TaxTMI 
TaxTMI 
2022 (9) TMI 1164
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....hal Mission, in terms of Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the National Company Law Tribunal Rules (NCLT Rules). The said Financial Creditor has been declared a related party to the Corporate Debtor (Corporate applicant) and has been ousted from the CoC and the instant application is for including the Applicant back into the CoC. Submissions on behalf of the Applicant 3. The Ld. Sr. Counsel Mr. Joy Saha appearing for the applicant states that the Corporate Debtor had approached the Applicant to raise an amount of Rs. 44,22,00,000/- vide an Agreement dated October 10, 2017. The applicant who is originally a Financial Creditor, had assisted the CD with funds totalling to Rs. 62,16,33,563/- . The claim of the Financial creditor (herein)had been accepted by the RP and accordingly the applicant was made a member of the CoC. 4. The said agreement signed between the Suasth healthcare and HVM on Oct. 10 2017 had a provision for reserving 100 beds in favour of the Applicant for the needy to be recommended by the financial creditor herein, free of charge in lieu of the Security deposit of 50 Crs , an interest free financial assistance. Ho....
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....d party and the applicant has also stated its reasons why it should not be termed as a related party along with legal backing. 8. The applicant also stated that Resolution Professional can only formulate an opinion but does not have adjudicatory power to adjudge that the applicant is a related party. The applicant states that the Corporate Debtor is not acting on the direction of the trustee or investment manager based on whom the Resolution Professional have termed the applicant as a related party and the respondent has not even submitted any evidence as to the basis of its finding and hence, such assertions are bad in law. It is asserted by the applicant that none of the components/ingredients of Section 5(24) of the code applies to the facts of the present case which renders the applicant a related party of the Corporate debtor. 9. It has been contended that there was no definition of 'Control' under the code. The definition provided under section 2(27) of the Companies Act 2013, also does not contemplate for lifting of the Corporate veil. There are no occasions for the purpose of section 5(24) of the code. Further contentions have been included in the pleadings as to how ....
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....d the relationship of various entities by way of an organogram which is depicted herein. The chart is based on the submissions included in the pleadings of the Applicant on page 53 of the petition. 14. With the help of the diagram above, which shows the share holding pattern of the corporate debtor and other connected entities, the point that was made to be driven home was that Kanoria Foundation, which is holding 99.9% of the ownership in H.V.M., is also the same entity which is holding the ownership of Suasth Healthcare Foundation albeit, through various layers of subsidiary companies/entities of the Kanoria Foundation. Thereby deducing that H.V.M. i.e. Hari Vitthal Mission who is a Financial Creditor of Suasth Healthcare Foundation i.e. Corporate Debtor is a related party. It is the case of the applicant that the Resolution Professional appointed for conducting CIRP in regard to the Corporate Debtor has wrongly determined the Corporate Debtor to be a related party. 15. By way of an e-mail received on 31st of December, 2021 certain inputs were asked for by the RP to ascertain the status of each of the financial creditors. After a reminder, mail on 11th January, the RP wrote....
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.... to Section 5(24)(i) of the Code (HVM) being a subsidiary of KF is a related party to the Corporate Debtor. 17. On this contention, the Ld. Sr. Counsel for the applicant had vociferously countered that Section 5(24)(i) is applicable in the instant case as this relates to a body corporate and not to trust which is the instant case. However it was pointed out by the Counsel on the other side that HVM was not a trust but a Section 8 company as is clear from the agreement dated 10 Oct, 2017, 18. Ld. Senior Counsel appearing for the RP Mr. Ramji Srinivasan controverted the arguments made by the Ld. Sr. Counsel for the applicant in so far as the issue of authority to adjudicate on the matters by RP is concerned, he cited Section 18(c) of the Code which enjoins upon the Resolution Professional to constitute a Committee of Creditors and then he further quoted Section 21(2) which gives the postulate of the Committee of Creditors and reads as follows: "The Committee of Creditors shall comprise of Financial Creditors of the Corporate Debtor; Provided that a Financial Creditor or the Authorized Representative of the Financial Creditor referred to sub-section 6 or sub-Se....
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.... as depicted below: Entity Holding % Held by KF Entity KF 100% 99.9% HVM Adisri 99.90% 99.9% SIFL 60.36% 60% TAIML 50.76% 31% SAIT 100% 31% SIPL 99.90% 30.97% PCPL 99.90% 30.94% SUASTH 51% 16% SUASTH 49% 15% 22. Thus it is clear that the relationship of the Financial creditor (herein ) and the corporate debtor is that the Kanodia foundation controls 31% of voting rights or a general control over the corporate debtor and by virtue of the fact that the HVM is owned to the extent of 99.9% by KF, it also controls crosses the bar of holding more than the 20% voting rights stipulated in Section 5(24)(j). Thus KF-HVM- SUASTH are related parties. 23. We need not repeat what has already been said regarding 5(24) (i) and is appropriately depicted in the organogram to conclude that the stipulations are evidently matching the current configuration of the parties/entities. Thus, in terms of the stipulations of the code, HVM is a body corporate of a holding company (KF) to which the corporate debtor is a subsidiary (....