TaxTMI 
TaxTMI 
2025 (9) TMI 198
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....h Prateek Kumar, Raveena Rai, Moha Paranjpe, Mr. Sidhant Grover, Adv. for Respondent No. 3 Ms. Haripriya Padmanabhan, Senior Advocate Ms. Pooja Dhar, Advocate Mr. Vishal Sinha, Advocate Ms. Shreya Nair, Advocate Mr. Pratul Pratap Singh, Advocate for IA No. 405/2025 JUDGMENT Per: Justice Rakesh Kumar Jain: This appeal is filed by Byju Raveendran, suspended director and promoter of M/s Think and Learn Pvt. Ltd. under Section 61 of the Insolvency and Bankruptcy Code, 2016 to assail the validity of the order passed by the NCLT, Bengaluru Bench dated 29.01.2025 by which it had disposed of two applications bearing I.A No. 660 of 2024 and I.A No. 820 of 2024 by a common order, on the ground that identical issues are raised in these applications, with the following directions :- "a. The reconstitution of the Committee of Creditors carried out by the Interim Resolution Professional on 31st August 2024 is hereby set aside. The Committee of Creditors constituted on 21st August 2024 is upheld and shall remain in effect. b. The Interim Resolution Professional is directed to convene a meeting of the Committee of Creditors as constituted on 21st August 2024 and submi....
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....efore the Appellate Authority. 6. The Respondent No. 2, vide its email dated 02.08.2024, asked Respondent No. 1 to provide the details of the bank guarantee documents, details of security realisation and other relevant agreements and documents in support of their claim whereas on the same date i.e. 02.08.2024 CA (AT) (CH) (Ins) No. 262 of 2024 was allowed by the Appellate Authority on the basis of a settlement arrived at between the parties therein. 7. The Respondent No. 3 (Glass Trust Company LLC) challenged the order dated 02.08.2024 in appeal before the Hon'ble Supreme Court in which, vide order dated 14.08.2024, operation and effect of the order dated 02.08.2024 was stayed and as a result thereof, the CIRP proceedings were restored. The amount paid by the CD to Respondent No. 4 was further directed to be kept in an escrow account. 8. The Respondent No. 2, vide email dated 21.08.2024, informed both Respondent No. 1 and 3 about the constitution of the CoC with the following members, namely, Glass Trust Company LLC, Aditya Birla Finance Ltd., Incred Financial Services Ltd. and ICICI Bank Ltd. 9. The Respondent No. 2 informed the members of the CoC that 1st meeting ....
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....ed vide mail dated 02.09.2024 and 06.09.2024 support their contention that the amount claimed by Respondent No. 1 was a financial debt and not the operational debt. 16. I.A No. 880 of 2024 was filed by Respondent No. 3 under Section 60(5) of the Code in which the following prayers were made by it :- "(i) declare that Respondent No.1 does not have the power to re- constitute to the Committee of Creditors ["CoC"] of the Corporate Debtor; (ii) Set aside reconstitution of CoC and restore the CoC as on 21.08.2024 and (iii) Set aside resolutions of the CoC held on 03.09.2024 and all subsequent meetings which may have taken place." 17. According to Respondent No. 3, after the admission of the application on 16.07.2024 and pursuant to public announcement dated 17.07.2024 it had submitted its claim of Rs. 11432,98,87,753/- on 27.07.2024. However, the order dated 16.07.2024 was set aside on 02.08.2024 which was stayed in appeal on 14.08.2024 by the Hon'ble Supreme court. The claim of Respondent No. 3 was verified on 19.08.2024 by Respondent No. 2 with the advice to submit the notarized/apostilled documents in due course which were hand delivered on 20.08.....
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....concerned, the Tribunal has referred to email dated 21.08.2024 sent by the Respondent No. 2 to both Respondent No. 1 and 3. The extract of the said email has also been reproduced in the impugned order which is also reproduced herein under for a quick reference:- "Dear Members of the CoC, This is in reference to the captioned matter. In this regard, please note that the undersigned has constituted the Committee of Creditors (CoC) of Think & Learn Limited (Corporate Debtor) in accordance with the provisions of the Insolvency & Bankruptcy Code, 2016 and the Regulations made thereunder, comprising of the following members: 1. Glas Trust Company LLC 2. Aditya Birla Finance Limited 3. Incred Financial Services Limited 4. ICICI Bank Limited Accordingly, enclosed is the Notice of the 1st CoC Meeting of the Corporate Debtor which will be held on Tuesday, the 27th day of August 2024 at 7:00 PM IST at the Registered office of Think & Learn Pvt. Ltd. located at 2nd Floor, Tower D, IBC Knowledge Park, 4/1, Bannerghatta Main Road, Bengaluru, Karnataka, India." 23. It has also been recorded by the Tribunal that Respondent No. 2 had....
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.... Resolution Professional/ 1st Respondent cannot constitute a 'Committee of Creditors' afresh, in negation of the earlier constituted 'Committee of Creditors" 28. The Tribunal has also discussed Regulation 14, relied upon by the Respondent No. 2 and referred to a decision of this Appellate Tribunal in the case of Union Bank of India Vs. Rajdeep Clothing & Advisory Pvt. Ltd. & Ors., CA (AT) (Ins) No. 399 of 2021 in which it has been held that there is no provision in the Code or Regulations which permit review of status of a creditor as the provision focuses only on the amount of claim. Thus, IRP/RP, on its own cannot review and reverse his own earlier decision without approval of AA. 29. In the aforesaid judgment, it has further been held that scope of updating exercise is limited and confined to the determination of quantum of claim and by no stretch of imagination it gives any power to the IRP/RP to review the status of the creditor. 30. The Tribunal after detailed discussion, disposed of both the applications with direction that CoC which was constituted on 21.08.2024 shall remain in effect, that status of Respondent No. 1 was restored to financial creditor a....
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.... also submitted that the Tribunal should not have passed the impugned order without deciding I.A No. 942 of 2024 and 671 of 2024 dealing with the constitution of the CoC. 34. On the other hand, Counsel appearing on behalf of Respondent No. 1 has submitted that the Appellant has no locus standi to challenge the impugned order and has referred to a decision of this Tribunal in the case of Gurdeep Singh Sahni Vs. Berger Paints India Ltd., (2017) SCC OnLine NCLAT 437. He has further submitted that the Application no. 405 of 2025 seeking impleadment of Riju Ravindran in this appeal is not maintainable because he had filed the appeal i.e. CA (AT) (Ins) No. 58 of 2025 against the very same impugned order in which a different relief was sought but the same was dismissed on 07.02.2025. He has also submitted that the issue being agitated in this case is qua the reconstitution of CoC for which the IRP had no jurisdiction / power as has been held by this Appellate Tribunal in the case of Union Bank of India Vs. Rajdeep Clothing & Advisory Pvt. Ltd., 2022 SCC NCLAT 4699 and that the role of the IRP is administrative in nature and not adjudicatory who works as facilitator and the adjudicatory....
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....r :- "This application is filed by the Applicant / RP under Section 18(C) and 21(1) of the Code r/w Regulation 17(1) of the Regulations to place on record the document certifying the constitution of the CD. The report is taken on record. Accordingly, I.A No. 942 of 2024 is disposed of" 37. It is also submitted that I.A No. 671 of2024 which was also filed by Respondent No. 2 for taking on record the status report of the constitution of 2nd CoC was disposed of as infructuous. The said order is also reproduced as under :- "This application is filed by the Applicant/RP under Regulation 18(C) and 21(1) of the Code r/w Regulation 17(1) of the Regulations seeking to take on record the report certifying the constitution of CoCs of CD. In light of the order dated 29.01.2025 by this AA in I.A No. 660 and 820 of 2024, the present application becomes infructuous. Therefore, I.A No. 671 of 2024 is disposed of as infructuous." 38. Both the orders were passed on 17.02.2025 which were produced during the course of hearing of this appeal. 39. We have heard Counsel for the parties and perused the record with their able assistance. 40. It is needless to mention that Resp....
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....e present IA 671/2024 is consequent to the reconstitution of COC done by him. IRP has filed this IA as if the present IA 671/2024 is the only COC Report filed by the IRP, and there is no mention of IA 942/2024 having been earlier made by the IRP alluding as if the latter application of the IRP does not exist. We find this to be an act of misinformation and misleading this Tribunal and is in gross violation of the Duties of the IRP as an officer of the Court. 22. Section 22 of the Code read with Regulation 17 of IBBI (CIRP) Regulations, 2016, mandates the first CoC meeting to be held within 7 days of Constitution of CoC. In the instant case, the CoC was constituted on 21/08/2024, therefore the statutory deadline for holding the first CoC meeting was 28/08/2024, which was not followed. The IRP's derogation from the mandated timeline under the IBC, 2016 was neither mentioned nor bought to the attention of this Tribunal by the IRP. 23.Another aspect which needs to be paid attention to is, the letter dated 1st September 2024, through which the IRP categorized the claims of Applicant No. 2 as contingent. The metadata and document properties of this letter were analy....
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....r in the garb of exercise of such duty IRP/RP can review the status of a creditor i.e., from Financial Creditor to Operational Creditor or vice-versa or a non-related Financial Creditor can be treated as related party without prior approval of Adjudicating Authority. From the perusal of all provisions as well as regulations it is apparent that no such power exists either with RP or COC. Now, coming to the powers of IRP/RP, it is apparent that they are responsible for collating the claims, revising the claims from time to time based upon information coming to their possession or being provided by the creditors. We have found no provision in the CODE or Regulations which permit for review of status of a creditor as all provisions focus only on the amount of claim. Thus, IRP /RP cannot, on its own, review and reverse his own earlier decision without approval of Adjudicating Authority. We are further of the view that scope of updating exercise is limited and confine to the determination of quantum of claim and, by no stretch of imagination it gives any power to the IRP /RP to review the status of a creditor. 23B. The other important question is whether consti....
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....empowered to constitute the Committee of Creditors. We hold that the Resolution Professional may add to existing claims of claimants already received, or admit or reject further Claims and update list of Creditors. But after categorization of a claim by the IRP/Resolution Professional we hold that they cannot change the status of a Creditor. For example, if the Resolution Professional has accepted a claim as a Financial Debt and Creditor as a Financial Creditor, then he cannot review or change that position in the name of updation of Claim. It is also to be clarified that while updating list of Claims the Resolution Professional, can accept or reject claims which are further received and update list." 49. The argument of the Appellant that if the IRP has been found lacking in discharge of his duties and his act and conduct is deprecated by the Tribunal then the entire exercise undertaken by him qua the constitution and reconstitution has to be set aside cannot be accepted because Respondent No. 2, on the basis of the collation of the claims submitted by Respondent No. 1 and 3 had duly constituted the CoC on 21.08.2024 and even filed an application in terms of Regulation 17 of th....