TaxTMI 
TaxTMI 
2022 (6) TMI 283
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.... who all are allottees of "Amadeus" a real estate project being developed by the Corporate Debtor. Appellant Nos. 2 to 5 are allottees in the above project of the Corporate Debtor. Brief facts of the case and sequence of events necessary to be noted for deciding the Appeal are:- (i) Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor commenced vide order dated 28.02.2020 passed by the Adjudicating Authority on an application under Section 7 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'Code') filed by three individual Financial Creditors. (ii) Interim Resolution Professional (IRP) did not take charge in pursuance of the order dated 28.02.2020. The Appellant were constraint to file application seeking replacement of the IRP being I.A. No. 3371 of 2020. (iii) The Appellant also filed an appeal in this Tribunal being Company Appeal (AT) (Insolvency) No. 166 of 2021 seeking direction to the NCLT to appoint new IRP which Appeal was disposed of by order dated 08.03.2021. (iv) Subsequently, the Adjudicating Authority appointed the Respondent No. 3 as IRP by order dated 05.04.2021. The Committee of Creditors (CoC....
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....ndent No. 2 and 3 is accepted, the Homebuyers who comprise 100% of the CoC will be relegated to minority position. The Appellants being diligently pursuing the rights of the Homebuyers, the Appellants were heard by the Adjudicating Authority itself in the earlier application filed by the Respondent No. 2 and 3 by which they sought direction to the IRP to admit the claim. At the time of hearing of I.A. No. 2275 of 2021 and 2286 of 2021 serious allegations were made against the Appellants alleging that there is collusion between the Appellants and the IRP. Appellants have right to be heard so that they are able to refute the baseless allegations of collusion with IRP. The Adjudicating Authority has wrongly taken the view that since Authorised Representative has no right with regard to claim of the Financial Creditors, Appellants shall also have not right to be heard in hearing of the Applications filed by the Respondent No. 2 and 3 challenging the order rejecting their claim. The Appellants have independent right to protect their right and interest and they are necessary party being Financial Creditors to be heard in opposing the claim of Respondent No. 2 and 3. 4. Learned counsel....
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....e impugned order dated 21.10.2021 that Authorised Representative has no role in receipt or verification of the claim of the class of creditors he represents and when Authorised Representative has no role in receipt or verification of claims of Creditors in class Association/ Allottees shall also have no role in receipt or verification of claim of Financial Creditor. 6. Learned counsel for the parties have placed reliance on the judgment of Hon'ble Supreme Court in support of their respective submissions which shall be referred to while considering submissions in detail. 7. We have considered submissions of learned counsel for the parties and perused the record. 8. From the submissions of learned counsel for the parties and materials on the record following are the issues which arise for consideration in this Appeal:- (i) Whether the application for impleadment filed by the Appellants before the Adjudicating Authority seeking impleadment in I.A. Nos 2275 of 2021 and 2286 of 2021 deserve rejection on the ground that Authorised Representative of Homebuyers who are creditors in class is not representing the creditors in a class before the Adjudicating Authority? ....
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....rity along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors; (c) is Representative by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors, and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share." 11. Section 25-A deals with rights and duties of Authorised Representative of financial creditors, which is to the following effect:- "25-A. Rights and duties of authorised representative of financial creditors. - (1) The authorised representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall have the right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents in accordance with....
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.... to the extent of voting share of the Financial Creditor. The Adjudicating Authority in its order has referred to Regulation 16A Sub-regulation (5) of the CIRP Regulations, 2016. Regulation 16A deals with the Authorised Representative. Regulation 16A provides for procedure of choosing an Authorised Representative of creditors of the respective class. The Sub-regulation 16A(5) contains a clarifications, which is to the following effect:- "16A(5). The interim resolution professional or the resolution professional, as the case may be, shall provide an updated list of creditors in each class to the respective authorised representative as and when the list is updated. Clarification: The authorised representative shall have no role in receipt or verification of claims of creditors of the class he represents." 13. The clarification under Regulation 16A(5) is that the Authorised Representative shall have no role in receipt or verification of claims of creditors of the class he represents. The Authorised Representative is to be chosen after claims of Financial Creditors in a class is submitted in Form-CA. The stage of choosing an Authorised Representative of a creditor ....
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....e i.e. for attending meetings of the CoC and voting on behalf of the Financial Creditors in a class. It cannot be said that since the Authorised Representative has not came up before the Adjudicating Authority for filing the impleadment application, the Appellants who themselves are Homebuyers have no right to participate in the adjudication initiated by filing applications by Respondent No. 2 and 3. 16. Learned counsel for the Appellant places reliance on the judgment of Hon'ble Supreme Court in "Phoenix Arc Private Limited vs. Spade Financial Services Limited & Ors.", (2021) SCC OnLine SC 51. In the above case Phoenix Arc Pvt. Ltd. and the Yes Bank were the Financial Creditors of the Corporate Debtor. The claim of two other entities i.e. AAA Landmark Pvt. Ltd. and Spade Financial Services Pvt. Ltd. claiming to the members of CoC was rejected by NCLT. In Para 12, 13, 14 and 15 of the Judgment facts pertaining to the proceedings before NCLT have been noticed, which are to the following effect:- "12. The application moved on behalf of YES Bank under Section 60(5), on 28 June 2018, sought the following reliefs: (i) A direction to the IRP to reconstitute the CoC i....
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....n 'related party' in Section 5(24), the Adjudicating Authority held: "There is no doubt in our mind that Arun Anand and his companies, namely, Spade and AAA Landmark were related parties to the CD. However, after 2013 (soon after signing the Agreement to Sell signed on 25.10.2012) Arun Anand resigned from all the companies of The Anil Nanda Group and so they are no longer related to the CD at the time of filing of application of CIRP." 35. Eventually, the NCLT concluded that the applications filed by YES Bank and Phoenix would have to be allowed. Its conclusion is extracted below: "13. Before parting with this application, we would like to observe that the affairs of the CD as well as the Group of Arun Anand companies are deeply entangled and it is difficult for the Tribunal in a summary jurisdiction to unravel-the same. Considering that the CD and Spade and AAA were Registrar of Companies since 2016, we have no hesitation in allowing the instant applications filed by Yes Bank Limited and Phoenix ARC Private Limited." " 18. Hon'ble Supreme Court observed that claim of one Financial Creditor to keep out other Financial Creditor from CoC need to be exami....
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.... I.A. No. 2275 of 2021 and I.A. No. 2286 of 2021, the Respondent No. 2 and 3 had filed an application being I.A. No. 2167 of 2021 seeking direction against the IRP to admit the claim of Respondent No. 2 and 3 in which application the Adjudicating Authority heard the Appellants and granted time to file their written submissions. Adjudicating Authority passed order dated 10.05.2021, which is to the following effect:- "ORDER IA-2167/2021: Heard the Ld. Counsel appearing for the Applicants Mr. Vierender Ganda, Mr. Arun Kathpalia, Sr. Counsle assisted by Mr. Gaurav Mitra as well as Mr. A. Makhija Counsel for the IRP and Mr. K. Dutta Sr. Counsle appearing for the allottees. The IRP accepts the notice and submits that he has received the copy of the application. The IRP is directed to file the reply on or before 14th May, 2021. List the matter on 17th May 2021 for hearing. During the period, no COC meeting would be held by the IRP. All the parties are requested to file a short synopsis on or before 16th May 2021. Mr. Dutta is also at liberty to file a short synopsis on behalf of allottees." 20. In pursuance to the above liberty granted by the Adjudicating Aut....