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2025 (11) TMI 1451
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....ani, Mr. Dhananjaya Mishra, Ms. Rishika Kumar, Ms. Pragati Prajapati, Mr. Ayan Rai and Mr. Navneet Dogra Advocate for SRA Mr. Niranjan Reddy, Senior Advocate for CoC Mr. Shravan Kumar, Advocate for R6 JUDGMENT [Per: Justice Sharad Kumar Sharma, Member (Judicial)] These are two company appeals which has been preferred by invoking the provisions contained under Section 61 of the I & B Code, 2016, wherein, (i) In Company Appeal (AT) (CH) (Ins) No.258/2025, the Appellant has preferred this company appeal upon being aggrieved against the order passed in IA(IBC)/256/2025, as it was preferred in pending IA No. 1724/2024 in the Principal proceedings of CP(IB) No. 306/10/HDB/2017, wherein, the relief was sought to declare the proceedings of 21st and 22nd CoC meeting, as respectively held on 23.09.2024 and 18.12.2024 to be arbitrary and illegal. (ii) In the Connected Company Appeal, being Company Appeal (AT) (CH) (Ins) No.259/2025, the challenge is given by the Appellant to the impugned order that was passed on IA No. 1724/2024 as preferred in CP(IB) No. 306/10/HDB/2017. 2. Since these two company appeals are interrelated, arising from the same set of f....
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....P process of the Corporate Debtor. 6. The issue of arbitrariness as contended by the Appellant in holding the proceedings, is on the ground that, the CoC meeting is faulted because, the authorized representative of the suspended Board of Directors, namely Mr. Nelluri Bapuji, was in fact not permitted to participate in the 20th CoC Meeting, which was held on 16.07.2024. And it is contended that, an abrupt obstruction has been created as against the authorized representative of the Corporate Debtor, in participating in the 20th CoC meeting by creating a restraint in attending the meeting, the aforesaid allegation, is argued that it is without any logic and inconsistent to the procedure which was being adopted by the CoC. Because, Mr. Nelluri Bapuji had been previously permitted to participate in the CoC meetings without any demand for specific authorization, hence, he could not have been stopped or restrained to attend the proceedings of the 20th CoC meeting, which was held on 16.07.2024. 7. The ground, which has been pressed upon by the Ld. Senior Counsel for the Appellant is that, so far as the authorization and vesting of an authority by the Corporate Debtor to Mr. Nelluri B....
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....ith the provisions of law. There had been failure on part of the Resolution Professional to provide the essential documents relevant to the matters to be discussed in meeting, and is in utter deprivation and in violation of Regulation 21(3)(iii) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, and further it was submitted that a preferential treatment was being meted out to M/s. Rungta Mines Limited, whose Resolution Plan alone was ultimately placed before the CoC for consideration, while plans that were submitted by the other Prospective Resolution Applicants, such as M/s. Vedanta Limited and M/s. OMIPL (Orissa Metallurgical Industry Private Limited) who had much financial liquidity were deliberately aimed to be excluded to be considered at the last moment. Hence, the proceeding was rather camouflaged by bias and could not be sustained. 10. It is the case of the Appellant that, the reference that has been made to Regulation 21(2) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, so as to justify the exclusion of Mr. Nelluri Bapuji was absolutely contrary to the provisions of the Regulation. It was further, the c....
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....n, for the Successful Resolution Applicant. This Appellate Tribunal is of a view, that may not be the necessary party to be heard because he is not a party to the appeals. And as per the principles of Dominus Litus, since it is an exclusive prerogative of the Appellant to choose his opponent, he cannot impose upon himself to be heard in the absence of any Impleadment Application being filed by him, seeking his impleadment in the proceedings of these two company appeals. 13. The debate, which has been carried by the Ld. Counsel for the Appellant qua the conduct of the 20th CoC meeting, it rather emerges from the consideration of IA No. 1724/2024, being an application which was preferred by the Appellant under Section 60(5) of I & B Code, 2016, questioning the propriety of the 20th CoC meeting. There are various questions which has been attempted to be pressed upon by the Ld. Counsel for the Appellant, that is, (i) If the finding which had been recorded in the impugned order, particularly, that as mentioned in para 12 of the impugned order, the Tribunal has observed that the alleged authorized representative of the Appellant herein i.e., Mr. Nelluri Bapuji, was asked to l....
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....oresaid two documents, that is the proper authorization and required confidentiality undertaking, so as to make him eligible to participate in the CoC meetings. There will be a two-fold impact of this argument. (i) This would amount to, that, Appellant himself admits that, as on 16.07.2024, when the 20th CoC meeting was held, Mr. Nelluri Bapuji, who the alleged authorized representative of the Appellant, was not a holder of the valid documents to make him legally eligible to participate in the CoC meeting (ii) Another question, which will emerge for consideration from the aforesaid argument extended by the Ld. Counsel for the Appellant would be, and as argued also, besides being taken as the ground in the application IA No. 1724/2024, is that, the said shortcoming of non-holding of a proper authorization and confidentiality undertaking, would be a rectifiable mistake and the representative of the Appellant ought to have been granted an opportunity to rectify the said defects. 16. This argument may not be acceptable by this Tribunal for the reason being that, as per the process contemplated under the Insolvency and Bankruptcy Board of India (Insolvency Res....
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....eting. What is relevant is that the proviso to Regulation 21(2), is that the information would be imparted to the participate authorized representative by the Resolution Professional to enable him to be eligible to participate in the meeting, which was done in the instant case by issuance of a notice on 12.07.2024. And what is relevant is that, notices contemplates that, the identity of being an authorised representative, who would attend and vote in the meeting, shall inform the Resolution Professional in advance that itself would be one of the most vital relevance to entitle a person to participate in the meeting. In fact, the use of the word "shall" under Regulation 21, which contemplates issuance of notice and its consequential service on the participant authorized representative, would hereby infer that of authorized representative would be the representative, only who holds a proper authorization and a confidentiality undertaking and not otherwise. If regulation determines the eligibility of an authorized representative to participate in the meetings of the CoC in a particular manner, if holding of the valid authorization is a precondition of an eligibility of an individual t....
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....e National Company Law Tribunal, Rules, under Rule 2(6)", it would mean a person authorised in writing, by any party to present his case before the Tribunal, as a representative of such party as provided under the Act. Similar is the expression given to the term "authorised representative" in the context of the procedure contemplated under National Company Law Appellate Tribunal Rules, 2016, particularly that as contained under Rule 2(d) which 2 means "a person authorized in writing by a party" conferring him an authority to represent a cause before the Tribunal under Section 432 of the Companies Act, 2013. 22. The preconditions to make a person an authorised representative to represent a cause of the other would be only when the appropriate legal authority is vested by virtue of a 'writing' giving an authority to represent. In the absence of the same and in the context of the aforesaid rules of the National Company Law Appellate Tribunal Rules and National Company Law Tribunal Rules, that is Rule 2 (d) and Rule 2 (6) respectively, do not bring Mr. Nelluri Bapuji as to be a person competent to hold an authority to represent the cause of the Corporate Debtor. Hence, on that groun....
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.... not done. And hence, Mr. Nelluri Bapuji, representing the cause of the Appellant before the CoC, was not holding a valid authority. 25. The argument of the Ld. Senior Counsel for the Appellant Mr. Srinath Sridevan was in qualification to the argument of the Ld. Senior Counsel for the Appellant Mr. P.S. Raman. First of all, the propriety does not call for that in judicial proceedings, if recurringly there are multiple counsels, each counsel is required to address the same issue, and that too for the same party. Because, other counsels in the panel representing a particular party to the proceedings, would be only assisting the lead counsel who is arguing the matter. But still, we proceeded to hear Mr. Srinath Sridevan, who made reference to Para 28 of the impugned order, which was in the context of the land officer of IDCO attending the 22nd CoC meeting held on 18.12.2024, which he alleges that it does not impact the approval of the Resolution Plan by the CoC, which has already been submitted. 26. In fact, the magnitude of this argument would be too large to an expansion of the actual controversy involved in these two company appeals, where only the procedural propriety of the....
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....vant documents attached to it on 29.07.2024. 30. The finding has been recorded that, the Appellant cannot have any grievances as far as the 22nd CoC meeting of 18.12.2024 is concerned, for the reason being that, in the said meeting, the Applicant or his authorised representative have not participated nor has raised any objection regarding the process of the CoC meeting. The documents reveal that, in the 20th CoC meeting held on 16.07.2024, the debate was held pertaining to the plans submitted by the Prospective Resolution Applicants who were found to be legally eligible, but however, the CoC members sought time to confirm the plans, and the same was considered and subsequent to it, the proceeding was finalized. The 22nd CoC meeting, which was held on 18.12.2024, will not have any negative impact, on the 20th CoC meeting held on 16.07.2024, for the reason being that, the plan which was discussed amongst the members of the CoC, the same was already approved and has been submitted to the Ld. Adjudicating Authority for approval almost approximately five months prior to the holding of the 22nd CoC meeting. 31. Questioning its validity by filing IA(IBC)/256/2023, would be nothing b....
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....place the RP as deemed fit. 3. In Company Appeal (AT) (CH) (Ins) No.258/2025, the Appellant challenges the order passed in IA(IBC)/256/2025, as it was preferred in pending IA No. 1724/2024 filed in CP(IB) No. 306/10/HDB/2017. In the said application, the Appellant had prayed for directions to declare the 21st and 22nd COC meetings dated 23.09.2024 and 18.12.2024 respectively, as arbitrary, to declare the action of RP at the behest of Successful Resolution Applicant (SRA) to be illegal and to call for fresh bids as the said action of RP changed the very core of the only asset of the company which is land. 4. Ld. Adjudicating Authority, after hearing the applications together dismissed the same on the ground that the objections raised by the Appellant were a deliberate attempt to obstruct and delay the CIRP & that the applications lack merit and have no objective other than to delay the CIRP and also imposed a cost of Rs.5 lakh. Aggrieved by the said Order, the instant company appeals have been filed by the Appellant. 5. Brief facts of the case are that the corporate debtor NSL Nagapatnam Power and Infratech Limited (NNPIL) filed an application CP(IB) No. 306/10/HDB/2017 und....
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.... on the same day by a common order, which is being challenged in the instant appeals. 6. In CA(AT)(CH) (Ins) No. 259/2025, the Appellant has challenged the validity of the proceedings of 20th COC meeting in which the resolution plans were discussed and the plan of Rungta Mines Limited was approved, in violation of Regulation 21(3)(iii) of CIRP Regulations. In CA(AT)(CH) (Ins) No. 258/2025, the Appellant had challenged the validity of the proceedings of 21st and 22nd COC meetings on the grounds that the meetings were held while his Application IA 1724/2024 was still pending before Ld. NCLT for adjudication and that certain land related issues including issue of NOC were discussed, which he alleges to be in contravention of the resolution process. Since 20th COC meeting was held earlier and the resolution plan was approved therein, it is proper that CA(AT)(CH)(Ins) No. 259/2025 is taken up for consideration first. 7. The short question to be decided in CA(AT)(CH)(Ins) No. 259/2025, which challenges the validity of the proceedings of 20th COC meeting is that (i) whether the act of RP in not permitting the representative of the Appellant to attend the said meeting and for not sha....
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....re circulated after the meeting was conducted on 16.07.2024, and that it vitiated the sanctity of the meeting. He has further contended that the said meeting was conducted without circulating the resolution plans, valuation reports, or compliance documents, which is a direct contravention of regulation 21(3)(iii) of the CIRP regulations and also runs contrary to the principles laid down in Vijay Kumar Jain (supra) which emphasizes that suspended directors have the right to access information and documents relevant to CIRP. He has alleged that Mr Bapuji was arbitrarily removed from the ongoing 20th COC meeting on the pretext that certain confidential information was to be discussed and unauthorised disclosure of the same to anyone cannot be done, which was arbitrary because this should have been informed to him in advance so that he could have given the required authorisation and confidentiality undertaking in time before the meeting. He has further stated that Ld. NCLT incorrectly relied upon section 24(4) of the code to override the legal requirement of having the suspended Directors or their representative to attend the COC meeting. Section 24(4) will not be applicable in this ca....
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....identiality undertaking, and after that, he had duly provided the minutes of 20th COC meeting to him. He has further stated that despite multiple requests to furnish the required authorisation and confidentiality undertaking, the suspended directors have been non-responsive and filed this appeal with an intent to stall the time-bound CIRP proceedings and to delay the process. He has also stated that Hon'ble Apex Court in the matter of Vijay Kumar (Supra) has emphasized on the importance of obtaining a confidentiality undertaking. 10. Having heard the learned counsels for the parties, it will be apt to refer to the relevant provisions of the code and the regulations made there under which govern the modalities of the COC meeting. Section 24 of I & B Code, 2016 stipulates as to how the meetings of COC will be conducted and who shall attend the same. The relevant provisions are extracted hereunder. 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. ....
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....ting.- (1) The notice shall inform the participants of the venue, the time and date of the meeting and of the option available to them to participate through video conferencing or other audio and visual means, and shall also provide all the necessary information to enable participation through video conferencing or other audio and visual means. (2) The notice of the meeting shall provide that a participant may attend and vote in the meeting either in person or through an authorised representative: Provided that such participant shall inform the resolution professional, in advance of the meeting, of the identity of the authorised representative who will attend and vote at the meeting on its behalf. (3) The notice of the meeting shall contain the following - (i) a list of the matters to be discussed at the meeting; (ii) a list of the issues to be voted upon at the meeting; and (iii) copies of all documents relevant to the matters to be discussed and the issues to be voted upon at the meeting. (4) The notice of the meeting shall- (a) state the process and manner f for voting by electronic means and the time schedule, including the time period during....
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....d of directors of the CD have a right to participate in the meetings held by the COC and also has a right to discuss with the members of the COC all the resolution plans that are presented at such meetings under section 25(2)(i) of the code and that they must be furnished with copies of such plans beforehand as per Rule 21(3) of the CIRP Regulations, if they are to participate effectively in the meeting of COC. This has been laid down by Hon'ble Apex Court in the matter of Vijay Kumar Jain v. Standard chartered bank & others in civil appeal No. 8430 of 2018. The relevant para is extracted hereunder- "9. This statutory scheme, therefore, makes it clear that though the erstwhile Board of Directors are not members of the committee of creditors, yet, they have a right to participate in each and every meeting held by the committee of creditors, and also have a right to discuss along with members of the committee of creditors all resolution plans that are presented at such meetings under Section 25(2)(i). It cannot be gainsaid that operational creditors, who may participate in such meetings but have no right to vote, are vitally interested in such resolution plans, and must be f....
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....he minutes of the 20th meeting of COC will reveal the true picture. The relevant extract is given below: "Other matter: The COC members, in between the meeting, placed a proposal to discuss some points within the COC members internally. Based on their proposal, the RP requested Mr. Nelluri Bapuji (representing the erstwhile management) to take leave from the meeting. Afterwards, the COC members expressed their elect Ans to discuss the agenda items in the presence of Mr. Nelluri Bapuji as the agenda of this particular meeting is highly classified, sensitive and confidential, and any unauthorised disclosure of the same to anyone, including the urge to hell management may be detrimental to the resolution of the corporator. In response, the legal counsel of RP drew the attention of the member of the COC to the judgement of honourable Supreme Court of India in the matter of Vijay Kumar Jain versus standard chartered Bank and others where it was held that the suspended Directors have a right to obtain and receive copies of the resolution plans and be heard while resolution plans are being discussed upon submission of an undertaking to maintain confidentiality, ....
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....f COC without any objection and to get the authorisation letter and the confidentiality undertaking later on and no damage would have been done to anyone. Or the meeting could have been postponed for a few days. By not doing so, the RP stood contravening the principles laid down by Hon'ble Apex Court in the matters of Vijay Kumar Jain (supra). Further, the manner in which the meeting was conducted raises suspicion especially when two PRAs were declared ineligible in the same meeting and the resolution plan of only one PRA was put to vote. 15. In addition, not providing the required documents and resolution plans to the suspended directors on the plea of non-furnishing of confidentiality undertaking is a major lacuna in the said process. As held by the Apex Court in the matter of Vijay Kumar v. Standard Chartered Bank (supra), the regulations mandate that such information have to be given to the suspended directors and so far the confidential information is concerned. It is clear that the resolution professional can take an undertaking from the members of erstwhile board of directors to maintain confidentiality. The relevant paragraphs are extracted below: "14. Under Reg....
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....Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, read with paragraph 21 of the First Schedule thereto. This can be in the form of a non-disclosure agreement in which the resolution professional can be indemnified in case information is not kept strictly confidential." 16. What is important to note is that furnishing of the resolution plan and such other information, including confidential information to the suspended directors is a primary requirement whereas non-disclosure agreement is optional. Signing a confidentiality undertaking will not mean that the matter will remain confidential forever; it only ensures that the person committing the breach will have to pay damages and thus confidentiality undertaking has only a deterrent value. When the same RP on provision of the said undertaking did provide the minutes nothing prevented him from sharing the details of the resolution plans with a promise to provide the said undertaking at the earliest. The RP could have taken proactive steps to obtain the confidentiality undertaking from the suspended directors in the beginning itself, because he knew that he has to share sensitive documents with ....