1. Borrower vs All Lenders: Borrower says "We agreed to reschedule, you cannot enforce old terms"
2. Majority Lenders vs Minority Lenders: Majority wants to reschedule and keep company alive, Minority wants to accelerate and file IBC
3. Novation vs Modification: Does new rescheduling agreement kill old agreement and securities?

Syndicated Loan is governed by Common Loan Agreement + Intercreditor Agreement under LMA format. Key clauses that decide dispute:

a) Majority Lenders Definition: Typically 66.67% or 75% of commitments. Can waive Event of Default, extend payment date by few months.
b) All Lenders / Unanimous Matters: Extension of final maturity beyond X months, reduction of principal/interest, release of security, change of currency - requires 100%.
c) Snooze-and-Lose / Yank-the-Bank: Dissenting lender who does not respond in 10-15 days is deemed to consent or can be bought out.
d) Sharing Clause: If one lender gets paid more, it must share with others.

Core Legal Issue 1 - Does Rescheduling = Novation?

No. Indian Law is now settled.

Case 1: NCLAT - Mere Rescheduling Does Not Change Repayment Obligations - Alok Gaur, Suspended Director of Jaypee Cement Corporation Ltd v. State Bank of India [2023-24]
NCLAT Delhi Bench Justice Ashok Bhushan and Barun Mitra held that mere rescheduling of payment date through an agreement does not alter repayment obligations under original Common Loan Agreement, nor does it result in novation.
Common Loan Agreement continues. New payment schedule is only a concession. Securities, personal guarantees continue.

Case 2: Supreme Court - Failure to Fulfil Pre-Conditions Does Not Amount to Novation - SBI v. Jaypee Cement Group [2025 Affirmed]
Supreme Court applied Ramdas Mahadeo Prashad (2004) 1 SCC 252 - where it was held that in absence of fulfilment of conditions precedent, novation does not take effect.
In Jaypee case, SBI had offered restructuring with conditions precedent - infusion of promoter funds, creation of additional security, execution of definitive documents by cut-off date. Borrower paid one instalment of Dec 2021 and claimed deemed acceptance.
Court held: (B) No novation absent fulfilment of conditions... Without compliance, there was no enforceable restructuring and therefore no novation of 2013 common loan agreement.
Result: Original financing terms restored. Lender can file Sec 7 IBC on original default.

Case 3: Court Dismisses Appeal - No Novation in Settlement Agreement
NCLAT held prerequisites for novation - explicit clauses extinguishing old obligations or superseding old contract - must exist. Settlement agreement only pertained to disposal of mortgaged properties. Original contract remained valid. Same principle applied to rescheduling - settlement fixing payment terms doesn't novate or change debt's nature.

Test under Sec 62 Indian Contract Act for Novation:

1. New contract must be in substitution of old
2. Old must be extinguished - clear intention
3. Consent of all parties
4. New must be valid and enforceable.
   Rescheduling letter which says "subject to execution of definitive documents" fails test 4.

Core Legal Issue 2 - Can Majority Lenders Bind Minority to Reschedule?

English Law Leading Case - Governs Most Indian Syndicated Facilities under English Law / LMA:

Redwood Master Fund Ltd v. TD Bank Europe Ltd All ER (D) 141
Rimer J refused to hold that majority lenders' power to vary terms of syndicated loan was subject to implied term that power would be exercised bona fide for benefit of lenders as a whole.
Minority lenders were bound by decision of majority to waive borrower's defaults and vary loan facility.[2002]

Later Development: Facilities agreement distinguished between waivers of breaches, events of default, rights and remedies, and terms. Court concluded majority lenders had not waived or amended a term by waiving rights and withdrawing notice, and thus majority could return loan to original payment requirements without unanimous consent.

Principle for India: If your facility agreement says maturity extension needs unanimous consent, a 66% majority cannot extend final maturity. If it says only waiver of payment default needs majority, majority can give temporary moratorium but cannot reduce principal.

Indian Position - Syndicate Bank v. General Exports Combinations & Others 2000
Defendants requested Bank for rescheduling packing credit for six months, which was allowed. Period expired on 10th Jan 1993. Court held debt continued, bank entitled to sue after expiry. Rescheduling is indulgence, not waiver of right to sue.

Lenders Ability to Independently Enforce - Charmway Case
Question is what a reasonable person having background knowledge would understand loan agreement to mean. Right to repayment is lender's most fundamental right. If syndicate agreement says no individual enforcement, individual lender cannot recover its share when due - it is entirely in hands of majority.
Indian intercreditor agreements post 2019 Prudential Framework include this - no individual enforcement without CoC approval.

Core Legal Issue 3 - Restructuring vs IBC - Can Borrower Stall IBC by Saying Restructuring is Pending?

Supreme Court - Mere Pendency Of Restructuring Arrangements Cannot Stall CIRP - Feb 2025
Bench of Justices Sanjay Kumar and K Vinod Chandran set aside NCLAT decision which had rejected Sec 7 IBC application on premise that restructuring arrangement was in place.

SC held: For admission of application under Sec 7, adjudicating authority is only required to examine and satisfy itself that financial debt exists and there is default. Internal communication regarding restructuring would have no bearing.

And: Mere pendency of restructuring arrangements cannot stall CIRP.

Related: Vidarbha Industries principle - viability should be considered - was confined to facts, not binding precedent. Default is enough.

RBI Circular History:
RBI's 12 Feb 2018 circular withdrew all earlier schemes - CDR, SDR, S4A, JLF - and said 180 days resolution, else IBC. Supreme Court in Dharani Sugars v. Union of India (2019) quashed it as ultra vires Sec 35AA. Then RBI issued Revised Framework 7 June 2019 - Prudential Framework for Resolution of Stressed Assets.

Under 2019 Framework, JLF discontinued, but Intercreditor Agreement mandatory for exposure > Rs 2000 Cr, decision by 75% by value and 60% by number binds all.

How Courts Decide Syndicated Rescheduling Dispute - Checklist

For Lender:

1. Was rescheduling agreement executed or only sanction letter? Sanction letter is merely offer, with string of conditions, unless acted upon does not result in novation.
2. Were conditions precedent fulfilled? If not, no novation.
3. Does rescheduling require unanimous consent under facility agreement? If yes and minority dissented, rescheduling void.
4. Does ICA under RBI framework apply? If 75% signed, dissenting bound but entitled to exit at liquidation value.

For Borrower:
You cannot claim novation if you failed to infuse equity or give security as per rescheduling terms. Your payment of one instalment does not create deemed acceptance.

For Minority Lender Who Wants to Exit:
Check for Yank-the-Bank clause. You can be bought out by borrower or majority at par if you are dissenting.

Practical Drafting to Avoid Dispute:

1. Use clear language: "This amendment does not constitute novation under Sec 62, original securities continue".
2. Include Condition Precedent clause - List 10-15 CPs, state "Failure to satisfy CPs by Long Stop Date = No restructuring, original terms revived automatically".
3. Include Revival Clause - If restructuring fails, guarantee and security revive.
4. Define Majority vs All Lenders for each rescheduling item separately - 3 month moratorium = majority, 2 year extension + haircut = unanimous.