2019 (11) TMI 1495 - Tri - Insolvency and Bankruptcy

Tribunal dismisses application, upholds related party classification, denies Committee of Creditors inclusion and voting rights, rejects plea to set aside resolutions.

SREI Infrastructure Finance Ltd. Versus Ashish Chhawchharia, Resolution Professional of Odisha Slurry Pipe Line Infrastructure Limited

The Tribunal dismissed the application (IA No. 85/CTB/2019), upholding the Resolution Professional's decision to classify the applicant as a related ... Approval of Resolution Plan - inclusion of claim of the Applicant Financial Creditor in the list of admitted claims/creditors so prepared by the Resolution Professional in respect of the Corporate Debtor - applicant Financial Creditor is a related party of the Corporate Debtor or not - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules - HELD THAT:- Under Investment Management Agreement, the SAIML has right to exercise all rights, powers, privileges over IGOF. It is also clear that IGOF is a majority shareholder of the Corporate Debtor and the Investment Manager directly controls more than 20 % of the voting rights of the Corporate Debtor. It is also important to mentioned here that the SAIML is the wholly owned subsidiary company of the applicant - the hands of Srei Alternative Investment Managers Ltd. (SAIML) (formerly known as Srei Venture Capital Limited), the wholly owned subsidiary of the applicant, is visible and encompassing like an octopus holding the prey, the limbs of the SAIML are all around the TRUST and ITS SCHEMES. It is also to bear in mind that the SAIML is THE FUND MANAGEMENT ARM of the applicant. The SAIML is the wholly owned subsidiary of the applicant. The SAIML plays the roles of Creator, Settlor, Management, administration, appointment & Removal of Trustee, contributor, Investment Manager and Manager of the Scheme IGOF. Hence, the applicant is 'related party' as defined under Section 5(24) of the Insolvency and Bankruptcy Code, 2016. The decision of the RP that the applicant is 'related party' is right - Application dismissed. Issues Involved:1. Inclusion of the applicant’s claim in the list of admitted claims/creditors.2. Determination of whether the applicant is a 'related party' of the Corporate Debtor.3. Inclusion of the applicant in the Committee of Creditors and allowing voting rights.4. Setting aside resolutions adopted in the Committee of Creditors' meetings.5. Interim orders to stay further meetings and maintain status quo in the Corporate Insolvency Resolution Process (CIRP).Issue-Wise Detailed Analysis:1. Inclusion of the Applicant’s Claim in the List of Admitted Claims/Creditors:- The first prayer of the applicant to include its claim in the list of admitted claims was not taken up during the argument.2. Determination of Whether the Applicant is a 'Related Party' of the Corporate Debtor:- The core issue revolves around whether the applicant, M/s. SREI Infrastructure Finance Limited, is a 'related party' as per Section 5(24) of the Insolvency and Bankruptcy Code, 2016.- The Corporate Debtor, Odisha Slurry Pipe Line Infrastructure Limited, is under Corporate Insolvency Resolution Process (CIRP) and has 69.81% shareholding by India Growth Opportunity Fund (IGOF).- The Resolution Professional (RP) classified the applicant as a related party, citing its association with IGOF.- The applicant argued that it is not a related party, emphasizing that SREI Alternative Investment Manager Limited (SAIML), its wholly-owned subsidiary, manages IGOF as an investment manager without controlling it.- The Tribunal examined various legal entities and their interconnections, including SREI Infrastructure Finance Ltd., SAIML, and SREI Multiple Asset Investment Trust (SMAIT).- The Tribunal referred to definitions under Section 5(24) of the IBC, 2016, and the Supreme Court’s interpretation of 'control' in Arcelor Mittal India Private Limited Vs. Satish Kumar Gupta.- The Tribunal concluded that SAIML, being a wholly-owned subsidiary of the applicant, exercises significant control over IGOF, making the applicant a related party.3. Inclusion of the Applicant in the Committee of Creditors and Allowing Voting Rights:- The applicant sought inclusion in the Committee of Creditors and the right to vote in its meetings.- Given the Tribunal’s finding that the applicant is a related party, it is disqualified from being included in the Committee of Creditors and exercising voting rights.4. Setting Aside Resolutions Adopted in the Committee of Creditors' Meetings:- The applicant requested to set aside resolutions adopted in the Committee of Creditors' meetings held on June 14, 2019, and July 18, 2019.- The Tribunal did not find merit in this request, primarily because the applicant is deemed a related party and thus excluded from such proceedings.5. Interim Orders to Stay Further Meetings and Maintain Status Quo in the CIRP:- The applicant sought interim orders to stay further meetings of the Committee of Creditors and maintain status quo in the CIRP.- Given the Tribunal’s decision on the related party status, these interim requests were also dismissed.Conclusion:- The Tribunal dismissed the application (IA No. 85/CTB/2019), upholding the Resolution Professional’s decision to classify the applicant as a related party.- The Tribunal directed the registry to communicate the order to the petitioner and respondent and issue a certified copy upon compliance with requisite formalities.