TaxTMI 
TaxTMI 
2022 (9) TMI 1070
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....eeking a direction to the Liquidator to reconstitute the Stakeholders Consultation Committee ('SCC') by directing M/s. Global Enterprises Logistics Private Limited /the Appellant herein. 2. Briefly put, facts in the instant Appeal are that Mr. Vivek Shukla the first Respondent, and Ex-Director and Shareholder holding 8.33% of the total paid-up Share Capital of the 'Corporate Debtor' sought for reconstitution of the SCC constituted by the Liquidator of the 'Corporate Debtor'. The shareholding pattern of the 'Corporate Debtor' as on the Insolvency commencement date is as follows: S. No. Name of Shareholders Number % 1 Vivek Shukla 404716 8.33 2 Anant Kumar Choudhary 404705 8.33 3 Pravin Chand Rai 404706 8.33 4 Rajiv Kathuria 225000 4.63 5 SBS Logistics Holdings Singapore Pte. Ltd. 3417723 70.37 Total Shares 4856850 100 3. It was averred that while including the Appellant herein in the SCC as representative of the Shareholders, the Liquidator has overlooked the fact that out of the 5 Shareholders of the 'Corporate Debtor', 3 Shareholders including Mr. Vivek Shukla, the Respondent herein have nominated the Respondent in terms of Regulation 31A(3) of....
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....he Respondent No. 2 as to represent Shareholders-in-class in the Stakeholders Consultation Committee of the Corporate Debtor made by the Respondent No. 1/Liquidator is not valid in terms of the provision of Regulation 31A (3) read with Regulation 31A (4) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. 28. Accordingly, the nomination of Respondent No. 2 to the Stakeholders Consultation Committee of the Corporate Debtor, made by the Respondent No. 1/ Liquidator in terms of Regulation 31A(4) of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, is set aside and the Liquidator is directed to accept the nomination of the Applicant as the Representative of Shareholders-in-class for the purpose of constitution of the Stakeholders Consultation Committee (SCC) of the Corporate Debtor." 5. Submissions of the Learned Counsel appearing on behalf of the Appellant: * Learned Counsel for the Appellant submitted that the 'existence of dispute' between the 'Corporate Debtor' and its majority Shareholder cannot be a basis to prevent a Stakeholder from exercising its right to be included in the SCC under the Liquidation Regul....
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....1.06.2021 and 05.07.2021 record that the Counsel for the Appellant is present and the matter was taken up by the Adjudicating Authority. But the Impugned Order erroneously implies that no Affidavit in Reply or Written Submissions were filed by the Appellant which is factually incorrect. 6. Submissions of the Learned Counsel appearing for the first Respondent: * It is submitted that vide Order dated 16.12.2020, the Adjudicating Authority initiated Liquidation process of the 'Corporate Debtor' and the Liquidator invited nominations from the class of Shareholders to the SCC vide email dated 06.02.2021. Vide email dated 10.02.2021, the first Respondent informed the Liquidator that he had been nominated to the SCC by himself, Mr. Anant Kumar Chaudhary and Mr. Praveen Chand Rai. The other Shareholders failed to nominate any person. Vide email dated 15.02.2021, the Liquidator informed the first Respondent that the Appellant too would be a Member of the SCC, subsequent to which, the first Respondent raised his objections which were rejected by the Liquidator on 20.02.2021. * It is contended that the decision of the Liquidator in the SCC is bad as it includes an erroneous interpretation ....
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....A(4) at the relevant time before the aforesaid amendment reads as hereunder: "(4) : If the stakeholders of any class fail to nominate their representatives, the required number of stakeholder with the highest claim amount in that class shall be included in the consultation committee." * It was due to this grey area which has since been verified by IBBI, that the Appellant has been nominated to the SCC. It is submitted that the present position is that the inclusion in the SCC is on the basis of Members present and voting (meaning only the Members who had nominated the representative). It is argued that if such a clear Regulation had been in place at the time when the Liquidator was constituting the SCC, the Appellant would not have been nominated as the representative. Assessment: 8. At the outset, the Shareholding pattern of the 'Corporate Debtor' is detailed as hereunder to examine the effect of Regulation 31A of the Liquidation Process Regulations: S. No. Name of Shareholders Number % 1 Vivek Shukla 404716 8.33 2 Anant Kumar Choudhary 404705 8.33 3 Pravin Chand Rai 404706 8.33 4 Rajiv Kathuria 225000 4.63 5 SBS Logistics Holdings Singapore Pte. Ltd. 3....
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.... mutual discussions. It is contended that the Appellant failed to be present and voting only because of the unpleasant relation amongst the Appellant and other Shareholders and also because prior to the amendment, Regulation 31A(4) did not require the Appellant to be 'present and voting' and therefore the Appellant abstained from casting it's vote. 11. Regulation 31A(1) of the Liquidation Process Regulations, as it stood, at the time when the matter was pending before the Hon'ble NCLT, is reproduced hereunder for the sake of convenience: ..." (1) The liquidator shall constitute a consultation committee within sixty days from the liquidation commencement date, based on the list of stakeholders prepared under regulation 31, to advise him on the matters relating to sale under regulation 32." 12. For the sake of completion, Regulation 31A(1) of the Liquidation Process Regulations amended with effect from 30.09.2021 vide the Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2021 reads as under: ..."(1) The liquidator shall constitute a consultation committee within sixty days from the liquidation commencement date, based on the list of ....
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....RP against the 'Corporate Debtor', which was disposed of since a separate Application under Section 7 was already admitted on 04.09.2019 and subsequently a Liquidation Order was also passed. It is also brought to our notice that the Second Respondent/Liquidator was also the RP in that Petition. It is strenuously contended that it would be highly prejudicial to the interest of the 'Corporate Debtor' if the Appellant, an adversary of the 'Corporate Debtor', be allowed to participate in the SCC as the representative of the Shareholders of the 'Corporate Debtor', merely on the basis that it holds the highest percentage of the shares of the 'Corporate Debtor'. It is also submitted that it is only because of the abrupt exit of the Appellant from the 'Corporate Debtor Company' in violation of the Shareholder Agreement that led to the Insolvency and now Liquidation of the 'Corporate Debtor'. 17. A perusal of the material on record shows that as none of the Shareholders have filed their claims before the Liquidator, in terms of Regulation 20 of the Liquidation Regulations, their names do not appear in the list of Stakeholders prepared in terms of Regulation 31 of the Liquidation Regulation....