TaxTMI 
TaxTMI 
2018 (9) TMI 1222
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....ss and meetings of the CoC which have taken place without the participation of the applicant after 1.2.2018. 2. The applicant submits he, being the suspended director of the Corporate Debtor, not only has a right to participate in the CoC meeting but also a right to receive all documents which are tendered before the CoC, which are pertinent to the issues come up in the meetings of CoC as well as CIRP proceedings of the Corporate Debtor. He further mentions that the CoC did not allow the applicant to sit inside 2nd CoC meeting dated 1.2.2018 informing that he would not be allowed to attend future CoC meetings, ever since the RP has been sending only the notices and agenda for the CoC meetings without providing the minutes of the subsequent meetings. As he was neither allowed to participate nor allowed to have access to the minutes of the meeting and the material placed before the CoC, he sent an email on 26.5.2018 asking for the following documents: a. Minutes of all the COC meetings that have taken place till date, after the first two COC meetings; b. Minutes of all the meetings of Sub-Committees of the COC that have taken place till date; c. All docu....
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....eting with (i) a list of matters to be discussed at meeting; (ii) a list of the issues to be voted upon at the meeting; and (iii) copies of all documents relevant to the matters to be discussed and the issues to be voted upon at the meeting. 6. By citing the above provisions, the applicant submits that every participant of the CoC is entitled not only to receive the notice of the meetings but also to receive all the information as mentioned in Regulation 21 of CIRP Regulations. 7. Besides this, this applicant's Sr. Counsel Mr. Mustafa Doctor submits that Hon'ble NCLAT in Rajputana Properties (P.) Ltd. v. Ultra Tech Cement Ltd. (NCLAT) (IA 594/2018, dated 15-5-2018) has clearly held that the suspended directors of the Board are not mere spectators, they are entitled to express their views to the CoC for coming to conclusions in one or other way. 8. He further relied upon ANG Industries Ltd. v. Shah Bros. Ispat Pvt. Ltd. (NCLAT) (Comp Appeal (AT)109/2018, dated 24-5-2018) to say that suspended Board of Directors are entitled to attend meetings though they have no voting rights and their views could be taken into consideration while finalising the resolution plans. ....
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....d to follow at the time of approval of the resolution plan, whereas, in this case, the issue is as to whether the material documents including the resolution plans, which require confidentiality to be maintained, are required to be provided to the suspended director or not, which is altogether different from the issues raised in Rajputana supra, therefore, the counsel says, the same is not applicable to this case. Besides this, the Counsel has further submitted that the Hon'ble NCLAT made it clear that confidential documents are not to be shared by the RP with the other contending resolution applicants. 15. R2 Counsel submits that the ratio decided in ANG Industries Ltd. (supra) is not applicable to this case because the issues decided in the aforesaid case is in respect to as to whether the resolution Professional is required to give notice to "Operational Creditors" or their representatives to attend the meeting of the CoC and as to what is the intention of the legislature to allow the Board of Directors or the partners of the Corporate Debtor and the Operational Creditors or their representatives or the Resolution Applicants to attend the meeting of the Committee of Credi....
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....editor in a meeting of the committee of creditors: Provided that the fees payable to such insolvency professional representing any individual creditor will be borne by such creditor. (6) Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor. (7) The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board. (8) The meetings of the committee of creditors shall be conducted in such manner as may be specified." 20. Looking at the Section, meetings have to happen as specified in the CIRP Regulations, the same has been said in sub-section (1) and sub-section (8) of Section 24. Therefore, convening and conducting CoC meetings is to happen as specified in the CIRP Regulations, in pursuance of this power, Regulation 21 has set out what contents are required to be present in the notice of the meeting of the Committee of Creditors. 21. In furtherance of this, if we look into Regulation 21, it is evident that notice shall go to all participants of the meeting as mentioned under Regulation 21, which is as f....
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....ing an undertaking from the member to the effect that such member shall maintain confidentiality of the fair value and the Liquidation value and shall not use such values to cause any undue gain or undue loss to itself or any other person and comply with the requirements under sub-section (2) of Section 29. 24. For the sake of clarity, Regulation 35 is hereby inserted which is as follows: "35. Fair value and Liquidation value. (1) Fair value and liquidation value shall be determined in the following manner: - (a) the two registered valuers appointed under regulation 27 shall submit to the resolution professional an estimate of the fair value and of the liquidation value computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor; (b) if in the opinion of the resolution professional, the two estimates of a value are significantly different, he may appoint another registered valuer who shall submit an estimate of the value computed in the same manner; and (c) the average of the two closest estimates of a value shall be considered the fair....
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....n said anywhere it has to be submitted to the participants as well, when it has been provided in a specific Regulation that it has to be submitted only to the Committee, since the suspended director is not part of the Committee of Creditors, and having separately specified to whom the plan has to be submitted, then, to my belief, as per the Regulations, such submission of report cannot be extended to the persons other than Committee of creditors. 30. Since we are concerned with suspended directors alone, we have not dealt with rights of the operational creditors and other participants other than Committee of Creditors. 31. Simultaneously it is also necessary to look into the ground realities of this case. The total debt exposure of this company is around Rs. 9500 crores, whereas the liquidation value is around Rs. 2300 crores. Even if the director is allowed to receive all commercial information, then also there is no chance for him to get anything out of this resolution plan because the liquidation value is far less than the liability exposure of this company. By looking at the Code, it appears that COC is entitled to take some information in dealing with the affairs of this....
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....en given. Now it appears that this applicant does not want to allow these creditors atleast to timely realise whatever that has remained in the company. 35. After having the legislature examined all these legacy problems, it has taken a decision in this Code, to shift management from Board Management to Creditor Management, so that they can act prudently as to how they have to go about realising their dues from the Corporate debtor. 36. The Counsel for RP as well as the Counsel for COC categorically mentioned that providing such information to these debtors will no way helpful to the COC for examination of the Resolution Plan placed before them. However, the COC as well as the Resolution Professional already agreed to allow this applicant/Director to participate in all the meetings of the COC and also to record his views in the minutes. 37. To this point, the applicant submits since he has already given confidentiality undertaking to the RP, he shall be allowed to have access to all the plans as well as commercial information so that he can have meaningful participation in the CoC meeting. When his participation is not required for the CoC to take any call over the resolut....