1,Borrower,Vandana Udhyog Ltd
7,Tenor,36 Months from date of first disbursement
8,Put/Call Option,"The Lender & Borrower will have Put/Call option at the end
of 12/24 months with a prior written notice of 45 days.
............,………………,
13,Repayment,"In 4 equal quarterly installment at the end of 27th, 30th, 33rd
and 36th month from the date of first disbursement
14,Security,"(a) Pledge of fully paid up, deÂmaterialised, unencumbered,
freely transferable equity shares of Vandana Vidhyut
Ltd
(VVL), which shall provide a cover of 2.50x, subject to the
minimum pledge of 26% of the entire paid up equity of VVL
throughout the currency of the Facility;
(b) Corporate Guarantee of Viconic Vyapar Pvt.Ltd. (c)
Personal Guarantee of Mr.Vinod Agrawal, Subhash
Agrawal, Mr.Ashok Agrawal, Mr.Gopal Prasad
Agrawal, Mr.Prahlad Agrawal and Mr.Vijit Kumar Agrawal
(d) PDCs for Principal & Interest
(e) Demand Promissory Note (DPN)
Note: Equity valuation with respect to the pledge of VVL
shares to be undertaken on DCF/other methodology
acceptable to IFIN. Present indicative valuation is in the
range of Rs.,8000Â8,500 mn which will be mutually
confirmed prior to disbursement.
The valuation shall be reviewed on annual basis based on the
financials of VVL & progress in the implementation of the
Project and top up be provided for any shortfall so as to
maintain minimum stipulated cover of 2.50x subject
to minimum pledge of 26%. First such review shall be carried
out in October 2012.
15,Put Option,"On the Put/Call dates, maturity and trigger of any event of
default (EoD) IFIN shall have the unconditional right to sell
the RTL, through transfer/assignment to Vandana Global Ltd.
(VGL) and Vandana Ispat Limited (VIL) and realize all the
outstanding dues under the Loan Agreement. The
unconditional commitment of VGL and VIL to buy the RTL on
the exercise of above right by IFIN will be backed by their
respective Board Resolution, in compliance with Sec.295 of
the Companies Act.
,…....,
20,Security Review,"The security package shall be reviewed on an annual basis
based on project progress of each SPV
,Other Rights,"(a) Drag along Rights  In the event of default
and
consequent enforcement of security, IFIN shall have the right
to sell the shares in VVL pledged to it to any third party and
drag the promoters to offer such number of shares as may be
required by the third party, to complete the strategic sale at
the same terms and conditions so that of the sale of the IFIN's
stake.
,,"(b) Tag Along rights: In the event of default and consequent
enforcement of security, IFIN shall have standard tag along
rights wherein if the promoters of VVL decide to offload a
certain stake in VVL to a new buyer, except the transfers
within the group, the Investors shall also have a right to offer
its shares on the same price and other terms and conditions.
,,"(c) Negative Covenant: The Promoters will undertake that
the following matters with respect to VVL/Borrowers shall
require the prior approval of IFIN:
,,"* Any new business initiative which VVL/the
Borrower wishes to undertake other than those
approved in the Business Plan;
* Any change in the capital structure, shareholding pattern or
management control of VVL/the Borrowers.
,,"* Mergers, amalgamations and acquisitions, deÂ‐
merger, reorganization and disposition of assets
(including both
acquisition and disposal) of VVL/the Borrowers;
,,"* Any change of the existing Statutory Auditors of VVL/the
Borrowers.
,,…....
pay the debts of the borrowerVandana Udhyog Ltd. It is submitted that by the impugned order in exercise of summary jurisdiction, the learned Single",,
Judge has in fact enforced the ""option agreement"". It is next submitted that the claim of the respondent based on the ""option agreement"" is not",,
enforceable in law as the ""option agreement"" was terminated by the appellant on 4 March 2015, which was not challenged by the respondent. It is",,
submitted that a claim under the terminated ""option agreement"" could not have been made in the company petition. It is next submitted that the",,
interpretation of the learned Single Judge on Article IV ""termination clause"" under the ""option agreement"", cannot be accepted that the agreement can",,
be terminated only on the happening of the two events as provided in the said clause i.e.; firstly on due repayment of the outstanding amount under the,,
facility by the borrowerVandana Udhyog Ltd. to the respondent and secondly on the receipt of 'exercise price' by the respondent from the appellant,,
and Vandana Ispat Limited in terms of Article 2.1 of the said agreement. The contention as urged on behalf of the appellant is that the termination,,
clause (Article IV) would not deprive the appellant from the right to terminate the agreement which is available under the general law, and thus, the",,
appellant's termination of the said agreement dated 4 March 2015 cannot be rendered inconsequential. In other words, the contention of the appellant",,
is that the ""Put option"" as exercised by the respondent would not survive in view of termination of the said agreement by the appellant and the winding",,
up petition was not the appropriate remedy for the respondent in such a situation. It is submitted that the learned Single Judge has thus misinterpreted,,
the ""option agreement"". Learned Senior Counsel for the appellant next submits that the learned Single Judge ought not to have observed that the",,
appellant in the reply affidavit filed in Company Petition No.782 of 2014 had admitted that it was a guarantor in respect of the financial facility as,,
extended to the borrowerVandana Udhyog Ltd., as this statement was made inadvertently which was clarified in the affidavit filed in the present",,
company petition.,,
[11] On the other hand, learned Counsel for the respondent would submit that this is a clear case where the appellant had admitted its liability to",,
discharge the debt of the borrowerVandana Udhyog Limited as evident from the reply affidavit filed in the earlier company petition wherein the,,
appellant has clearly admitted that the appellant was a guarantor to the said financial facility. It is submitted that the nomenclature of the agreements,,
may be anything, ultimately it is required to be seen as to what was the intention of the parties. It is submitted that if the option agreement when",,
carefully seen, in its various clauses clearly reflects nothing but a guarantee on the part of the appellant alongwith Vandana Ispat Ltd. guaranteeing",,
the loan availed by the borrowerVandana Udhyog Ltd. It is thus submitted that the option agreement is thus an unambiguous guarantee. Our attention,,
is drawn to Article II of the ""option agreement"" dated 6 January 2012, namely the ""Put Option"" clause, under which the appellant and Vandana Ispat",,
Limited (VIL) have irrevocably and absolutely agreed and undertook that in the event of occurrence of a default under the 'facility agreement',,
between the respondent and the borrowerVandana Udhyog Ltd., the respondent may at its discretion issue a ""Put Notice"" and upon receipt of ""Put",,
Notice"", the appellant and Vandana Ispat Ltd. (VIL), shall without demur and protest make payment of the 'exercise price' to the respondent and",,
accept by way of assignment from the respondent the facility alongwith all rights and liabilities thereunder. It is thus submitted that the language of,,
Article II of the 'option agreement' being clear and unambiguous, it is in fact an agreement of guarantee. Learned Counsel for the respondent submits",,
that moreover the appellant itself has accepted this interpretation.,,
Supporting this submission, our attention is drawn to page 272 of the appellant's compilation namely the admission as made in paragraph 7 of the",,
appellant's reply affidavit filed in the earlier company petition wherein the appellant has stated that ""the appellant is only a guarantor to the alleged",,
claim made by the respondent against Vandana Udhyog Ltd."" Our attention is thereafter drawn to page 256 of the compilation of the appellant where",,
the borrowerVandana Udhyog Ltd. setting out the details of the guarantee given in relation to the debts of the company, has indicated name of the",,
respondent as financial creditor to whom the guarantee has been given by the appellantVandana Global Limited. It is also brought to our notice that,,
Mr.Ashok Kumar Jain who is one of the Director of the appellantcompany is also the Director of the borrowerVandana Udhyog Ltd. In support of,,
this submission our attention is also drawn to Sections 140 and 141 of the Indian Contract Act,1872 which deals with the rights of surety on payment",,
or performance and surety's right to benefit of creditors security respectively. It is thus submitted that no interference is called for in the impugned,,
order. In support of the submission that the intention of the parties is required to be gathered from the agreements as executed between the parties,",,
learned Counsel for the respondent has placed reliance on the decision of the Supreme Court in the case ""Tamboli Ramanlal Motilal (Dead) by LRs.",,
Vs. Ghanchi Chimanlal Keshavlal (Dead) by LRs. And Anr., 1993 Supp1 SCC 295""",,
[12] We have heard the learned Counsel for the parties and with their assistance, we have perused the documents on record as also the impugned",,
order.,,
[13] There are three principal submissions as urged on behalf of the appellant in challenging the impugned order passed by the learned Single Judge.,,
The first submission is that the option agreement was not available to be invoked against the appellant as the same was terminated by the appellant on,,
4 March 2015. The ""option agreement"" being terminated was not enforceable in law. As a consequence of termination of the option agreement no",,
dues are payable under the option agreement. Further the adjudication of the validity and purport of the option agreement cannot be a subject matter,,
of summary proceedings of a winding up petition but ought to be agitated in a civil suit. The second submission is that the learned Single Judge has,,
erred in coming to a conclusion that there is no right available under the general law, for the appellant to terminate the option agreement and that the",,
option agreement could not have been terminated only in two circumstances as provided by the termination clause - Article IV . The third submission,,
is that even assuming that the option agreement was subsisting, the same could not have been construed as an ""agreement of guarantee"" by the",,
learned Single Judge. The option agreement had created reciprocal obligations as also there was no amount payable by the appellant per se under the,,
option agreement. The interpretation of option agreement is, therefore, contrary to the express terms of the said agreement.",,
[14] We are not persuaded to accept any of the submissions as urged on behalf of the appellant. Taking the third submission first, we may state that it",,
is not in dispute that the principal terms and conditions of the financial assistance as provided by the respondent to the borrowerVandana Udhyog Ltd.,,
stipulates ""Put Option"" which provides that on the Put/Call dates, maturity and trigger of any event of default, the respondent shall have an",,
unconditional right to sell the RTL through transfer/assignment, to the appellantVandana Global Ltd. (VGL) and Vandana Ispat Limited (VIL) and",,
realize all the outstanding dues under the loan agreement. It further provides of the unconditional commitment of the appellant and Vandana Ispat,,
Limited (VIL) to buy the RTL on the exercise of the above right by the respondent which will be backed by their respective Board Resolution, in",,
compliance of Section 295 of the Companies Act. Accordingly, the respondent had entered into the ""Option Agreement"" dated 6 January 2012 with",,
the appellant and Vandana Ispat Limited and the borrowerVandana Udhyog Ltd. Clause 2 of the said agreement clearly provides that it is a condition,,
for the respondent agreeing to grant financial facility that the appellant and Vandana Ispat Ltd. (VIL), provide the respondent with an unconditional",,
and irrevocable option to sell and assign the facility to the appellant and VIL alongwith associated rights thereunder in the event default occurs under,,
the said facility agreement. Clause 2 reads as under:,,
It is a condition for IFIN agreeing to grant the Facility that VGL and VIL provide IFIN with an unconditional and irrevocable option to sell and assign",,
the Facility to VGL and VIL alongwith the associated rights thereunder in the event in Event of Default occurs under the Facility Agreement.,,
[15] 'Article I' being the interpretation clause, the ""Put Option"" is defined to mean the right but not the obligation of the respondent to sell and assign",,
the facility to the appellant and VIL on the terms and conditions contained in the said agreement and demand payment of ""Exercise Price"". The",,
Exercise Price is defined to mean the aggregate amount of all debts and monetary liabilities of the borrowerVandana Udhyog Ltd. to the respondent,,
which are owed, incurred and outstanding as principal, together with interest, charges, costs, expenses and all other monies payable by the borrower",,
alongwith the penalty, if any, under the facility agreement and any other documents in relation to the facility, upon the occurrence of an event of",,
default, under the facility agreement. Article II provides for ""Put Option"" and as the controversy revolves around the""Put Option"" it would be relevant",,
to extract the same, which reads thus:",,
ARTICLE II PUT OPTION",,
VGL and VIL hereby irrevocably, absolutely and unconditionally agree with and undertakes to IFIN that in the event of the occurrence of an Event of",,
Default under the Facility Agreement IFIN may, at its discretion, issue the Put Notice; and upon the receipt of the Put Notice VGL and VIL shall,",,
without demur or protest, make payment of the Exercise Price to IFIN and accept by way of assignment from IFIN the Facility alongwith all rights",,
and liabilities thereunder.""",,
[16] Adverting to the principle of law as laid down in ""Tamboli Ramanlal Motilal (Dead) by LRs. Vs. Ghanchi Chimanlal Keshavlal (Dead) by LRs.",,
And Anr."" in regard to interpretation of the agreements and to ascertain the intention of the parties, we may observe that a plain reading of Article II",,
the Put Option"" would clearly indicate that it is nothing but a guarantee of the appellant to the respondent, without demur or protest to make payment",,
of the ""exercise price"". To appreciate as to what is the meaning of the term ""guarantee"" it would be useful to refer to Black's Law Dictionary, Eighth",,
Edition which defines 'guarantee' as under:,,
Guarantee (garantee), n. 1. The assurance that a contract or legal act will be duly carried out.2. GUARANTY (1)",,
In practice, guarantee, n., is the usual term, seen often, for example, in the context of consumer warranties or other assurances of quality or",,
performance, Guaranty, in contrast, is now used primarily in financial and banking contexts in the sense ""a promise to answer for the debt of another."".",,
Guaranty is now rarely seen in nonlegal writing, whether in G.B. Or in the U.S."" Brayan A. Garner, A Dictionary of Modern Legal Usage 394(2nd ed.",,
1995).,,
3. Something given or existing as security, such as to fulfil a future engagement or a condition subsequent. [Cases: Guaranty - 29] 4. One to whom a",,
guaranty is made. Also spelled guaranty. Guarantee, vb 1. To assume a suretyship obligation; to agree to answer for a debt or default. 2.To promise",,
that a contract or legal act will be duly carried out. 3. To give security to.""",,
[17] In the above context from the bare reading of Article II, it is clear that the appellant as also Vandana Ispat Ltd. had irrevocably, absolutely and",,
unconditionally agreed and had undertaken to the respondent that in the event of occurrence of a default under the facility agreement, the respondent",,
may at its discretion issue ""Put Notice"" and upon receipt of the Put Notice, the appellant and Vandana Ispat Ltd., shall without demur or protest make",,
payment of ""Exercise Price"" to the respondent and accept by way of assignment from the respondent the facility alongwith all rights and liabilities",,
thereunder.,,
The very wording of Article II is suggestive of a guarantee on the part of the appellant to the respondent. The legal position can be clearly noted from,,
Section 126 of the Contract Act which defines a contract of guarantee to mean a contract to perform the promise, or discharge the liability, of a third",,
person in case of his default. It is well settled that a contract of guarantee involves principally three parties namely the creditor, the surety and the",,
principal debtor, where liability may be actual or prospective. Thus necessarily the ingredients of a contract of guarantee are clearly present in the",,
option agreement which are reflected from the unambiguous nature of Article II the ""Put Option"" whereby the appellant has irrevocably, absolutely",,
and unconditionally without demur or protest agreed to make payment of the exercise price to the respondent. If this be the case, then considering the",,
provisions of Section 126 of the Contract Act, it is imperative to accept the 'option agreement' as a 'contract of guarantee'. There can be no other",,
interpretation. Thus, we are of the considered opinion, the learned Single Judge is correct in observing that the 'option agreement' is required to be",,
considered as a guarantee.,,
[18] Now coming to the contention as urged on behalf of the appellant that the option agreement was terminated on 4 March 2015 and the same could,,
not have been invoked. This contention also cannot be accepted, firstly because the parties have bound themselves by providing Article IV 'the",,
termination clause', which provides that the option agreement will be terminated only on the happening of two events, firstly on due repayment of all",,
outstanding amounts under the facility by the borrower to the respondent and secondly on receipt of 'exercise price' by the respondent from the,,
appellant and Vandana Ispat Ltd. (VIL) It would be desirable to note that the contents of Article IV which reads thus:,,
This Agreement will terminate on the happening of the following events:",,
a) On the repayment of all outstanding amounts under the Facility by the Borrower to IFIN, or",,
b) on the receipt of the Exercise Price by IFIN from VGL and VIL in terms of Article 2.1.""",,
Once having agreed to the above conditions of termination, it was not open to the appellant to contend that the appellant's liability had ceased to exist",,
in view of a purported termination of the option agreement and that civil proceedings were required to be filed by the respondent to seek specific,,
performance of the said agreement. In our opinion, by agreeing to Article IV (termination clause) and accepting that the agreement will be terminated",,
only on the happening of said two events, it can certainly be said that the appellant had waived the right if any, to terminate the contract. The",,
submission as urged on behalf of the appellant that by their letter dated 4 March 2015 the option agreement was terminated, if is accepted, then the",,
consequence is that Article IV (Termination Clause) of the option agreement itself would be rendered nugatory and meaningless. The whole intention,,
of the parties to incorporate the termination clause as contained in Article IV is to bind the parties only in the stipulated and agreed mode of,,
termination and in no other form or method. In fact what is pertinent is that the parties had categorically avoided to enter any other form of termination,,
when they agreed to incorporate Article IV. Thus, the appellant's contention that in view of termination letter dated 4 March 2015 the ""Put Option""",,
could not have been exercised by the respondent is wholly untenable.,,
The appellant's contention of the validity of the option agreement being considered by the learned Single Judge in the summary proceedings of a,,
winding up petition, hence is wholly unfounded.",,
[19] Before parting, we may also note that by the impugned order the winding up petition of the respondent has been admitted and was directed to be",,
advertised. It is not in dispute that the winding up petition has already been advertised and to that extent the impugned order is already implemented.,,
As regards the final hearing of winding up petition, as informed to us, the learned Single Judge has placed the winding up petition for final hearing on",,
16 March, 2018.",,
[20] In view of the above discussions and the only points of argument being considered and dealt by us in the foregoing paragraphs, we are of the",,
clear opinion that no ground is made out to interfere in the impugned order. The appeal lacks merit. It is accordingly rejected with costs.,,
[21] In view of disposal of the appeal, pending Notice of Motion (Lodg) No.37 of 2018 does not survive. It is accordingly disposed of.",,
[22] After pronouncement of the judgment, learned Counsel for the appellant prayed for stay to the operation of the judgment. Learned Counsel for",,
the respondent submits that there was no stay operating in the appeal. Hence, the prayer for stay stands rejected.",,
