Exclusion of Financial Creditor from Creditors' Committee Deemed Unjustified

The tribunal found that the exclusion of the Appellant, a financial creditor, from the Committee of Creditors (CoC) by the Interim Resolution Professional (IRP) was unjustified. The decisions taken in the first CoC meeting without the Appellant, including confirming the appointment of the IRP and raising interim finance, were deemed substantive and invalidated due to the Appellant's exclusion. The tribunal allowed the appeal, set aside the impugned order, and directed that decisions from the meeting not be implemented until ratified or modified in the next CoC meeting. The importance of proper inclusion of financial creditors in the CoC was emphasized.

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Issues Involved:
1. Whether the decision of the IRP to constitute the CoC without including the Appellant and holding the first CoC meeting without the Appellant is sustainable in terms of the IBC and CIRP regulations.
2. Whether the decisions taken in the first CoC meeting are substantive decisions and, if so, whether they deserve to be set aside as they were taken without the presence of the Appellant in the CoC.

Detailed Analysis:

Issue 1: Constitution of CoC Without the Appellant
The appeal arises from the exclusion of the Appellant, a Financial Creditor, from the Committee of Creditors (CoC) by the Interim Resolution Professional (IRP). The IRP constituted the CoC and held its first meeting without including the Appellant, who had filed their claim six days after the last date for submission. The IRP justified the exclusion by citing adherence to the timelines provided by the CIRP Regulations. The Appellant argued that the IRP's action violated Section 21 of the IBC and Regulation 17 of the CIRP Regulations, which mandate the inclusion of all financial creditors in the CoC.

The tribunal noted that the IRP had issued a public announcement on 03.04.2022, inviting claims with a last submission date of 15.04.2022. The Appellant sent emails on 13.04.2022 and 16.04.2022 indicating their intention to file claims, which the IRP did not acknowledge but did not deny receiving. The IRP filed a report certifying the constitution of the CoC on 19.04.2022, excluding the Appellant, who submitted their claim on 21.04.2022.

The tribunal found that the IRP's exclusion of the Appellant was unjustified as the Appellant had communicated their intent to file claims before the last date and had submitted their claim within a reasonable time frame. The IRP's provisional acceptance of claims, including the Appellant's, indicated that the verification process was incomplete. The tribunal held that the IRP's undue haste in constituting the CoC and excluding the Appellant was not in sync with the IBC's form and spirit.

Issue 2: Substantive Decisions Taken in the First CoC Meeting
The tribunal examined whether the decisions taken in the first CoC meeting, held without the Appellant, were substantive and should be set aside. The decisions included confirming the appointment of the IRP as the Resolution Professional, determining his fees, appointing other staff, and raising interim finance of Rs.50 lakhs.

The tribunal noted that these decisions had significant financial implications for the corporate debtor and should have been taken under the guidance of a properly constituted CoC. The exclusion of the Appellant, a secured financial creditor, from the CoC invalidated the decisions taken in the first meeting. The tribunal disagreed with the Respondent's assertion that the decisions were not substantive and found that the Appellant's exclusion deprived them of participation in crucial decisions.

Conclusion and Directions
The tribunal allowed the appeal and set aside the impugned order with the following directions:
1. The decisions taken in the CoC meeting dated 28.04.2022 shall not be implemented unless ratified or modified in the next CoC meeting.
2. The directions were issued considering the peculiar facts and circumstances of the case.
3. The intervention application No.3054/2022 was disposed of with the liberty for the applicants to file an appropriate application before the Adjudicating Authority.
4. No order as to costs.

The tribunal emphasized the importance of including all financial creditors in the CoC and ensuring that the CoC is properly constituted to make decisions in the best interests of the corporate debtor.

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