TaxTMI 
TaxTMI 
2021 (8) TMI 206
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....reconstitute the Stakeholders Consultation Committee by removing Respondent No. 2 as the representative of the shareholders of the Corporate Debtor; b) Restrain the Respondent No. 1 from issuing any Notice(s), Agenda(s) or invitation(s) to Respondent No. 2 of any forthcoming Stakeholders' Consultation Committee Meeting(s) until the present Application is decided;" 3. To put succinctly, facts of the case are that the Operational Creditor, M/s. Advance Cargo Movers (India) Pvt. Ltd. had filed a petition bearing no. IB-1373(ND)/2019 under Section 9 of IBC 2016 for initiation of CIR Process against the Corporate Debtor M/s. SBS Transpole Logistics Private Limited ("hereinafter referred to as "Corporate Debtor"/CD). That vide Order dated 04.09.2019, this Adjudicating Authority had initiated CIR Process against the CD and appointed Mr. Mohan Lal Jain as the Interim Resolution Professional. That subsequently vide Order dated 01.11.2019, he was confirmed as RP and vide Order dated 16.12.2020, the Liquidation proceedings were initiated against the CD and Mr. Mohan Lal Jain was appointed as the Liquidator ("hereinafter referred to as "Respondent No. 1") of the CD. 4. It is averred by....
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....(4) cannot be applied in the case herein as the majority of the shareholders, in number, have successfully nominated the Applicant as the representative, whereas the Respondent No. 2 did not even participate in the said nomination process. That in such a scenario, it was not open to the Respondent No. 1/Liquidator to ignore the nomination by majority of the shareholders and instead select a non-participative shareholder. That the Respondent No. 1 has erroneously concluded that a majority decision is not a valid decision unless it is by a unanimous 100% majority of the class of shareholders. 12. That while placing reliance on Section 25A(3A) of IBC 2016, it is submitted by the applicant that the legislature was faced with a similar situation in case of allottees/financial creditors in a class and their voting during the CIR Process. The same was tackled by inclusion of Section 25A(3A) in the IBC, which enabled voting in the case of a class of creditors to be done with the decision of a 51% majority. That the same principle ought to be read into Regulation 31A(3) of the Liquidation Process Regulations, and the nomination by the majority, either in number or in value, who have voted ....
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....r the SARFAESI Act, Corporate Insolvency Resolution Process and now Liquidation Process. That the Respondent No. 2 must not be allowed to suddenly appear now during the Liquidation Process as a representative of the shareholders." 14. Since the reply of Respondent no. 1/Liquidator only is available on record, the same is taken for consideration. 15. In response to the grievance raised by the Applicant, it is submitted by the Respondent No. 1/Liquidator that: "7. As per records of the Corporate Debtor, there are 5 shareholders of the Corporate Debtor, as stated by the applicant also in para 6 of the present application. The answering respondent no. 1 had endeavoured to facilitate the class of shareholders to nominate their representative for inclusion in the consultation committee in terms of regulation 31A(3) of the liquidation regulations. As per the table in regulation 31A(2), only 1 (one) representative is to be included from the class of 'shareholders'. However, the 'shareholders' failed to nominate their representative and in terms of regulation 31A(4), the stakeholder with the highest amount in the class of shareholders was included in the consultation com....
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....action', which do not have any bearing on or connect with the present liquidation proceedings. 18. In response to the reliance being placed by the Applicant on Section 25A(3A) of IBC 2016, it is submitted by the Liquidator that Section 25A(3A) of the Code is not relevant to the present issue of nominating a representative of shareholders, which does not involve any voting. Furthermore, the reference to this section does not help the applicant as the stress in this section is on voting share of the financial creditors. In the instant case, the shareholders have failed to nominate their representative, even if such failure is due to 02 of the 05 shareholders not nominating their representative and accordingly, Regulation 31A(4) has come into play. The shareholding of the Respondent No. 2 being the highest, it has been included in the SCC in terms of Regulation 31A(4). 19. That the Applicant has filed its Rejoinder and has reiterated the same grounds, which are not repeated for the sake of brevity. 20. We have heard Counsels of both the parties. After hearing submissions of both the Parties and perusing averments, reply and documents on the record, we are of the view that the m....
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....e of the shareholders has completely ignored that out of a total of 5 shareholders of the Corporate Debtor, the applicant had secured the nomination of 3 (including the applicant) in terms of Regulation 31A(3) of the Liquidation Regulations. The respondent had duly noted that 2 out of the 5 shareholders had nominated the applicant as their representative who himself can also be considered to have nominated himself and had also noted that these 3 shareholders represent only 24.99% of the shareholding. Furthermore, the answering respondent no. 1 as the Liquidator had also noted that the other 2 shareholders having 75% shareholding had not nominated the applicant as their representative and accordingly, the applicant could not be considered as the representative of the entire 'shareholders' class of stakeholders. It is envisaged in terms of table forming part of Regulation 31A(2) that only 1 representative of all the shareholders is to be included in the SCC. The term 'stakeholders of each class' in Regulation 31A(3) does not mean 'some of the stakeholders in the class' or even 'majority of stakeholders by number in the class'. In the considered view of....