TaxTMI 
TaxTMI 
2022 (2) TMI 305
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....National Company Law Tribunal, Kolkata Bench, Kolkata in C.A. (I.B.) No. 1748/K.B./2019 and C.A. (I.B.) 57/K.B./2020 in C.P. (I.B.) No 1684/K.B./2018, whereby the Adjudicating Authority/NCLT initiated liquidation proceedings against the Corporate Debtor 'INCAB Industries Limited', wherein the Appellant of Appeal No.348 of 2020 was employed until the date of passing the order of liquidation. Parties original status in the Company Petition represents them in these Appeals for the sake of convenience. Appellants Averment 2. The Corporate Debtor was admitted into the Corporate Insolvency Resolution Process (in short 'CIRP'), vide order dated 7th August 2019, and Respondent No. 1 was appointed as Interim Resolution Professional (IRP) of the Corporate Debtor. 3. Under the invitation of claims by the IRP, the Appellant and thousands of other employees who were employed with the Corporate Debtor submitted their claim, along with other Operational Creditors and Financial Creditors. 4. Subsequently, after forming the Committee of Creditors ('COC'), the resolution was adopted on 5th December 2019 to liquidate the Corporate Debtor, thereby sabotaging the cha....
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....or. These two Financial Creditors together constitute the majority of Financial Creditors with a vote share of 77.20%. 7(b). Under Section 5(24)(a) of the Code, a "related party", in relation to the corporate debtor, means a director or partner of the corporate debtor or a relative of a director or Companies Act. A related party about the Corporate Debtor (public company) includes "a Director of the Corporate Debtor holding more than 2% of the shares capital. Sub-section (f) of 5(24) states that "a body corporate whose board of directors, managing director or manager, in the ordinary course of business, acts on the advice, directions or instructions of the individual." 7(c). Given the provisions above, it is found that 'Kamla Mills Private Limited' and 'Fasqua Investment Private Limited' (both members of COC) were related party as Mr Ramesh Ghamandiram Gowani had a substantial shareholding of 99.74% in the Financial Creditor Kamla Mills Ltd and is also a Director and Shareholder of the Financial Creditor 'Fasqua Investment Private Limited'. He was the Director of the Corporate Debtor 'Incab Industries Ltd' till the commencement of the CIRP. Aft....
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....e inclusion of 'Kamla Mills Private Limited' and 'Fasqua Investment Private Limited in the Committee of Creditors. a. Respondent No. 1/Liquidator contends that Mr Ramesh Gowani claims to be a Director of the Corporate Debtor in terms of the Telefax Communication, dated 4th May 2009, passed by the BIFR in case No. 390 of 1999. In terms of the said order of the BIFR, while approving the Corporate Debtor's change in Directors, Mr Ramesh Gahmandiram Gowani was appointed as an Additional Director of the Corporate Debtor. b. Hon'ble High Court of Delhi, in Writ Petition (Civil) No. 3358/2012, passed an order dated 29th April 2013, set aside the said Telefax Communication of BIFR dated 4th May 2009. Since the said Telefax Communication was set aside by the Hon'ble High Court, therefore, Mr Gowani cannot be said to have been appointed and/or continued as such. c. That even if for the sake of arguments, the stand was taken by the Appellant that Mr Ramesh G. Gowani was appointed and continued as an Additional Director of the Corporate Debtor, is taken as correct, in terms of Section 260 of the Companies Act, 1956, such Director could hold of....
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....is defined to "mean" what is set out in sub-clauses (a) to (m). The expression "related party" is defined in Section 5(24) as follows: "5. (24) "related party", in relation to a corporate debtor, means- (a) a Director or partner of the corporate debtor or a relative of a Director or partner of the corporate debtor; (b) a key managerial personnel of the corporate debtor or a relative of a key managerial personnel of the corporate debtor; (c) a limited liability partnership or a partnership firm in which a Director, partner, or manager of the corporate debtor or his relative is a partner; (d) a private company in which a Director, partner or manager of the corporate debtor is a Director and holds along with his relatives, more than two per cent of its share capital; (e) a public company in which a Director, partner or manager of the corporate debtor is a Director and holds along with relatives, more than two per cent of its paid-up share capital; (f) anybody corporate whose Board of Directors, Managing Director or manager, in the ordinary course of business, acts on the advice, directions or instructions of a Director, pa....
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....ined by Parliament in the Companies Act, 2013 for all corporations. The definition of the expression has also been expanded for listed entities by the Securities Exchange Board of India by amendment to the Equity Listing Agreement to include elements mentioned under applicable accounting standards. However, in the present case, we are assessing its definition only under the IBC, which is exhaustive. The purpose of defining the term separately under different statutes is not to avoid inconsistency but because the purpose of each of them is different. Hence, while understanding the meaning of "related party" in the context of the IBC, it is important to keep in mind that it was defined to ensure that those entities which are related to the corporate debtor can be identified clearly, since their presence can often negatively affect the insolvency process.**** 88. An issue of interpretation in relation to the first proviso of Section 21(2) is whether the disqualification under the proviso would attach to a financial creditor only in praesenti, or if the disqualification also extends to those financial creditors who were related to the corporate debtor at the time of acquiring ....
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....party, if divesting was intending to be part of CoC. 12. The Appellant contends that the corporate debtor was operational and could have been revived had the premature liquidation order not passed. It is submitted that IRP/RP should have made every effort to run the Corporate Debtor as a going concern. The liquidation should have been the last resort in the CIR process. However, the Company was sent into liquidation in the instant case without even publishing the Information Memorandum. The fact that the Company was a going concern could be reflected from the facts that the Pune plant of the Corporate Debtor was in production till the year 2016, which could be clear from the Custom Returns filed by the Corporate Debtor before the Central Board of Excise and Customs. (Copy of the Customs Return is at Vol.III pages 482 for 486). 13. The Appellant contends that the liquidator worked 'hand in gloves' with the 'COC' to liquidate the Corporate Debtor. During the 3rd 'COC' meeting, dated 18th October 2019, the IRP, who is also liquidator, was informed by one of the Members of the 'COC', namely 'Pegasus Assets Reconstruction Private Limited', t....
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....was not available. However, the same would be made available on the receipt of the non-disclosure agreement. 17. Respondent No. 1 /Liquidator states that he had proposed and appointed the valuer in the 4th 'COC' meeting and proposed two registered valuers to determine the fair value and liquidation value under Regulation 35 CIRP regulations. In the 4th COC meeting, he circulated the quotation for valuation of assets of the Corporate Debtor he received by email from three Registered Valuers. After careful deliberation on the same concluded that the 'CoC' would confirm the names of the valuation professional after having consultations among themselves within two days. After that, in the 5th CoC meeting, at the time of discussion for status/steps taken, the CoC members present proposed and discussed for liquidation of the corporate debtor. After that, the Adjudicating Authority allowed Application u/s 33 of the Code, and he was appointed as liquidator of the Corporate Debtor. 18. Respondent No. 1 further contends that the Appellant, an erstwhile workman of the Corporate Debtor and Operational Creditor, has no locus to institute the Appeal and question the Credito....
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....view, it is of no consequence as it has already been established that he was never the Director or be deemed to have vacated much before. We further find force in the contention made of of Mr Gowani that such action was taken as a precautionary measure and to update the MCA records, which were pending for updation since 1999 as no meetings of shareholders, i.e. AGM or EGM, have taken place since then." (Verbatim copy) 23. In the above order, the Adjudicating Authority mentions that in the order dated 19th November 2019, it has been held that Mr Ramesh G Gowani has never been a Director of the Company and that order has attained finality. It is pertinent to mention that IRP/RP filed an Application under Section 19(2) of the Insolvency and Bankruptcy Code 2016 for directions to the respondents to give access to the books of account and other statutory records of the Corporate Debtor, provide all information and handover possession of all assets to resolution professional for a smooth implementation of CIRP. The adjudicating authority, while disposing of the said Application C.A. 1453/K.B./2019, made observations; "3. When the matter came up for hearing, representative ....
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.... this order. 6. Having stated so, we direct the respondents/directors and officers of the Company to provide all necessary documents, information and handover the possession of the assets of the corporate debtor to resolution professional so that CIRP can be completed smoothly and in timely manner---------." (verbatim copy) 24. We find that the Adjudicating Authority's observation is based on its earlier order dated 19th November 2019 about 'Kamla Mills Ltd' and 'Fasqua Investment Private Limited' being not related parties to the corporate debtor, has attained finality. However, the Adjudicating Authority failed to notice that his earlier order contains a stray observation about the Directorship of Mr Ramesh G Gowani in the corporate debtor company. Because it was not an issue in C.A., 1453/K.B./2019 filed under Section 19(2) of the Code. The said Application was filed U/S 19(2) of I & B code 2016 by IRP/RP, only on a limited issue involving direction to extend cooperation to the IRP. But it appears that the Adjudicating Authority, instead of deciding the main issue to extend cooperation by the suspended directors of the corporate debtor to the IR....
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...., the parties are agreed that the telefax communication is set aside as there is no order dated 4th May 2009 passed by the bench as such." It is also specifically stated in the order that "the result of this is clearly understood by the parties to mean that the position as existing on 3rd May 2009 would revive as regards the contents of the said telefax communication dated 4th May 2009.****** It is further observed by the Hon'ble High Court that "we have consciously not said anything about the merits of the matter because that had the potential for confounding the situation even more". 28. Based on telefax communication dated 4th May 2009 and the Hon'ble High Court order dated 29th April 2013, the position that emerges is that the BIFR never passed such order as stated in telefax communication. 29. The Learned Counsel for the Appellant has placed reliance on the master data of the Corporate Debtor annexed with the appeal paper book as Annexure VI. Photocopy of the master data is as under; 30. The Master data of the Ministry of Corporate Affairs clearly shows that Corporate Debtor 'Incab Industries Limited' was having four directors, and one of them was Mr R....
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....affect any power conferred on the Board of directors by the articles to appoint additional directors: Provided that such additional directors shall hold office only up to the date of the next annual general meeting of the Company: Provided further that the number of the directors and additional directors together shall not exceed the maximum strength fixed for the Board by the articles." 38. The Adjudicating Authority has noted that by implication of Section 260 of the Companies Act 1956, Mr Ramesh Ghamandiram Gowani is deemed to have vacated office, in the event he was found to be Additional Director validly appointed, on 29th September 1999, i.e. much before his resignation on 20th November 2019. 39. The said Finding appears to be incorrect given Section 260 of the Companies Act 1956. Because of the statutory provision, Additional Directors shall hold office only up to the date of the next Annual General Meeting of the Company. The Appellant has filed a copy of the 81st Annual Report of INCAB industries limited, which contain the report from 1st April 1999 to 31st December 1999. Page 7 of this report is the Director's report. Clause 13 of this report s....
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.... on the doors of liquidation cannot be allowed to escape responsibility and liabilities based on provisions of the Companies Act seeking deemed vacation of Director's office. 42. The Adjudicating Authority has observed that Mr Ramesh Ghamandiram Gowani appointment as Director of the corporate debtor was based on telefax communication dated 4th May 2009, set aside by the Hon'ble High Court order Dt. 29th April 2013. From the Hon'ble High Court order, it appears that after noticing that there is no such Order dated 4th May 2009 passed by the Bench, the Hon'ble High Court, without adding anything further set aside the telefax communication dated 4th May 2009. It is also clarified in the order that the position that was existing prior to telefax communication, i.e. that is, on 3rd May 2009, stood revived. Hon'ble High Court has further clarified in the order that that they are not saying anything about the merits of the matter because both parties have agreed that the said telefax communication be either set aside or ignored. Since no order was passed on 4th May 2009, there could not be any impact of the said non-existent order. 43. It is pertinent to mention ....
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....rd March 2018 seeking the re-appointment, resigned from the Corporate Debtor's Board with effect from 20th November 2019, i.e. much after initiation of the Corporate Insolvency Process against the Corporate Debtor Incab Industries Limited. 49. Hon'ble Supreme Court in the case of Phoenix ARC (supra), has laid down the law that the term related Party in the context of IBC is defined to ensure that those entities which are related to the Corporate Debtor can be identified clearly since their presence can often negatively affect the insolvency process. Hon'ble Supreme Court has further propounded that the default rule under the first proviso to Section 21(2) is that only those Financial Creditors that are related parties in praesenti would be barred from the 'COC'. However, the related Party Financial Creditors that seem to be related parties in order to circumvent the exclusion under the first proviso to Section 21(2) should also be considered as being covered by the exclusion thereunder. Therefore Mr Ramesh Ghamanndiram Gowani's resignation from the Board of Directors of the Corporate Debtor 'Incab Industries Limited' after initiation of the Corpor....
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....s, including the assignment's validity. 54. The Learned Counsel for the Respondent No.2 submits that Reference under the 8th Schedule could have been made only in cases where proceedings were pending before the BIFR or AAIFR, within 180 days from the commencement of the Insolvency and Bankruptcy Code 2016. Since no proceedings were pending before BIFR or AAIFR, the proceedings before BIFR and AAIFR had attained finality. Further, no reference has been made under the 8th Schedule by any of the aggrieved parties within 180 days from the date of commencement of the Insolvency and Bankruptcy Code, 2016. Hence, the aggrieved parties have wilfully preferred not to address the said issues. Therefore by the principle of estoppel, the parties are barred from raising any such issue, particularly when the proceedings for liquidation of the Corporate Debtor is at such an advanced stage. 55. The Appellant has relied on Section 5 of the SARFAESI Act 2002 and the Factoring Act, 2011. Section 5 of the SARFAESI Act 2002 provides debt assignment only to an Asset Reconstruction Company. However, the SARFAESI Act 2002 does not apply to the proceedings under the Insolvency and Bankruptcy Code....
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....i.e. only based on claims submission. It is essential to evaluate the validity of the Committee of Creditors, which was constituted even without verification, admission or rejection of claims. It is essential to evaluate how the Corporate Insolvency Resolution Process can go on without knowing the actual percentage of voting share of a Financial Creditor, based on the Financial Debt owed by that creditor. In this case, we have also noticed that no Information Memorandum was prepared. An order of liquidation is passed on the pretext of the proviso to Section 33 (2) of the Insolvency and Bankruptcy Code. In the instant case, liquidation has been started even without valuation and determination of the liquidation value. 62. Under the Insolvency and Bankruptcy Code 2016, the role assigned to the Committee of Creditors is of paramount importance. Section 28 of the I & B code 2016 specifically provides the actions that require the approval of the Committee of Creditors. The success of corporate insolvency resolution entirely depends upon the validly constituted Committee of Creditors. Therefore the legislature has barred the representation, participation and voting by related parties ....
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....details of security and status 1. Pegasus Assets Reconstruction Private Limited Rs. 1,87,06,37,178. 64 * 2. Kamla Mills Ltd 1,554,72,71,570 (including interest, if any) * 3. Fasqua investment private limited 266,77,66,485.80 (including interest, if any) * Total 1,741,79,08,748.64 * *The verification of claims is under process, and the amount of claims is yet to be determined. 64(b) The Interim Resolution Professional has also received claims in form B (received via email/speed post) from one Operational Creditor other than workers and employees as of 31st August 2019 (date of receipt of claims), i.e., the cut of date per public announcement namely. Serial number Name of the creditors Amount claimed by the creditors (amounting to rupees) Amount admitted (amounting to rupees) till date Remarks 1 Tata steel limited 77,66,49,726.65 (including interest Rs. 35,09,89,602.24 * Total 77,56,49,726.65 * 64(c). No claim was received from creditors (other than Financial Creditors and Operational Creditors) in form F until....
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.... that had been prepared. A copy of the said list of assets was given to the COC members with the request that, if any member of COC knows any other assets, then it can be informed to the R.P. in the next COC meeting time through email. It is also mentioned that the resolution professional proposed appointment of two registered valuers, who will determine the fair value and liquidation value in terms of regulation 35 of CIRP regulations. It is stated that registered valuers extension deferred up to the next 15-20 days and will be taken up in the next meeting of the committee of creditors. It is also mentioned that once the list of assets at different locations is ascertained, valuers' appointment will be made. It was also decided that once the statutory records, audited accounts, and books of accounts of the corporate debtor's are available, the forensic audit can be conducted. The existence of preferential transaction, if any, cannot be ascertained. 66. Summary of Third COC meeting took place on 18th October 2019; Minutes of the CoC meeting has been filed by the Appellant which shows that during this meeting Chairman informed about receiving a ....
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.... 68(b). It is stated in the minutes of 5th COC that "the chairman further informed that an application under section 19 (2) Of the Insolvency and Bankruptcy Code, 2016 was filed before the NCLT, Kolkata bench for necessary directions for providing statutory records, financial books of accounts and other necessary information. Hon'ble NCLT has passed the necessary order for assistance. 68(c). The chairman submitted that earlier Kamla Mills Ltd and Fasqua Investment Private Limited while declared as related parties based on the fact that Ramesh Gowani is a director of Incab Industries limited, and he also holds 99% of shares in Kamla Mills Ltd. Besides, Ramesh Gowani also holds 22% shares Fasqua Investment Private Limited. 69. Based on the minutes of all the five 'COC' meetings, it is crystal clear that entire CIRP proceedings were conducted & completed even without any valuation of the Corporate Debtor. In all the COC meetings, it was informed that no records are available and suspended directors are not cooperating. The Interim Resolution Professional has constituted the Committee of Creditors even without admitting the claims. The Committee of Cred....
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....er which the corporate debtor has ownership rights which may be located in a foreign country; (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets subject to the determination of ownership by a court or authority; (g) to perform such other duties as may be specified by the Board. Explanation.-For the purposes of this 45[section], the term "assets" shall not include the following, namely- (a) assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment; (b) assets of any Indian or foreign subsidiary of the corporate debtor; and (c) such other assets as may be notified by the Central Government in consultation with any financial sector regulator. 21. Committee of creditors.-(1) The interim resolution professional shall after collation of all claims re....
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....ehalf in the committee of creditors to the extent of his voting share; (b) represent himself in the committee of creditors to the extent of his voting share; (c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself in the committee of creditors to the extent of his voting share; or (d) exercise his right to vote to the extent of his voting share with one or more financial creditors jointly or severally. [(6-A) Where a financial debt- (a) is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors; (b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professi....
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....or, and it is only such persons who do not have any right of representation, participation, or voting in a meeting of the Committee of Creditors, Vijay Kumar Jain v. Standard Chartered Bank, (2019) 20 SCC 455. 24. Meeting of committee of creditors.-(1) The members of the committee of creditors may meet in person or by such electronic means as may be specified. (2) All meetings of the committee of creditors shall be conducted by the resolution professional. (3) The resolution professional shall give notice of each meeting of the committee of creditors to- (a) members of 57[committee of creditors, including the authorised representatives referred to in sub-sections (6) and (6-A) of Section 21 and sub-section (5)]; (b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be; (c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent of the debt. (4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of committee of creditors, but shall ....
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.... debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans;] (i) present all resolution plans at the meetings of the committee of creditors; (j) file application for avoidance of transactions in accordance with Chapter III, if any; and (k) such other actions as may be specified by the Board. 29. Preparation of information memorandum.- (1) The resolution professional shall prepare an information memorandum in such form and manner containing such relevant information as may be specified by the Board for formulating a resolution plan. (2) The resolution professional shall provide to the resolution applicant access to all relevant information in physical and electronic form, provided such resolution applicant undertakes- (a) to comply with provisions of law for the time being in force relating to confidentiality and insider trading; (b) to protect any intellectual property of the corporate debtor it may have access to; and (c) not to share relevant information with third parties unless clauses (a) and (b) of this sub-section are complied with. Explanat....
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....ng of the committee of creditors and seek the vote of the creditors prior to taking any of the actions under sub-section (1). (3) No action under sub-section (1) shall be approved by the committee of creditors unless approved by a vote of 63[sixty-six] per cent of the voting shares. (4) Where any action under sub-section (1) is taken by the resolution professional without seeking the approval of the committee of creditors in the manner as required in this section, such action shall be void. (5) The committee of creditors may report the actions of the resolution professional under sub-section (4) to the Board for taking necessary actions against him under this Code. Approval of committee of creditors for certain actions. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 8. Claims by financial creditors.- (1) A person claiming to be a ^15[financial creditor, other than a financial creditor belonging to a class of creditors, shall submit claim with proof] to the interim resolution professional in electronic form in Form C of the Schedule: Provided that such per....
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....fs of claim; (b) available for inspection by members, partners, directors and guarantors of the corporate debtor; (c) displayed on the website, if any, of the corporate debtor; [(ca) filed on the electronic platform of the Board for dissemination on its website: Provided that this clause shall apply to every corporate insolvency resolution process ongoing and commencing on or after the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2020;] (d) filed with the Adjudicating Authority; and (e) presented at the first meeting of the committee. 14. Determination of amount of claim.-(1) Where the amount claimed by a creditor is not precise due to any contingency or other reason, the interim resolution professional or the resolution professional, as the case may be, shall make the best estimate of the amount of the claim based on the information available with him. (2) The interim resolution professional or the resolution professional, as the case may be, shall revise the amounts of claims admitted, including the es....
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....olvency commencement date till a resolution professional is appointed under Section 22.] [27. Appointment of registered valuers.-The resolution professional shall within [seven days of his appointment, but not later than forty-seventh day from the insolvency commencement date], appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with Regulation 35: Provided that the following persons shall not be appointed as registered valuers, namely- (a) a relative of the resolution professional; (b) a related party of the corporate debtor; (c) an auditor of the corporate debtor at any time during the five years preceding the insolvency commencement date; or (d) a partner or director of the insolvency professional entity of which the resolution professional is a partner or director.] [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 liquidati....
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.... the names of creditors, the amounts claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims; (e) particulars of a debt due from or to the corporate debtor with respect to related parties; (f) details of guarantees that have been given in relation to the debts of the corporate debtor by other persons, specifying which of the guarantors is a related party; (g) the names and addresses of the members or partners holding at least one per cent stake in the corporate debtor along with the size of stake; (h) details of all material litigation and an ongoing investigation or proceeding initiated by Government and statutory authorities; (i) the number of workers and employees and liabilities of the corporate debtor towards them; (j) [* * *] (k) [* * *] (l) other information, which the resolution professional deems relevant to the committee. (3) A member of the committee may request the resolution professional for further information of the nature described in this Regulation and the resolution professional shall provide such information to all members wi....
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....any non-refundable deposit for submission of expression of interest. (5) A prospective resolution applicant, who meet the requirements of the invitation for expression of interest, may submit expression of interest within the time specified in the invitation under clause (b) of sub-regulation (3). (6) The expression of interest received after the time specified in the invitation under clause (b) of sub-regulation (3) shall be rejected. (7) An expression of interest shall be unconditional and be accompanied by- (a) an undertaking by the prospective resolution applicant that it meets the criteria specified by the committee under clause (h) of sub-section (2) of Section 25; (b) relevant records in evidence of meeting the criteria under clause (a); (c) an undertaking by the prospective resolution applicant that it does not suffer from any ineligibility under Section 29-A to the extent applicable; (d) relevant information and records to enable an assessment of ineligibility under clause (c); (e) an undertaking by the prospective resolution applicant that it shall intimate the resolution professional forthwith if it ....
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.... and 15. Section 18(1)(c) authorises IRP to constitute a Committee of Creditors. Section 21(1) imposes a precondition for the collation of all claims received to determine the financial position of a Corporate Debtor. The word 'collation used in Sub-section 21(1) means verification of claims. The literal meaning of the word 'collation' is the comparison of a copy with its original to ascertain its correctness. Section 21 (7) mandates for determination of the voting share to be assigned to each creditor. Section 24 is about the meeting of the Committee of Creditors. Section 24(6) provides that each creditor shall vote by the voting share assigned to him based on the financial debts owed to such creditor. Section 24 (7) imposes a duty on the resolution professional to determine the voting share assigned to each creditor. 72. It is pertinent to mention that Regulation 12(1) of CIRP Regulations mandates to submit proof of claim on or before the last date given in the public announcement. Regulation 12 (2) provides a maximum time limit for the submission of proof of claim. Regulation 12 (3) specifically provides that a financial creditor shall be included in the Committee....
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....The copy of the said application is Annexure III (pages 45 - 156 of the appeal paper book). Para 22 reads as under; "The applicant states that an email was received from [email protected] on Wed, 11 December 2019 18:09:12 inter alia it was stated that; 'we refer to the e-voting called for by you today pursuant to the circulation of minutes of 5th COC meeting conducted on 5th of December 2019 and request you to defer the voting till the issues raised by us with regards to verification of voting percentage, compliance of CIRP process, and other issues raised by us are addressed by you". (verbatim copy) 77. The Appellant's Learned Counsel further drew our attention towards the email dated 9th December 2019 sent to respondent number 1 Resolution Professional on 15:39:58 (pages 142 144 of the appeal paper book). In this email letter, the financial creditor Pegasus assets reconstruction company had written that "as you are aware that as per the provision of the IBC, 2016 you have to verify the claims submitted by the various creditors within a stipulated period. In the 5th COC held on 5th December 2019, you have informed the COC members that till d....
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.... of the COC members. However, despite reminders, Resolution Professional, without even admitting/rejecting the claims of the financial creditors, had constituted the committee of creditors and determined their voting percentage. It is also clear that in the 5th COC meeting, there was no such an agenda regarding the deliberation on the liquidation of the corporate debtor. But, by permitting the financial creditor/related parties, Kamla Mills Ltd and Fasqua investment private limited, to represent, participate and vote in the COC, the decision was taken to liquidate the corporate debtor. 80. It is important to mention that all the statutory provisions for the conduct of CIRP are interlinked; it doesn't leave any scope to the IRP/RP to skip any of the provisions. CIRP regulations are exhaustive and include a provision to deal with all the eventualities that may arise in the conduct of the CIRP. For example, during CIRP, the IRP has to publish the notice in the newspaper for inviting claims. After receiving and collating the claims, he has to form the Committee of Creditors. Based on the collation of the claims, IRP has to form the Committee of Creditors from among the Financial Cre....
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....terim Resolution Professional has constituted the Committee of Creditors even without admitting the claims. The Committee of Creditors has been formed based on claims submitted. In the column of a status report, It is everywhere mentioned that verification of claims is under process. But the said verification process never came to an end, and the committee of creditors resolved to liquidate the corporate debtor ignoring mandatory requirements of determination of fair market value, liquidation value and preparation of information memorandum. There was no publication of Form 'G' for inviting expression of interest. One of the Financial Creditors objected to the participation of Financial Creditors, Kamla Mills Ltd and Fasqua Investment Private Limited, as they are related parties. However, this objection was overruled by the Adjudicating Authority while it was issuing directions to the suspended Director to extend cooperation to the IRP for submission of records of the Corporate Debtor. 85. Based on the above discussion, we are the considered opinion that the Constitution of the Committee of Creditors violates the proviso to Section 21 (2) of the I & B code 2016 read with ....
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....ustice in the matter. The impugned order dated 7th February 2020 was passed within 184 days of the petition being admitted on 7th August, 2019. The Application under Section 33 of the IBC appears to have been filed on 17th December, 2019. It appears in the interest of justice that the time spent before the Adjudicating Authority when the application under Section 33 of the IBC was filed, till now should be excluded from calculating the period under Section 12 (1), (2) & (3) of the IBC. Parties and Corporate Debtor need not suffer for time spent during this period before Adjudicating Authority and in Appeal, as an effort at Resolution needs to be made. 87. We further observe that the corporate insolvency process in the instant case is totally in disregard of the provision of the Code and Regulations thereunder. The formation of the Committee of Creditors in the instant case is a nullity in the eyes of the law. Since the illegally constituted committee of creditors took the decisions at every stage of CIRP. Therefore, the entire corporate insolvency resolution process of the Corporate Debtor is found to be vitiated. Therefore the impugned order of liquidation passed by the Adjudic....
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....24 APR 2009 ADDRESSED TO THE BOARD AND LETTER 25 SEP 2008 ADDRESSED TO ROC, WEST BENGAL, KOLKATA WITH A COPY ENDORSED TO THE BOARD ENCLOSING A COPY OF THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF THE COMPANY HELD ON 22.09.2009 STATING THAT THE COMPANY HAS APPOINTED FOLLOWING THREE ADDITIONAL DIRECTORS;- (a) MR. YADDAPPA RAMAPPA KORI (b) MR. MAHENDRA B SHAH (c) MR. KESRI NAMARIA THE COMPANY HAS REQEUSTED THE BOARD TO CHANGE THE RECORD HELD IN BIFR (.) ON PERUSAL OF THE COMPANY'S REQUEST, THE BENCH HAS ACCORDED APPROVAL TO THE APPOINTMENT OF ABOVE THREE ADDITIONAL DIRECTORS ON THE BOARD OF DIRECTORS OF THE COMPANY (.) THE COMPANY WILL SUBMIT A COMPY OF FORM 32 WITH ROC RECEIPT TO THE BOARD FOR RECORD(.) SECONDLY (.) THE BENCH HAS ALSO ISSUED FOLLOWING DIRECTIONS TO THE COMPANY FOR COMPLIANCE:- (a) THE BOARD OF DIRECTORS OF THE COMPANY WILL TAKE CHARGE OF ALL ACTIVITIES AND ASSETS, PROPERTIES ETC OF THE COMPANY(.) (b) THE INTERIM MANAGEMENT COMMITTEE IS DEBARRED FROM INTERFERING IN THE ACTIVITIES OF THE COMPANY AS IT HAS NO LOSCUS STANDI (.) (c) A REPRESENTATIVE OF KAMALA MILLS LTD (WHO HAS LARGE ....
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.... (not being pledge) Movable property (not being pledge) Book debts; Movable property (not being pledge) Movable property (not being pledge) Book debts; Movable property (not being pledge) Book debts; Movable property (not being pledge) Movable property (not being pledge) Book debts; Movable property (not being pledge) Book debts; Movable property (not being pledge) Movable property (not being pledge) Book debts; Movable property (not being pledge) Movable property (not being pledge) Book debts; Movable property (not being pledge) Immovable property or any interest therein; Movable property (not being pledge) Movable property (not being pledge) Book debts; Movable property (not being pledge) Immovable property or any interest therein Movable property (not being pledge) Movable property (not being pledge) Directors/Signatory Details Charge Amount Date of Creation 100000000 03/12/1998 3000000 15/05/1980 2000000 21/01/1980 6000000 28/04/1982 153500000 18/05/1998 100000000 10/08/1998 19771575 16/06/1999 680000000 01/09/1997 200000000 23/09/1998 10000000 29/07/1998 2500000 01/08/1985 ....
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....ully paid-up held as on 31st March, 2018 No Name the She 1 Ramesh Gowani 2 Ravi Bhandari 3 Maruti V. Desai 4 Kondiba R. Hiwale 5 Satishkumar Purohit 6 Sidharth Behera 7 Siddesh Mandave 8 Sanjay R. Gije 9 Kishore M. Vussonji Place: Mumbai Date: 20/09/2018 No. of Share S% Holding 26,70,158 99.74% 100 0.00% 100 0.00% 142 0.01% 100 0.00% 100 0.00% 3,100 0.12% 3,250 0.12% 100 0.00% 100.00% 26-77-150 For & on behalf of the Board of Directors of Kamala Mills Limited Ravi S. Bhandari DIN: 00096533 Director mees Maruti V. Desai DIN: 07198259 Director Jarjanta By OLLA LA GOV MARY REGO NO. 9360/2011 OF Document 7 ANNEXURE - VII 604 THE MINUTES OF 10 THE COMPANY HELD BOARD OF THRECTORS OF AT MINIBALON 20012011 Resolved that in supersession of all earlier Resolutions (s) passed by the Board of Drectors. any of the undernoted officials of the Company he and are hereby authorized to operate and close the Bank Accounts in the name and style of INCAB INDUSTRIES D. Current A/c No. 00290200000541 at your below me....