Shareholder appeal dismissed under Section 61 IBC 2016 for lacking locus standi as aggrieved person

NCLAT dismissed a shareholder's appeal under Section 61 of IBC, 2016, ruling the appellant lacked locus standi as an "aggrieved person." The tribunal held that shareholder oppression disputes fall under Companies Act, 2013, not IBC, and that IBC as special statute prevails per Section 238. While equity shareholders are represented through Board of Directors who can intervene post-CIRP admission, individual shareholders cannot pursue derivative actions. The court emphasized that debt and default were established without pre-existing dispute pleadings, making the NCLT order compliant with IBC provisions. Appeal dismissed for non-maintainability.

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Issues Involved:
1. Maintainability of the appeal by a shareholder under Section 61 of the Insolvency and Bankruptcy Code, 2016.
2. Existence of a pre-existing dispute under Section 5(6) of the Code.
3. Allegations of fraud or collusion between the Corporate Debtor and the Operational Creditor.

Issue-wise Detailed Analysis:

1. Maintainability of the Appeal by a Shareholder:
The primary issue was whether the appellant, a majority shareholder, could file an appeal under Section 61 of the Insolvency and Bankruptcy Code (IBC), 2016. The appellant argued that as a majority shareholder, its financial interests would be adversely affected by the Corporate Insolvency Resolution Process (CIRP), thus qualifying it as an "aggrieved person" under Section 61. The appellant cited several judgments to support its position, including Ashish Gupta v. Delagua Health India Pvt. Ltd., where the majority shareholders were allowed to intervene due to peculiar circumstances. However, the tribunal referred to previous judgments, notably Nirej Vadakkedathu Paul v. Sunstar Hotels and Estates Pvt. Ltd., which clarified that shareholders are not considered "aggrieved persons" merely because the Corporate Debtor is admitted into CIRP. The tribunal emphasized that the IBC does not allow shareholders to initiate CIRP processes, and once admitted, the functions of the Board of Directors are taken over by the Interim Resolution Professional (IRP). Consequently, the appeal was deemed not maintainable as the appellant lacked locus standi.

2. Existence of a Pre-existing Dispute:
The appellant contended that a pre-existing dispute existed between itself and the Corporate Debtor, which should have been considered by the Adjudicating Authority (AA) before admitting the CIRP application. The tribunal noted that disputes related to shareholder oppression or mismanagement under the Companies Act, 2013, are distinct from those under the IBC. The tribunal cited the judgment in Chetan Sharma v. Jai Laxmi Solvents (P) Ltd., which held that disputes under Section 5(6) of the Code must be between the Corporate Debtor and the Operational Creditor, not among shareholders. The tribunal found no evidence of a pre-existing dispute between the Corporate Debtor and the Operational Creditor, as the debt and default were undisputed.

3. Allegations of Fraud or Collusion:
The appellant alleged fraud and collusion between the Corporate Debtor and the Operational Creditor, arguing that this should invalidate the CIRP proceedings. However, the tribunal observed that these allegations were not part of the original pleadings and lacked supporting evidence. The tribunal reiterated that arguments outside the pleadings cannot be considered under settled law. The tribunal found no merit in the appellant's contentions of fraud or collusion, as the CIRP was initiated following due process, and the debt and default were established.

Conclusion:
The tribunal dismissed the appeal, concluding that the appellant, as a shareholder, lacked the locus to challenge the CIRP order under Section 61 of the IBC. The tribunal emphasized that the appellant's arguments regarding pre-existing disputes and allegations of fraud were unfounded and unsupported by evidence. The appeal was deemed not maintainable, and any pending interlocutory applications were closed without costs.

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