TaxTMI 
TaxTMI 
2019 (11) TMI 1495
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....he respondent M/s. Odisha Slurry Pipe Line Infrastructure Limited is under Corporate Insolvency Resolution Process (CIRP) is represented herein by its Resolution Professional Mr. Ashish Chhawchharia. 3. The Corporate Insolvency Resolution Process commenced against the Corporate Debtor by Order of this Adjudicating Authority dated 14.05.2019. The Corporate Debtor was incorporated on 17.01.2014. The shareholding of the Corporate Debtor is Essar Steel India Ltd - 30.19 % and IGOF-69.81 %. 4. This application has been taken out by the applicant on the ground that it is one of the Financial Creditor of the Corporate Debtor. It has given loans to the tune of Rs. 5,49,76,10,986/- the same is due and payable. The loans were given by this applicant under Loan Agreements and Supplementary Agreements dated 28.03.2015 and 20.06.2015. The applicant has filed this application seeking various reliefs which are as under - "Reliefs: - (i) Pass necessary Order and/Orders directing the Resolution Professional to forthwith include the claim of the Applicant Financial Creditor in the list of admitted claims/creditors so prepared by the Resolution Professional in respect of the C....
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....ant is "related party" as per the Section 5(24) of the IBC, 2016. In support of this stand, the Resolution Professional has filed various documents. 6. We have heard the submission of the parties in detail. The parties placed their submissions in detail for many hours before this Adjudicating Authority. The patient hearing was given to all the parties and accommodated to the convenient timing and the duration of argument was allowed to the satisfaction all. 7. The first prayer of the applicant to pass a necessary Order directing the Resolution Professional to include the claim of the applicant was not taken up at the time of the argument. Both the parties in respect of this application made their submissions, regarding 2nd relief that Resolution Professional has wrongly held the applicant as a related party. Aggrieved by this decision of the Resolution Professional, the applicant has filed this application and seeks orders/reliefs in the respect of the same. Hence, the entire case revolves around a question whether the applicant is "related party" as per the Section 5(24) of the Insolvency and Bankruptcy Code, 2016. 8. The Corporate Debtor was incorporated on 17.01.2014. E....
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....t. Srei Alternative Investment Manager Ltd. is a wholly owned subsidiary of the applicant herein referred to as the "Settlor" and Mr. Anil Choudhary is referred as second part in the Trust Deed. Highlights of few clauses of the Trust Deed which are as under - "A. The Settlor has identified various investment opportunities in Portfolio Investment Opportunities (defined hereinafter). In order to pool together funding from institutional and other investors for the purpose of making such investments, the Settlor has decided to establish an irrevocable determinate trust under the Indian Trust Act, 1882. Which shall be known as the "SREI Multiple Asset Investment Trust" ("Fund") through this Indenture. The Settlor intends that the Trustee will, on behalf of the Fund, raise and pool. Together funds for the purpose of investing in Portfolio Companies/Special Purpose Vehicles with the objective of obtaining attractive returns for the Beneficiaries (defined hereinafter). The Fund will seek registration with the SEBI (defined hereinafter) as an Alternative Investment Fund under the Regulations (defined hereinafter). 1.1.9. "Contributors" or "Beneficiaries" means the persons,....
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....mploy and pay at the expense of the Trust Fund, any agent in any jurisdiction whether attorneys, solicitors, brokers, banks, trust companies, custodians, financial and tax advisors, placement agents or other agents whether associated or connected in any way with the Trustee or not, without being responsible for the default of any agent if employed in good faith to transact any business. " (iv) By Deed of Appointment and Retirement made at Kolkata dated 01.04.2014, Mr. R.N. Ghose was appointed as sole Trustee. (v) This Deed was executed by the following parties: - (a) SREI Alternative Investment Managers Limited (Formerly known as SREI Venture Capital Limited) as the "Contributor 1" (herein after referred to as SAIML). (b)Essar Oil Limited as the "Contributor 2". (c)Mr. Anil Choudhury as the "Retiring Trustee". (d)Mr. Raghunath Ghose as the "New Trustee". (vi) Shri R.N. Ghosh is a practising advocate. He is a sole trustee of SMAIT. (vii) M/s. SAIML is an Investment Manager of IGOF under the Investment Agreement dated 22nd May, 2013 between SREI Multiple Assets Investment Trust (SMAIT) and SREI Alternative Invest....
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....Control is the direct or indirect power to direct the management and policies of a person or entity, whether through ownership of voting securities, by contract, or otherwise; the power or authority to manage, direct, or oversee. " 13. IGOF is the majority shareholder of the Corporate Debtor with 69.80 % holding. 14. SEBI has initiated an investigation for the period between April, 2014 and October, 2015 which revealed that the applicant directly invested a sum of Rs. 60.49 crores in IGOF. 15. From SEBI Order dated 29.11.2017, the portfolio companies of IGOF includes Essar Steel Chhattisgarh Ltd., Essar Steel India Ltd., Essar Steel Jharkhand Ltd., Essar Shipping Ltd., Essar Pellets Marketing Ltd. and the Corporate Debtor. By E-mail dated 24th June, 2019, the representative of the applicant has confirmed that the applicant has invested in IGOF and the investment still subsists as on that date. 16. In Appeal No. 666 of 2019, the Hon'ble NCLAT has observed that the stand taken by the appellant therein M/s. SREI Multiple Investment Trust is similar to the stand taken by the M/s. SREI Infrastructures Finance Ltd. The Hon'ble NCLAT had held at Para No. 12 of the Orde....
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.... and administrative services in respect of IGOF. 21. However, it is to bear in mind that under the Trust Deed clause 1.1.19, the SAIML is referred as Investment Manager. Hence, the appointment of SAIML as Investment Manager took place at the time of creation of the Trust. SAIML is also one of the creator of the Trust, the other being Mr. Anil Choudhury an Advocate. Mr. Anil Choudhury was replaced, the present sole Trustee Mr. R.N. Ghose, Advocate was appointed by Deed dated 01.04.2014. 22. The respondent has stated that the Annual Report of the Financial Year ending on 31.03.2019 of the applicant SREI Alternative Investment Managers Limited is 100 % subsidiary of the applicant. Applicant owns 100 % of the legal and beneficial interests in the Investment Manager. The relevant extract of the Annual Report of the Financial Year 31.03.2019 is filed in Annexure "A" of the reply. 23. The respondent states that Investment Management Agreement between the Trust and SAIML, clearly explain that the applicant wholly owned subsidiary company of the applicant directly controls more than 20 % of the voting rights of the Corporate Debtor. 24. The few extracts of the Investment Managem....
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....ntributors under the relevant Scheme and shall be empowered to liaise and interact with the Contributors to secure the timely receipt of the Capital Contributors under the relevant Scheme. 8. Portfolio Administration - The Investment Manager shall supervise the investment activities of the Trust in accordance with the following principles: (a) The Investment Manager shall exercise all rights of nomination, voting, veto, inspection, exit mechanisms etc. as may be available, to the extent necessary, granted to the Scheme under the provisions of the Investment/shareholder agreements with the Portfolio Companies; (b) The Investment Manager shall require each Portfolio Company to provide quarterly reports of operating results, financial position and marketing prospects, as well as audited annual statements of accounts from reputable auditing firms; and (c) The Investment Manager shall ensure that the Portfolio Companies take all secretarial steps including issue of share certificates, appointment of nominee Non-Executive Directors, amendment of Articles of Association, etc. to give full effect and protection to the rights of the Scheme. 9. In....
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....any of the applicant. 26. To establish the stand that applicant is "related party", the Resolution Professional has submitted the following diagram - 27. The applicant has submitted this diagram to establish that applicant has no nexus with SMAIT or IGOF. Hence, no nexus with Corporate Debtor. 28. To conclude the hands of Srei Alternative Investment Managers Ltd. (SAIML) (formerly known as Srei Venture Capital Limited), the wholly owned subsidiary of the applicant, is visible and encompassing like an octopus holding the prey, the limbs of the SAIML are all around the TRUST and ITS SCHEMES. It is also to bear in mind that the SAIML is THE FUND MANAGEMENT ARM of the applicant, (the relevant statement, https//www.srei.com>companies>srei-ventures>contact us, which was available in the website was missing at the time to finalisation of the order). (i) SAIML created this TRUST along with one Mr. Anil Choudhury an advocate. Subsequently he was replaced with present sole Trustee Mr. R.N. Ghose, also a practising advocate. In the TRUST DEED the term SETTLOR refers to SAIML. (ii) In the Trust Deed definition of "Investment Manager" means SREI Venture Capital ltd. now known as ....
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....ights against the Trustee except as expressly conferred on such Contributor hereby and in the Contribution Agreement, nor shall the Trustee be bound to make payment to any Contributors, except out of funds held by it for that purpose under the provisions of this Indenture. 7.5 Notwithstanding anything contained in this Indenture the rights of the Contributors shall be as specified in the Contribution Agreement. 7.6 Defaulting Contributors: If any Contributor, fails to contribute any portion of its Capital Commitment pursuant to a Drawdown Notice, within 30 (thirty) business days (any day when the Reserve Bank of India is open for business) of the date specified in the Drawdown Notice, the Trustee may declare such Contributor to be a defaulting contributor (hereinafter referred to as the "Defaulting Contributor") and the Contribution of the Defaulting Contributor shall be dealt with in accordance with the provisions of the Contribution Agreement. 30. Investment Management Agreement dated 22.05.2013 between SMAIT and SAIML: - The wholly owned subsidiary company of the applicant enters Trust as an Investment Manager under Investment Management Agreement dated 22.0....