Application Dismissed: Tribunal Upholds Exclusion from CoC Due to "Related Party" Status Under IBC, 2016.

The Tribunal dismissed the Applicant's application, affirming the IRP's decision to exclude the Applicant from the CoC due to its classification as a "Related Party" under IBC, 2016. The IRP's determination was based on objections from financial creditors and subsequent investigations. The Tribunal noted the Applicant's failure to challenge the "Related Party" status or provide sufficient evidence to refute it. Consequently, the IRP's decision to keep the Applicant's claim in abeyance was upheld, and the application was dismissed without costs.

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Issues Involved:
1. Exclusion of the Applicant from the Committee of Creditors (CoC).
2. Determination of the Applicant as a "Related Party" to the Corporate Debtor.
3. Validity of the IRP's decision to keep the Applicant's claim in abeyance.
4. The Applicant's challenge to the IRP's quasi-judicial powers and actions.

Detailed Analysis:

1. Exclusion of the Applicant from the Committee of Creditors (CoC):
The Applicant, Shoka Tradelink Private Limited, sought to set aside the decision to exclude it from the CoC as recorded in the minutes of the CoC meeting dated 26.02.2020. The Applicant also requested that all resolutions taken at the CoC meetings be quashed until it is included in the CoC. The IRP had initially accepted the Applicant's claim and invited it to participate in the first CoC meeting. However, objections were raised by other financial creditors, leading to the Applicant's exclusion pending further verification.

2. Determination of the Applicant as a "Related Party" to the Corporate Debtor:
The primary contention revolved around whether the Applicant was a "Related Party" under Section 5(24) of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016). The IRP, based on objections from other financial creditors and subsequent investigations, concluded that the Applicant was indeed a "Related Party." This conclusion was communicated to the Applicant via a letter dated 27.04.2020. The Applicant did not challenge this determination or provide sufficient evidence to refute the IRP's findings.

3. Validity of the IRP's Decision to Keep the Applicant's Claim in Abeyance:
During the CoC meeting, objections were raised regarding the inclusion of certain creditors, including the Applicant, on the grounds of their relationship with the Corporate Debtor. The IRP decided to keep the claims of these creditors in abeyance until a detailed due diligence was completed. The IRP's decision was based on the premise that the assignment transactions were recent and required thorough verification. The Tribunal upheld the IRP's decision, noting that reasonable opportunities were given to the Applicant to provide necessary documentation, which it failed to do satisfactorily.

4. The Applicant's Challenge to the IRP's Quasi-Judicial Powers and Actions:
The Applicant argued that the IRP acted beyond its powers by excluding it from the CoC based on allegations from other financial creditors. The Tribunal found that the IRP did not pass any quasi-judicial order during the CoC meeting but merely sought time to verify the claims. The IRP's subsequent determination that the Applicant was a "Related Party" was not challenged by the Applicant. The Tribunal referenced the decision in Pankaj Yadav & Anr. vs. State Bank of India & Anr., which held that an assignee of a debt from a related party steps into the shoes of the assignor and inherits both rights and disadvantages. This precedent supported the IRP's conclusion that the Applicant, as an assignee from a related party, was also a related party.

Conclusion:
The Tribunal dismissed the Applicant's application, affirming the IRP's decision to exclude the Applicant from the CoC pending verification and the determination that the Applicant was a "Related Party." The Tribunal emphasized that the Applicant did not challenge the IRP's findings or provide sufficient evidence to refute the related party status. The application was dismissed without costs.

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