2023 (10) TMI 71 - SCH - Insolvency and Bankruptcy

Court rules appellant not 'related party' under Insolvency Code, remits matter for further consideration.

The Court ruled in favor of the appellant, determining that they are not a 'related party' under Section 5(24) of the Insolvency and Bankruptcy Code, ... Related party or not - allowed to take place on the Committee of Creditors or not - Section 5(24) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- There can be no cavil to the proposition that so far as the appellant before us is concerned, on account of both the aspects urged by learned senior counsel for the appellant, the appellant cannot be treated as a related party and thus, would find a place on the Committee of Creditors. Having opined so, insofar as the other aspects are concerned, which have not been dealt with by the NCLAT, it would not be appropriate for this Court to venture into that area and other aspects, considering the nature of appeal before this Court as the NCLAT must bestow consideration on those aspects first before this Court is called upon to take a view in the matter, especially keeping in mind the limited jurisdiction of this Court vis-a-vis Section 62 of the Code limiting the appeal to a “question of law”. The impugned order set aside - matter remitted back to the NCLAT for its adjudication on the various other aspects which the appellant seeks - appeal allowed by way of remand. Issues involved:The main issue in this case is whether the appellant is a 'related party' under Section 5(24) of the Insolvency and Bankruptcy Code, 2016, affecting their place on the Committee of Creditors. Other issues include the interpretation of Section 21 with provisos and Sub-clause (j) to Section 5(24), and the consideration of additional arguments raised by the appellant.Related Party Status:The Tribunal had opined that the appellant is a related party, but the appellant argued that as a Stressed Assets Stabilization Fund, it is a Government Sector Undertaking with voting rights limited to 20%, not falling under the disqualification criteria of owning more than 20% as per Section 5(24) of the Code. The appellant also cited Section 21 with provisos and Sub-clause (j) to Section 5(24) to support their position. The Court agreed with the appellant's argument, ruling that the appellant cannot be treated as a related party and should be included in the Committee of Creditors.Remittal of Matter:The Court set aside the impugned order and remitted the matter back to the NCLAT for adjudication on other aspects raised by the appellant that were not addressed in the judgment. The Court emphasized the limited jurisdiction of the Supreme Court under Section 62 of the Code, restricting the appeal to questions of law. The appellant's appeal was allowed, and each party was directed to bear their own costs. All other contentions not addressed in the order remain open for the parties to pursue.