The very concept of cross-liability or cross-collateralisation, as applicable to commercial contracts, predicates reciprocity of security and commonality of the parties to the contract. This is, even etymologically, apparent, as "cross-collateralisation" necessarily requires the same collateral being available, as security against more than one loan. "Cross-collateralisation", as a concept known to commercial contracts, necessarily predicates the usage of the collateral, available as security against one loan, as collateral against a second loan. If, however, the two loans are governed by independent loan agreements, the inclusion of a cross collateralisation clause, in one of them, cannot, proprio vigore, justify proceeding against the collateral, provided in the said loan agreement, for satisfaction of the loan in the other agreements, unless the said security is also collateral under such other agreements. It is open, to contractual parties, to provide for such a dispensation in the loan agreements. Absent such dispensation, however, the mere existence of a cross collateralisation, or cross liability, clause in one of the agreements, would be insufficient.
IN THE HIGH COURT OF DELHI
O.M.P. (I) (COMM.) 142/2020, I.A. 4600/2020, I.A. 4942/2020 and I.A. 4943/2020
Decided On: 31.08.2020
Sunil Goel Vs. Indiabulls Housing Finance Limited
Hon'ble Judges/Coram:
C. Hari Shankar, J.
Citation: MANU/DE/1654/2020
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