Lender rights and related party conundrum

While deciding on the appeals against the NCLAT’s decision, the Supreme Court considered the articles of association, debenture trust deed, facility agreement, sanction letter, power of attorney and other financing documents together, rather than examining individual rights in isolation. Those rights included the appointment of a lender nominee director on the board of security providers upon an event of default, lender approval to resolve board and shareholder deadlocks, approval of construction budgets and control over the release of project cash flows from escrow accounts. Additionally, ECL could also appoint a board observer, restrict the removal of key managerial personnel, require changes in management if project milestones were…