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2021 (8) TMI 206
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....ication: "a) Direct the Respondent No. 1 to 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 refe....
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....lation 31A(4). 11. It is contended by the Applicant that the Regulation 31A(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, a....
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....at due to this, the Corporate Debtor suffered from NPA classification, followed by the sale of its assets under 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 reg....
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.... commencement of CIRP of the CD, wherein the Corporate Debtor is one of the claimants, is based on distinct 'cause(s) of 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. Aft....
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.... "19. In response to the contentions in para 9, it is wrong to contend that the answering respondent no. 1 as the Liquidator while including the Respondent No. 2 as the representative 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 eac....
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....stowed a duty on the Liquidator to facilitate the stakeholders of each class to nominate their representatives for inclusion in the SCC. 25. That we further notice that the Liquidator, while facilitating nomination of the Shareholders in class through his mail dated 06.02.21, has not informed the shareholders that the representative shall be unanimously nominated by all the shareholders or the representative shall be decided on the basis of majority of shareholding in number or value. Such criteria ought to have been declared upfront to the all concerned. 26. Therefore, the nomination of the Applicant as the Representative of Shareholders cannot be rejected by the Liquidator on the ground that the said nomination was not made unanimously by all the shareholders. 27. Since the Applicant has been nominated by the majority i.e., 3 out of 5 Shareholders as the Representative of the Shareholders-in-class, which was duly communicated by the Applicant to the Respondent No. 1, the question of applicability of the provision under Regulation 31A(4) did not arise. Therefore, we hold that the nomination of the Respondent No. 2 as to represent Shareholders-in-class in the Stakeholders ....
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....ited (in Liquidation) ("Corporate Debtor) In relation to the above, we wish to inform you that the undersigned, being the Liquidator has constituted The Stakeholders Consultation Committee of Ms SBS Transpole Logistics Pvt. Ltd. in compliance with the Regulation 31A of the Liquidation Regulations which consist of the following stakeholders. S. No. 2 Class of Stakeholders Secured Frandal Creditor, who have relinquished their security under Section 52 of the Code Unsecured Financial Creditor Employees & Workmen Name of the Representative CFM Assel Reconstruction PvE LI Mr. Vivek Shukla Mi Shyam Sunder Sharma 4 Government 5 Operational Creditors other than Workmen Mr Durel George employees and Government G Shareholders or parties, if any This is for your kind information please. With Regards SBS Logistics Holdings Bingapore Ple. L (now known as Global Enterprise Logistics Pte. Ltd) (GEL) MOHAN LAL JAIN LIQUIDATOR In the matter of SBS Transpole Logistics Private Limited in Liquidation Reg. No. IBBITPA-002/TP-No0o06/2016-17/10006 Res Address F-2/26, Sector 15,Rohini, New Delhi 110089....