Hi Tejbir,
MPLS TE only reserves bandwidth at the control plane level. In the example you gave, both LSPs would get signalled properly but you would need to do admission control on the LSP head end router in order not to oversubscribe any of the links along the LSP.
Regards
Harold Ritter
Sr Technical Leader
CCIE 4168 (R&S, SP)
harold@cisco.com
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