee dated 29.09.2011 (Form No. 255) executed by defendants no. 3 (Ex. AW1/16);

- (xv) Consent Letter dated 29.09.2011 executed by defendants no. 2 & 3 for disclosure to CIBIL in case of default committed by them (Ex. AW1/17);

- (xvi) Respective letters dated 28.09.2011 executed by applicant bank in favour of Term Lenders i.e. defendants no. 4 to 9, thereby, ceding Pari Passu charge (Ex. AW1/18 to AW1/23);

- (xvii) Request Letter dated 29.09.2011 of defendant no. 1 for disbursing the Term Loan (Ex. AW1/24);

- (xviii) Letters dated 31.10.2011, 02.11.2011, 27.10.2011, 16.11.2011, 02.11.2011 and 01.11.2011 executed by defendants no. 4 to 9 respectively ceding pari passu charge over the assets of defendant no. 1 company (Ex. AW1/25 to AW1/30);

- (xix) Lead Bank i.e. Jammu & Kashmir Bank Ltd.'s letter dated 05.11.2011 extending / ceding the first Pari Passu charge on the Project Land and Building and other fixed assets of Hotel Complex (Ex. AW1/31);

- (xx) certified true copy of the MOE Register containing the Memorandum of Entry at Sl. No. 37 & 38 on 05.11.2011 along with copies of Title Documents i.e. copy of Lease Deed dated 11.02.2010 executed between President of India on the one Part and M/s Aman Hospitality Pvt. Ltd. on the Other Part and copy of Possession Certificate dated 08.02.2010 issued by DD in favour of M/s Aman Hospitality Pvt. Ltd. [Ex. AW1/32 to AW1/34] (OSR)];

- (xxi) certified copies of the Board Resolutions dated 13.01.2012 and 15.03.2012 submitted by defendant no. 1 to the consortium member banks including applicant bank [Ex. AW1/35 & AW1/36(OSR)];

- (xxii) Inter-se Agreement dated 17.03.2012 executed by defendant no. 1 (Ex. AW1/37-OSR);

- (xxiii) Joint Deed of Hypothecation dated 17.03.2012 executed by defendant no. 1 (Ex. AW1/38-OSR);

- (xxiv) Security Agent Appointment Agreement dated 17.03.2012 executed by defendant no. 1 (Ex. AW1/39);

- (xxv) Escrow Account Agreement dated 17.03.2012 executed by defendant no. 1 (Ex. AW1/40-OSR);

- (xxvi) Master Joint Lenders Forum Agreement dated 17.03.2012 executed by defendant no. 1 (Ex. AW1/41-OSR);

- (xxvii) Sanction Letter dated 04.09.2012 of applicant bank duly accepted by defendant no. 1 (Ex. AW1/42);

- (xxviii) certified copy of its Board Resolution dated 04.09.2012 and list of its Directors vide certificate dated 04.09.2012 submitted by defendant no. 1 to the applicant bank (Ex. AW1/43 & AW1/44);

- (xxix) Demand Promissory Note dated 04.09.2012 [Form No. 14(R)] executed by defendant no. 1 (Ex. AW1/45);

- (xxx) Letter of Waiver for presentment of Demand Promissory Note dated 04.09.2012 [Form No. 106] executed by defendant no. 1 (Ex. AW1/46);

- (xxxi) Bank's Form No. 103 dated 04.09.2012 executed by defendant no. 1 (Ex. AW1/47);

- (xxxii) Hypothecation Agreement dated 04.09.2012 executed by defendant no. 1 (Ex. AW1/48);

- (xxxiii) Bank's Form No. 291 dated 04.09.2012 regarding payment of penal interest @2% in case of default /

irregularity executed by defendant no. 1 (Ex. AW1/49);

(xxxiv) Bank's Form No. 412 dated 04.09.2012 regarding non-diversion of Funds executed by defendant no. 1 (Ex. AW1/50);

(xxxv) Bank's Form No. 200 dated 04.09.2012 regarding rate of interest executed by defendant no. 1 (Ex. AW1/51);

(xxxvi) Letter of Authorization dated 04.09.2012 for debiting expenses by the bank executed by defendant no. 1 (Ex. AW1/52);

(xxxvii) Stamped Undertaking dated 04.09.2012 for sublimit of ILC/FLC Limit of Rs. 10.0 crore executed by defendant no. 1 (Ex. AW1/53);

(xxxviii) Letter of Undertaking dated 04.09.2012 executed by defendant no. 1 (Ex. AW1/54);

(xxxix) Consent Letter dated 04.09.2012 for disclosure to CIBIL in case of default (Annexure -1) executed by defendant no. 1 (Ex. AW1/55);

(xl) Stamped Undertaking dated 04.09.2012 executed by defendant no. 1 (Ex. AW1/56);

(xli) Agreement of Guarantees dated 04.09.2012 (Form 255) executed by defendant no. 2 (Ex. AW1/57);

(xlii) Agreement of Guarantees dated 04.09.2012 (Form 255) executed by defendant no. 3 (Ex. AW1/58);

(xliii) Consent Letter dated 04.09.2012 of defendants no. 2 & 3 for disclosure to CIBIL in case of default committed by them (Ex. AW1/59);

(xliv) Letter of Undertaking dated 04.09.2012 executed by defendants no. 2 & 3 (Ex. AW1/60);

- (xlv) Stamped Undertaking (form No. 199) dated 04.09.2012 executed by defendants no. 1 to 3 (Ex. AW1/61);

- (xlvi) Bank's Form No. 84A dated 04.09.2012 executed by defendant no. 1 in favour of the applicant bank (Ex. AW1/62);

- (xlvii) Revival Letters dated 05.04.2013 executed by defendant no. 1 (Ex. AW1/63 & AW1/64);

- (xlviii) Letters dated 04.10.2012, 06.04.2013, 16.04.2013, 10.10.2013 and 31.07.2013 executed by defendants no. 4 to 9 ceding second charge on the assets of defendant no. 1 (Ex. AW1/65 to AW1/69);

- (xlix) Covering Letter dated 07.06.2014 of defendant no. 1 acknowledging the Sanction dated 24.04.2014 of the applicant bank thereby enclosing the Certified copy of its Board Resolution dated 04.06.2014 and duly signed copy of the Sanction Letter dated 24.04.2014 by the authorized signatory / director of the defendant no. 1 company (Ex. AW1/70 to AW1/72);

- (l) Letter dated 26.12.2014 of defendant no. 1 to the applicant bank for restructuring of instalments etc. (Ex. AW1/73);

- (li) Sanction dated 30.12.2014 read with Letter dated 30.12.2014 of the applicant bank with regard to restructuring of the existing credit facilities in line with the lead Bank and other consortium member banks (Ex. AW1/74 & AW1/75);

- (lii) certified copy of Board Resolution dated 30.12.2014 of defendant no. 1 (Ex. AW1/76);

- (liii) Demand Promissory Note dated 30.12.2014 [Form No. 14 (R)] executed by defendant no. 1 (Ex. AW1/77);

- (liv) Letter for Waiver for presentment of Demand Promissory Note dated 30.12.2014 (Form No. 106) executed by defendant no. 1 (Ex. AW1/78);

- (lv) Supplementary Term Loan Agreement dated 30.12.2014 executed by defendant no. 1 (Ex. AW1/79);

- (lvi) Funded Interest Term Loan Agreement dated 30.12.2014 executed by defendant no. 1 (Ex. AW1/80);

- (lvii) Bank's Form No. 103 dated 30.12.2014 executed by defendant no. 1 (Ex. AW1/81);

- (lviii) Bank's Form No. 126 dated 30.12.2014 executed by defendant no. 1 (Ex. AW1/82);

- (liix) Bank's Form No. 200 dated 30.12.2014 executed by defendant no. 1 (Ex. AW1/83);

- (lx) Bank's Form No. 291 dated 30.12.2014 regarding payment of penal interest @2% in case of default / irregularity executed by defendant no. 1 (Ex. AW1/84);

- (lxi) Bank's Form No. 412 dated 30.12.2014 regarding non-diversion of Funds executed by defendant no. 1 (Ex. AW1/85);

- (lxii) Letter of Authorization dated 30.12.2014 for debiting expenses by the bank executed by defendant no. 1 (Ex. AW1/86);

- (lxiii) Consent Letter dated 30.12.2014 for disclosure to CIBIL in case of default (Annexure-1) executed by defendant no. 1 (Ex. AW1/87); 

- (lxiv) Stamped Undertaking dated 30.12.2014 executed by defendant no. 1 (Ex. AW1/88);

- (lxv) Agreement of Guarantee dated 30.12.2014 (Form No. 255) executed by defendant no. 1 (Ex. AW1/89);

- (lxvi) Stamped Undertaking dated 30.12.2014 in favour of the Applicant Bank as well as Consent Letter dated 30.12.2014 (Annexure-II) for disclosure to CIBIL in case of default committed by him, both executed by defendant no. 2 (Ex. AW1/90 & AW1/91);

- (lxvii) Undertaking (Form No. 199) dated 30.12.2014 executed by defendants no. 1 & 2 (Ex. AW1/92);

- (lxviii) Bank's Form No. 84A dated 30.12.2014 executed by defendant no. 1 in favour of the applicant bank (Ex. AW1/93);

- (lxix) Letter dated 20.01.2015 of the Lead Bank i.e. J&K Bank Ltd. confirming the extension of equitable mortgage over the immovable property of the defendant no. 1 company by way of pari passu charge in favour of Lender Banks including applicant bank containing Schedule-I to IV (Ex. AW1/94);

- (lxx) Attested copy of its MOE Register by the Lead Bank i.e. J&K Bank Ltd. recording the entry of extension of equitable mortgage towards restructured loan facilities sanctioned to defendant no. 1 company (Ex. AW1/95-OSR);

- (lxxi) certified copy of Board Resolution dated 28.03.2015 of defendant no. 1 submitted by it to the Lead Bank i.e. Jammu & Kashmir Bank Ltd. (Ex. AW1/96-OSR);

- (lxxii) certified copy of Board Resolution dated 28.03.2015 of defendant no. 1 submitted by it to the Lead Bank i.e. Jammu & Kashmir Bank Ltd. (Ex. AW1/97-OSR);

- (lxxiii) Letter of Undertaking dated 31.03.2015 executed by defendant no. 1 (Ex. AW1/98);

- (lxxiv) Undertaking dated 31.03.2015 executed by defendant no. 1 (Ex. AW1/99);

- (lxxv) Letter ceding Pari Passu charge dated 31.03.2015 executed by defendant no. 1 (Ex. AW1/100);

- (lxxvi) First Supplementary Joint Deed of Hypothecation dated 31.03.2015 executed by defendant no. 1 (Ex. AW1/101);

- (lxxvii) First Supplemental Security Agent Appointment Agreement dated 31.03.2015 executed by defendant no. 1 (Ex. AW1/102);

- (lxxviii) First Supplemental Inter-se Agreement dated 31.03.2015 executed by defendant no. 1 (Ex. AW1/103);

- (lxxix) First Supplemental Escrow Agreement dated 31.03.2015 executed by defendant no. 1 (Ex. AW1/104);

- (lxxx) Joint Master Restructuring Agreement dated 31.03.2015 executed by defendant no. 1 (Ex. AW1/105);

- (lxxxii) Letter of Undertaking dated 31.03.2015 executed by defendant no. 1 (Ex. AW1/106);

- (lxxxii) Deed of Guarantee dated 31.03.2015 executed by defendant no. 2 in favour of the Lead Bank / J&K Bank Ltd. (Ex. AW1/107-OSR);

- (lxxxiii) respective Revival Letters dated 29.02.2016 executed by defendants no. 1 to 3 in favour of the applicant bank (Ex. AW1/108 to AW1/110);

- (lxxxiv) respective Revival Letters dated 30.06.2017 executed by defendants no. 1 in favour of the applicant bank with regard to Term Loan Account, Cash Credit Account and FITS Account (Ex. AW1/111 to AW1/113);

- (lxxxv) second Supplemental Term Loan Agreement dated 08.03.2018 executed by defendant no. 1 in favour of the Applicant Bank (Ex. AW1/114);

- (lxxxvi) Demand Notice under Section 13(2) of SARFAESI Act dated 18.09.2018 issued by the applicant bank to the defendants no. 1 to 3 (Ex. AW1/115-OSR);

- (lxxxvii) Reply dated 27.02.2019 of the applicant to the objection dated 15.11.2018 of the defendant no. 1 (Ex. AW1/116-OSR);

- (lxxxviii) respective Balance and Security Confirmation Letters dated 06.06.2020 with regard to Term Loan, Cash Credit and FITL Accounts executed by defendant no. 1 in favour of the applicant bank (Ex. AW1/117 to AW1/119);

- (lxxxix) Calculation Sheet of the applicant bank (Ex. AW1/120);

- (xc) Certified statement of account of the Term Loan duly certified under Banker's book Evidence Act (Ex. AW1/121);

- (xci) Memorandum and Calculation Sheet of the Term Loan Account inclusive of unapplied interest and penal interest w.e.f. 28.07.2017 till 06.08.2021

besides expenses and credits received (Ex. AW1/122 & AW1/123);

- (xcii) Certified statement of account of the Funded Interest Term Loan (FITL) duly certified under Banker's book Evidence Act (Ex. AW1/124);

- (xciii) Memorandum and Calculation Sheet of the FITL Account inclusive of unapplied interest and penal interest w.e.f. 28.07.2017 till 06.08.2021 besides expenses and credits received (Ex. AW1/125 & AW1/126);

- (xciv) Certified statement of account of the Cash Credit Account duly certified under Banker's book Evidence Act (Ex. AW1/127);

- (xcv) Memorandum and Calculation Sheet of the Cash Credit Account inclusive of unapplied interest and penal interest w.e.f. 28.07.2017 till 06.08.2021 besides expenses and credits received (Ex. AW1/128 & AW1/129);

- (xvi) Memoranda / Calculation Sheets with record to the total OA amount of Rs. 136,15,29,255.55 (Ex. AW1/130-colly).

9. So far as, defendants no. 1 to 3 are concerned, they filed their evidence by way of three affidavit(s).

Defendant no. 1 has filed evidence by way of affidavit of Sh. Dayanand Singh, Director of defendant no. 1.

So far as, defendant no. 2 / Sh. Raj Singh Gehlot is concerned, he has filed evidence by way of his own affidavit.

Similarly, defendant no. 3 / Sh. Dayanand Singh has also filed evidence by way of his own affidavit.

9.1 It is important to note here that defendants no. 1 to 3 have relied upon same documents which are as under:-

- (i) Sanction Letter dated 30.12.2017 of the Applicant approving the conversion of debt into equity (Ex. DW-1/1);

- (ii) Minutes of the JLF Meeting dated 04.01.2018 (Ex. DW-1/2);

- (iii) Minutes of the JLF Meeting 17.09.2018 (Ex. DW-1/3);

- (iv) Sanction Letter dated 28.09.2011 and 04.09.2012 of applicant bank (Ex. DW-1/4-colly);

- (v) Master Joint Lenders Forum Agreement dated 18.09.2014 (Ex. DW-1/5);

- (vi) Sanction Letter dated 30.12.2014 for restructuring of the Term Loan as per the Corrective Action Plan (Ex. DW-1/6);

- (vii) Minutes of the JLF Meeting dated 20.06.2017 (Ex. DW-1/7);

- (viii) Minutes of the JLF Meeting dated 18.07.2017 (Ex. DW-1/8);

- (ix) Minutes of the JLF Meeting dated 26.07.2017(Ex. DW-1/9);

- (x) Share subscription-cum-conversion agreement dated and Shareholder Agreement dated 09.01.2018 entered into between the Applicant, other lenders of the JLF, Defendant no. 1 company and the then existing shareholders of defendant no. 1 (Ex. DW-1/10 & DW-1/11);

- (xi) First Supplemental Joint Master Restructuring Agreement dated 28.03.2018, Second Supplemental Escrow Agreement dated 28.03.2018, Second Supplemental Inter-se Agreement dated 28.03.2018, Second Supplemental Security Agent Agreement dated 28.03.2018 (Ex. DW-1/12-colly);

- (xii) Minutes of the JLF Meeting dated 18.06.2019 (Ex. DW-1/13);

- (xiii) RBI Notification / Circular dated 12.02.2018 (D-13) (Ex. DW-1/14);

- (xiv) Minutes of the JLF Meeting dated 26.03.2018 (Ex. DW-1/15);

- (xv) Letter dated 05.04.2018 from defendant no. 1 proposing an offer on behalf of 3^rd party investor M/s Shyam Telecom (Ex. DW-1/16);

- (xvi) Minutes of the JLF Meeting dated 25.06.2018 (Ex. DW-1/17);

- (xvii) Minutes of the JLF Meeting dated 23.07.2018 (Ex. DW-1/18);

- (xviii) J&K Bank's Sanction Letter dated 31.01.2019 (Ex. DW-1/19);

- (xix) Letter dated 13.03.2019 issued by Central Bank of India approving the OTS proposal submitted by defendant no. 1 (Ex. DW-1/20);

- (xx) Acknowledgement of receipt of payment dated 02.04.2019 of Central Bank of India (Ex. DW-1/21);

- (xxi) Valuation Reports of Bank of India, OBC and J&K Bank (Ex. DW-1/22 to DW-1/24);

- (xxii) Minutes of the JLF Meeting dated 18.06.2019 (Ex. DW-1/25);

- (xxiii) J&K Bank's email dated 01.11.2019 rejecting the OTS proposal submitted by defendant no. 1(Ex. DW-1/26);

- (xxiv) Letter dated 03.01.2020 of Defendant no. 1 proposing to pay 100% outstanding debt of each lender of JLF (Ex. DW-1/27);

- (xxv) Minutes of the JLF Meeting dated 23.01.2020(Ex. DW-1/28);

- (xxvi) Minutes of the JLF Meeting dated 21.11.2020 (Ex. DW-1/29);

- (xxvii) Minutes of the JLF Meeting dated 06.01.2021 (Ex. DW-1/30);

- (xxviii) Letter/proposal dated 08.01.2021 of defendant no. 1 (Ex. DW-1/31);

- (xxix) Minutes of the JLF Meeting dated 23.06.2022 & 30.08.2022 (Ex. DW-1/32-colly);

- (xxx) Letter dated 22.11.2022 from defendant no. 1 to the Applicant (Ex. DW-1/33);

- (xxxii) Letter dated 07.12.2022 from Lead Bank requesting defendant no. 1 to enhance the OTS proposal and a copy of the letter dated 07.12.2022 from defendant no. 1 to Lead Bank with an enhanced proposal (Ex. DW-1/34-colly);

- (xxxiii) Order dated 08.12.2022 passed in C.P. (IB) 1086 of 2020 by NCLT, Principal Bench, New Delhi (Ex. DW-1/35);

- (xxxiiii) Minutes of the JLF Meeting dated 16.12.2022 (Ex. DW-1/36);

- (xxxiv) Letter dated 24.01.2023 from defendant no. 1 proposing an OTS to Applicant (Ex. DW-1/37);

- (xxxv) Email dated 04.02.2023 from Applicant rejecting the OTS proposal of defendant no. 1 (Ex. DW-1/38);

- (xxxvi) Letter dated 11.02.2023 from defendant no. 1 proposing an enhanced OTS to Applicant (Ex. DW-1/39);

- (xxxvii) Defendant no. 1's representation by Letter dated 25.05.2023 to the Applicant (Ex. DW-1/40);

- (xxxviii) Minutes of JLF Meeting dated 27.08.2023 (Ex. DW-1/41);

- (xxxix) OTS proposal issued by defendant no. 1 on 28.06.2023 (Ex. DW-1/42);

- (xl) Minutes of JLF Meeting dated 11.08.2023 (Ex. DW-1/43);

- (xli) Letters dated 05.08.2023 and 22.08.2023 issued by applicant bank to defendant no. 1 (Ex. DW-1/44-colly);

- (xlii) Letters dated 09.08.2023 and 30.08.2023 issued by Defendant no. 1 to Applicant Bank (Ex. DW-1/45-colly);

- (xliii) Letter dated 04.11.2023 issued by defendant no. 1 to the Applicant Bank (Ex. DW-1/46);

- (xliv) Letter dated 30.12.2023 issued by the Applicant to the Defendant no. 1 (Ex. DW-1/47);

- (xlv) Sanction letter dated 28.12.2023 issued by Union Bank of India sanctioning the OTS proposal (Ex. DW-1/48).

(documents DW-1/41 to DW-1/48 were not mentioned in the WS of defendants no. 1 to 3).

11. So far as, performa defendant no. 8 / Indian Bank is concerned, it also filed evidence by way of affidavit of Sh. Kuwar Jeetendra Singh, Chief Manager and authorized representative of defendant no. 8 bank and has relied upon various documents, as detailed in said affidavit.

12. During the pendency of this OA, it was informed by the Ld. counsel for defendant no. 2 that defendant no. 2 is before Ld. NCLT, Delhi as the personal insolvency proceedings have been initiated qua defendant no. 2.

13. Record reveals that IA No. 249/2025 was filed on behalf of defendant no. 1 praying therein to take on record Ex. D-49 & D-50 produced herein and to read the same herein as evidence of the defendant no. 1 and to permit the defendant no. 1 to rely on these documents during the final arguments.

It is stated in IA that the applicant bank in its Section 7 Petition i.e. CP(IB) No. 213 of 2015 categorically admits the fact that the value of equity shares held by it post conversion is not a 'debt'. Accordingly, the applicant bank has only alleged debt in the sum of Rs. 35.0 crore as of the year 2021, which excludes the value of equity shares or the interest thereupon.

(i) Copy of Form-1/Section 7 Petition filed by the applicant bank before Hon'ble NCLT bearing number CP(IB) No. 213 of 2025 (DW-1/49)

- (ii) Copy of e-mail by which the Section 7 Petition has been served upon defendant no. 1 on 30.03.2025 (DW-1/50).

Aforesaid IA is still pending and as per order dated 18.07.2025, same was to be considered at the time of final arguments.

- 14. Record reveals that another application being IA No. 569/2025 was filed on behalf of defendant no. 1 praying therein to take on record Ex. D-51 produced herein and to read the same herein as evidence of the defendant no. 1 and to permit the defendant no. 1 to rely on these documents during the final arguments.

It is stated in IA that the applicant bank has issued a notification dated 11.07.2025 inviting expression of interest for the sale of defendant no. 1 account to ARCs / permitted Transferee. In the said notification, the applicant bank has categorically admitted that the total outstanding amount in its books is Rs. 22.70 crore.

- (i) Copy of Proposal Document dated 11.07.2025 notified by the applicant bank (DW-1/51)

Aforesaid IA is still pending and as per order dated 18.07.2025, same was to be considered at the time of final arguments.

- 15. In the light of averments made in the IA Nos. 249/2025 & 569/2205, it is directed that the documents filed with said IAs i.e. DW-1/49, DW-1/50 and DW-1/51 shall be read in evidence. Accordingly, IA Nos. 249/2205 and 569/2025 stands disposed off accordingly

16. In the present case, applicant bank as well as defendants no. 1 to 3 have filed their respective written submissions / arguments.

17. Heard Ld. counsels for the parties and perused the entire record.

17.1 It is matter of record that defendant no. 2 had filed the WS as well as evidence. It is also matter of record that personal insolvency proceedings have been initiated qua defendant no. 2 before Ld. NCLT, Delhi, hence, no final order can be passed qua defendant no. 2, at this stage. In these circumstances, there is no need to deal with the defence taken by defendant no. 2 in this case.

However, it is directed that applicant bank shall be at liberty to revive the OA qua defendant no. 2 in case NCLT proceedings are quashed / withdrawn in future, in accordance with law.

It is also directed that in case applicant Bank receives any amount from the proceedings pending before Ld. NCLT, Delhi, it shall give due adjustment of the same in the recovery proceedings.

17.2 So far as, defendants no. 1 & 3 are concerned, now I would like to deal with the objections raised by them in their common WS in following paras :-

- (i) Defendants no. 1 & 3 have raised an objection that once the applicant bank itself has agreed to allow settlement of the dues by defendant no. 1, subject to actions pending at their end, the applicant bank cannot simultaneously allege default and proceed with the present OA. Moreover, this Tribunal has no jurisdiction to entertain this OA as the applicant bank has already approved the OTS proposal and in terms of the OTS, the applicant is bound to withdraw the present OA.

This Tribunal is of the view that settlement of the question can be decided by the parties themselves and this Tribunal is not going to interfere or give opinion on the same. In the present case, availment of loan facilities or execution of security documents is not denied by the defendants. Accordingly, this plea of defendants no. 1 & 3 stands rejected.

- (ii) Defendants no. 1 & 3 have raised a main objection in their WS that the Applicant has specified the amount of debt by wrongfully ignoring the Shares Subscription cum Conversion Agreement and Shareholders' Agreement executed by the Applicant and Defendant no. 1 on 09.01.2018. In terms of the Shareholders' Agreement, the Applicant's debt in the sum of Rs. 65.97 crore was converted to 5.05% equity shareholding in defendant no. 1 and Applicant became an equity shareholder of defendant no. 1. Thus, once applicant's debt was converted into equity, it ceased to continue as debt either in the books of Applicant or in the books of defendant no.

1. Post execution of the Shareholders' Agreement, the amount of debt to the sum of Rs. 65.97 crore stood discharged by its conversion into equity and the outstanding debt due to the applicant was reduced to Rs. 28.42 crore. It is also stated that the action of conversion of debt into equity is irreversible and once having chosen to convert its debt into equity, the applicant bank cannot initiate the debt recovery proceedings before this Tribunal for the amount which was converted to equity. Moreover, after conversion of debt into equity by the applicant bank vide Shareholders' Agreement dated 09.01.2018, the repayment schedule of the Term Loan was effectively deferred and repayment of the remaining dues in the sum of Rs. 28.42 crore was to commence only from 2023-24 and no installments are due to the applicant bank before 2023. It is stated in the WS that in terms of Clause 2.4 of the Shareholders' Subscription cum Conversion Agreement, the loan conversion amount was to be adjusted firstly towards outstanding amount of FITL, and lastly towards outstanding amounts of the original Term Loans. Thus, on execution of the Shareholders' Agreement, Applicant's total debt in the sum of Rs. 10.85 crore under the Funded Interest Term Loan stood completely discharged and a further sum of Rs. 55.12 crore under the Term Loan Agreements also stood repaid. However, the Applicant has arbitrarily calculated the dues on the basis of repayment schedule in its sanction letter dated 08.03.2017 which stood deferred by the execution of the Shareholders' Agreement, as demonstrated above. As per the sanction letter read with the Shareholders' Agreement, the time period for payment of the remaining debt has not arisen as yet and only begins in FY 2023-24. Thus, as on date there is no legally recoverable debt due to the applicant bank and hence, the OA ought to be dismissed.

**In this case, the Defendant No. 1 raised the objection** that the JLF, in its meetings dated 20.06.2017 and 18.07.2017, resolved to invoke the SDR mechanism for revival of Defendant No. 1's account, and SBI Capital Markets Ltd. was appointed to prepare the resolution proposal. The process culminated in execution of the Share Subscription-cum-Conversion Agreement and the Shareholders' Agreement, both dated 09.01.2018, wherein Rs. 666.13 crore of the total consortium debt was converted into equity, resulting in a 51 percent shareholding of the lenders in Defendant No. 1. The applicant's own exposure of Rs. 65.97 crore was converted into equity, reducing the principal outstanding to Rs. 28.42 crore after accounting for repayments. The total outstanding principal debt of all lenders stood reduced to Rs.286.96 crore as recorded in the minutes of JLF meetings, including those dated 18.06.2019. It is argued that once the conversion took place, the debt to that extent stood extinguished, and the banks became shareholders in proportion to their equity holding. Hence, the applicant bank cannot claim recovery on the reconverted amount.

**On the other hand, Ld. Counsel for the applicant bank** has contended that though the Joint Lenders' Forum (JLF) invoked the Strategic Debt Restructuring (SDR) mechanism pursuant to the Reserve Bank of India's Circular dated 08.06.2015, the same was not fully implemented. It is stated that the Defendant No. 1 company failed to bring in a new investor or adhere to the repayment schedule under the Joint Master Restructuring Agreement dated 31.03.2015, the First Supplemental Joint Master Restructuring Agreement dated 28.03.2018, and the Share Subscription-cum-Conversion Agreement dated 09.01.2018. The applicant submits that owing to such default, the SDR process failed and the banks, including the applicant, were entitled to reconvert the equity into debt. It is further urged that in view of RBI's subsequent notification dated 12.02.2018, which withdrew all existing restructuring schemes including SDR, the applicant was justified in re-classifying the account as NPA and in seeking recovery of Rs. 136,15,29,225.55 jointly and severally from Defendants No. 1 to 3.

On careful consideration of the material on record, it is evident that the SDR scheme was duly invoked by the consortium in accordance with the RBI Circular dated 08.06.2015 and acted upon by execution of the Share Subscription-cum-Conversion Agreement and the Shareholders' Agreement, both dated 09.01.2018. Pursuant thereto, Rs. 666.13 crore of the total debt was formally converted into equity, resulting in a 51 percent shareholding of the lending banks in Defendant No. 1. Such conversion was not merely an intention but an executed transaction, as reflected in the contemporaneous minutes of JLF meetings and in the shareholding structure subsequently recorded in the company's audited financials.

Once debt is validly converted into equity under the SDR framework, the portion so converted ceases to subsist as "debt" in the books of the borrower as well as the lender. The liability of the borrower is discharged to that extent, and the banks assume the role of shareholders, subject to all attendant commercial risks and rights. The RBI circular itself contemplates this transformation as part of the debt-to-equity swap mechanism. The subsequent non-introduction of a strategic investor or failure of the resolution process does not ipso facto revive the extinguished debt, unless there exists a specific contractual clause mandating automatic reconversion none has been shown by the applicant.

The applicant's reliance on the borrower's later financial statements showing continuing provisions for interest does not alter this legal position, as such entries may represent accounting provisions rather than acknowledgment of a live debt obligation post-conversion. The JLF minutes and the executed agreements are conclusive in demonstrating that the debt stood reduced to Rs. 28.42 crore in the applicant's books following the SDR implementation. Therefore, the applicant cannot now seek recovery of the reconverted portion of Rs. 65.97 crore, which had already been extinguished upon issuance of equity shares.

In view of the above analysis, it is held that once the Strategic Debt Restructuring mechanism was invoked and implemented through conversion of debt into equity, the debt stood reduced to that extent, and the applicant bank's claim for reconversion and recovery of the earlier converted amount is untenable. **Now, the liability of the defendants stands confined for a sum of Rs. 39,11,96,578.81**, as per details given in Para V(5.45) at Page No. 50 of the OA which are as follows:- <table> <tr> <td>Term Loan Account<br/>No. 00131200914398</td> <td>Rs. 28,57,23,428.59</td> </tr> </table>

<table> <tr> <td>FITL Account No.<br/>00131200914399</td> <td>Rs. 66,60,214.77</td> </tr> </table>

<table> <tr> <td>Cash Credit Account<br/>No. 00131600913828</td> <td>Rs. 9,88,12,935.45</td> </tr> </table>

---

<table> <tr>

<td><b>Rs. 39,11,96,578.81</b></td> </tr> </table>

---

(It is pertinent to note here that the amount of Debt converted into Equity i.e. Rs. 97,03,32,646.74 is not allowed by the Tribunal). Accordingly, the issue is decided in favor of the defendants.

(iii) Defendants no. 1 & 3 have also taken a plea that the Applicant has also wrongly declared the account of defendant no. 1 as NPA on 30.06.2018 as the standstill period of 18-months commencing from 18.07.2017, in terms of the SDR, was in operation when the account was wrongfully declared as NPA. This Tribunal is of the view that once the SDR scheme was duly invoked by the consortium in accordance with the RBI Circular dated 08.06.2015 and acted upon by execution of the Share Subscription-cum-Conversion Agreement and the Shareholders' Agreement, both dated 09.01.2018, hence, this plea of defendants is not tenable and same stands rejected.

(iv) Defendants no. 1 & 3 have also raised an objection that the consortium failed in its responsibility of exiting defendant no. 1 in terms of the SDR and consequently cannot hold the defendant liable for its failure. Since, the SDR scheme was duly invoked by the consortium in accordance with the RBI Circular dated 08.06.2015, hence, this plea of defendants stands allowed.

(v) Defendants no. 1 & 3 have also raised an objection that the personal guarantee of Defendant no. 3 was subsequently discharged in terms of the Joint Restructuring Agreement pursuant to which only the personal guarantee of defendant no. 2 was retained. Record reveals that defendant no. 3 had executed Deed of Guarantee from time to time before restructuring and implementation of SDR Scheme. Since, the guarantee of defendant no. 3 was continuing one, hence, this plea of defendant no.3 does not hold any water and same stands rejected.

- (vi) Next objection of defendants no. 1 & 3 is that the account of defendant no. 1 was declared as NPA in violation of the relevant SDR Guidelines.

This Tribunal is of the view that once the SDR scheme was duly invoked by the consortium in accordance with the RBI Circular dated 08.06.2015 and acted upon by execution of the Share Subscription-cum-Conversion Agreement and the Shareholders' Agreement, both dated 09.01.2018, hence, account of defendant no. 1 was rightly declared as NPA in pursuant to guidelines of RBI. Accordingly, this plea of defendants no. 1 & 3 stands rejected.

17.3 So far as, defendants no. 4 to 9 are concerned, they are performa defendants and no relief has been claimed against these defendants by the applicant bank.

17.4 On the other hand, the witness of applicant bank has corroborated the averments made in the OA. Even otherwise the whole case of the applicant bank is based on the documents and the witness has duly proved all these documents. The evidence filed by the applicant bank gone unrebutted and there is no question of disbelieving the evidence lead by the applicant bank and applicant has proved its case beyond reasonable doubts upto the extent of Residual amount. Accordingly, the Applicant bank is entitled to recover the amount i.e. **Rs. 39,11,96,578.81** from the defendants along with pendentelite and future interest @10% p.a. and cost of this OA. However, it is made clear that the applicant bank shall not be entitled for pendentelite and future interest on the amount of penal interest already imposed by the applicant bank while filing the OA.

17.5 In this OA, applicant bank has prayed to issue recovery certificate against defendants no. 1 to 3 wherein the defendant 1 is principal borrower and defendants no. 2 & 3 are personal guarantors.

17.6 So far as, defendants no. 4 to 9 are concerned, no relief has been claimed by applicant bank qua these defendants being performa defendants.

17.7 It is pertinent to note here that during the pendency of this OA, it was informed by the defendant no. 2 that personal insolvency proceedings have been commenced qua defendant no. 2 before Ld. NCLT, New Delhi.

In the light of above, no order can be passed against defendant no. 2, at this stage till the relevant order(s) of Ld. NCLT are withdrawn / quashed. However, applicant bank shall be at liberty to revive the OA qua defendant no. 2 in case NCLT proceedings are quashed / withdrawn in future, in accordance with law.

It is also directed that in case Applicant Bank receives any amount from the insolvency proceedings pending before Ld. NCLT, Delhi it shall give due adjustment of the same in the recovery proceedings.

17.8 Consequently, TA No. 58/2022 is liable to be allowed partly in favour of applicant bank against defendants no. 1 & 3 (being principal borrower and personal guarantor and/or mortgagors), who are liable to pay the dues of the applicant bank, however, their liability stands confined to **Rs. 39,11,96,578.81** (discussed in above paras while dealing with the WS of defendants no. 1 & 3), along with costs and pendentelite & future interest @10% p.a. from the date of filing of present OA, till the date of payment in full (however, applicant bank shall not be entitled for pendentelite and future interest on the amount of penal interest already imposed by the applicant bank while filing the OA).

**ORDER**

(i) TA No. 58/2022 stands allowed partly and the defendants no. 1 & 3 are directed to pay to the applicant bank, within 30 days, a sum of **Rs. 39,11,96,578.81 (Rupees Thirty Nine Crore Eleven Lakh Ninety Six Thousand Five Hundred Seventy Eight and Paise Eighty One only)**, as detailed below:- <table><tr><td>Term Loan Account<br/>No. 00131200914398</td><td>Rs. 28,57,23,428.59</td></tr></table>

<table><tr><td>FITL Account No.<br/>00131200914399</td><td>Rs. 66,60,214.77</td></tr></table>

<table><tr><td>Cash Credit Account<br/>No. 00131600913828</td><td>Rs. 9,88,12,935.45</td></tr></table>

---

<table><tr><td><b>Total</b></td><td><b>Rs. 39,11,96,578.81</b></td></tr></table>

(as discussed in above paras while dealing with the WS of defendants no. 1 & 3), along with pendentelite and future interest @ 10% p.a. from the date of filing of this OA till realization of the entire dues of the Applicant Bank (however, applicant bank shall not be entitled for pendentelite and future interest on the amount of penal interest already imposed by the applicant bank while filing the OA), failing which, the aforesaid amount shall be recovered from the sale of secured assets / mortgaged properties / hypothecated assets / stocks etc. belonging to defendants no. 1 & 3.

In case of shortfall, same shall be recovered from the movable and immovable assets of defendants no. 1 & 3 only.

- (ii) So far as, defendant no. 2 is concerned, since personal insolvency proceedings have been commenced qua defendant no. 2 before Ld. NCLT, New Delhi, no order can be passed against defendant no. 2, at this stage till the relevant order(s) of Ld. NCLT are withdrawn / quashed.

However, applicant bank shall be at liberty to revive the OA qua defendant no. 2 in case NCLT proceedings are quashed / withdrawn in future, in accordance with law.

It is also directed that in case Applicant Bank receives any amount from the insolvency proceedings pending before Ld. NCLT, Delhi it shall give due adjustment of the same in the recovery proceedings.

- (iii) It is also directed that the applicant shall adjust the amount(s), if any, received from the defendants during the pendency of this case.

- (iv) It is also directed that the sale proceeds of the secured assets shall be distributed between the consortium members, as per inter-se agreements executed amongst them.

- (v) The recovery certificate be issued forthwith and be sent to the Recovery Officer-I, Debts Recovery Tribunal-III, Delhi.

- (vi) Parties are directed to appear before the Recovery Officer-I, DRT-III, Delhi on 08.12.2025.

- (vii) Copies of final order as well as Recovery Certificate be sent to all concerned free of cost.

File be closed and consigned to records.

07.10.2025

(SHIV KUMAR - I) PRESIDING OFFICER, DRT-III, DELHI

(Pronounced in open court) Dated: 07.10.2025