Applicants' Claims Dismissed for Not Meeting Financial Creditor Criteria

The Tribunal rejected the Applicants' claims as they did not qualify as financial creditors under the Insolvency and Bankruptcy Code, 2016. Consequently, all ancillary prayers dependent on their qualification as financial creditors were also rejected.

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Issues Involved:
1. Rejection of claim by the Resolution Professional.
2. Qualification as a financial creditor under the Insolvency and Bankruptcy Code, 2016.
3. Invocation of guarantees and securities.
4. Reconstitution of the Committee of Creditors.
5. Entitlement to voting share and consequential benefits.
6. Prohibition on altering the Articles of Association.
7. Restraining further meetings of the Committee of Creditors.

Issue-wise Detailed Analysis:

1. Rejection of Claim by the Resolution Professional:
The Applicants sought to quash the email dated 28th January 2021 issued by the Respondent rejecting their claim of financial debt under Regulation 8 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Respondent rejected the claims on the grounds that the Applicants had not made any payments under the guarantees and had not provided financial statements showing disbursement of debt by the Corporate Debtor.

2. Qualification as a Financial Creditor:
The Tribunal examined whether the Applicants qualify as financial creditors under the Code. The Applicants, being founder promoters, had provided corporate/personal guarantees. The Tribunal noted that the essential condition for a claim to fall under the category of financial debt is that there must be a disbursement of debt against consideration for the time value of money. Since the Applicants had not made any payments under the guarantees, there was no disbursement of debt to the Corporate Debtor. Thus, the Applicants did not qualify as financial creditors.

3. Invocation of Guarantees and Securities:
The Tribunal noted that the Applicants had provided personal and corporate guarantees, and the security trustee had invoked these guarantees. However, the Applicants had not made any payments pursuant to the invocation. Additionally, the pledged shares had not been sold. Therefore, the Applicants had not suffered any loss due to the enforcement of the guarantees.

4. Reconstitution of the Committee of Creditors:
The Applicants requested the Tribunal to order the reconstitution of the Committee of Creditors and grant them voting shares proportionate to their claims. Since the Tribunal concluded that the Applicants did not qualify as financial creditors, this prayer was rejected.

5. Entitlement to Voting Share and Consequential Benefits:
The Applicants sought voting shares and consequential benefits arising from their claims. As the Tribunal rejected their qualification as financial creditors, this request was also denied.

6. Prohibition on Altering the Articles of Association:
The Applicants requested that Article 137 of the Articles of Association of the Corporate Debtor not be altered until the entire liability under the Applicants' guarantees was satisfied. This prayer was consequential to their claim as financial creditors, which was rejected.

7. Restraining Further Meetings of the Committee of Creditors:
The Applicants sought to restrain the Respondent from conducting further meetings of the Committee of Creditors. This prayer was also dependent on their claim as financial creditors, and thus, it was rejected.

Conclusion:
The Tribunal rejected the claims of the Applicants, concluding that they did not qualify as financial creditors under the Insolvency and Bankruptcy Code, 2016. Consequently, all ancillary prayers dependent on their qualification as financial creditors were also rejected.

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