TaxTMI 
TaxTMI 
2026 (2) TMI 1285
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....5/2025 in CP(IB) No.149/BB/2023 raises a fundamental issue: What is the legal character of the appellant, the Committee of Creditors of M/s. Think and Learn Pvt. Ltd., to litigate in its name. 2. The minimum facts which are relevant for the current purposes may now be stated: a) M/s. Think and Learn Pvt. Ltd. was admitted into CIRP under Sec.9 IBC vide the order of the Adjudicating Authority in CP(IB) No.149/BB/2023. b) On 21.08.2024, the RP constituted a four-member CoC whereinafter it took out I.A No.942/2024, before the Adjudicating Authority to place on record the constitution of the CoC. Subsequently, on 31.08.2024, the RP reconstituted the CoC by dropping 2 out of 4 members in the CoC, namely M/s. Glas Trust Company LLC (hereinafter Glas Trust, for short) with 99.41% voting share and M/s. Aditya Birla Capital Limited (ABCL) with a fractional voting share in the remainder. It may be stated that on the date when the RP reconstituted the CoC, the application he had earlier taken pursuant to the constitution of CoC on 21.08.2024 was yet to be taken on record. Subsequent to the reconstitution of the CoC, the RP took out IA No.671 of 2024 for the acceptance of ....
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....The learned counsel contended that the CoC vide its resolution dated 30.05.2025 has authorised Glas Trust only to file a company petition under Sec. 241, 242 of the Companies Act, but not file any application for impleading the CoC in I.A.466 of 2025, a petition which the respondent has filed for the very removal of Glas Trust from the CoC. 5.2 Both the sides competed with each other in citing several authorities, but we choose to list the authorities of both the appellant^1 and the respondent^2 in the footnote, since for deciding the issues raised, understanding the import of those authorities is more important than extracting them as part of this judgement. More so, when the principal question to be resolved involves an understanding of the legal character of the CoC, which in our estimate remains to be explored in a virgin terrain and on first principles. Discussion & Decision: 6. There are in effect four issues: (a) whether the appeal is properly instituted? (b) Has the Committee of Creditors - the CoC, a legal character - a juristic personality to litigate in its name under scheme of the IBC as CoC. The issue largely has to be tested on the basis of jurisprudential pr....
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....ave entered into with the corporate debtor. A CoC is not a committee spontaneously created by the volition of the financial creditors but is formed in deference to the statutory conceptualisation. They are bound together not by a common cord but only by a common denominator. Under the scheme of the IBC, the CoC is conceived as a statutory contrivance, an engine, that runs the entire insolvency resolution process. In another sense CoC is also required to be a statutory conscience keeper, as the responsibility it is enjoined with travels far beyond its preference to protect the financial interest of the members constituting it, since it is also required to secure the interest of every creditor of the corporate debtor besides the corporate debtor itself. An analysis of the IBC informs that while its decisions are taken by a majority voting of 66%, yet when a resolution plan is approved by the majority, it treats a dissenting financial creditor differently under Sec. 30(2) without forcing it to be bound by the decision of the majority. It can therefore, be deduced that while the IBC attempts to forge a purposive alliance, it is equally careful not to dissolve the independent identity o....
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....placed reliance on Sec. 3(23) of the Code, which reads: "Person" includes- (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a trust; (e) a partnership; (f) a limited liability partnership; and (g) any other entity established under a statute. It may have to be stated that this definition bears striking similarity to the definition of a person under Sec.2(31) of the Income Tax Act. If this definition is closely analysed it can be noticed that the definition of a person under Sec.3(23) above is an amalgamated collection of those who are jurisprudentially recognised as a person and also those who are not. For instance, a HUF or a trust or a partnership firm are not recognised as a person in jurisprudence, yet by a statutory fiction they are grouped with a company or a Limited Liability Partnership in the definition of a 'person'. This definition appears as a legislative conciliation of jurisprudential incompatibles. 9.2 The appellant would now rely on Sec. 3(23)(g) to contend that the CoC is a statutory entity as it is a creation of a statute, and hence it falls within the definition of a ....
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....any judicial or quasi-judicial fora may even become relevant. But, why not it be given a limited recognition for litigating within the framework of the IBC as concerning issues that arises under the Code? In its statutory role within the scheme of the IBC it has a functional role to play by taking business decisions founded on ground realities which then binds all stakeholders, including dissentient creditors as was pointed out by the Supreme Court in Satish Kumar Gupta's case [(2020) 8 SCC 534]. Therefore, since CoC is a statutory body and a decision- making entity, to deny it it's legal existence for all purposes merely because it is neither a juristic person might be akin to throwing the baby out with the bathwater. 10.2 It should not also be ignored that CoC is not constituted as a permanent body for all the insolvency resolution processes initiated against every corporate debtor. It is only then it's right to litigate as a legal entity that may become relevant, but not when its existential relevance itself is limited to the insolvency resolution process of a particular CD. This is one part. On the other, we are conscious that there are innumerable litigations where CoC is a....
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....ether. If CoC (constituted of multiple financial creditors) alone is arrayed as a party- respondent, and only few members of the CoC with fractional voting share enter appearance, where to accommodate those with balance voting share? Therefore, the practice of letting CoC litigate in its name which we have approved in the earlier paragraph, is not without its difficulties. This therefore, necessitates a finetuning of the practice of allowing CoC to litigate in its name to avert the difficulties that it may pose. We therefore hold: a) Where CoC is run by a single member, it does not matter whether CoC litigates or the lone member constituting it litigates in their names. Therefore, CoC can litigate in its name. b) Where a multi-member CoC decides unanimously to litigate together, then it may institute such proceedings which may include a petition or an application or an appeal in its name. c) Where however, a multi-member CoC is intended to be arrayed as a respondent, then it is necessary that every member of the CoC is arrayed independently as a respondent, since the one who approaches the tribunal with a grievance may not know whether the members of the ....
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....ust has established with the corporate debtor, and if it has given rise to a financial debt which the corporate debtor has defaulted in repaying. How does it concern the other members of the CoC, when their right to be in the CoC itself is dictated by their respective independent contract with the corporate debtor? Glas Trust may be keen to have the CoC as its cheer group while it defends I.A.466 of 2025, but law does not allow entry unless the presence of a party is necessary or at least proper for adjudicating an issue. 13.2 Needless to mention that CoC is neither a necessary party, not even a proper property for deciding the issue whether one of its members, the Glas Trust, should be in the CoC. We affirm the decision of the Adjudicating Authority and hold that the CoC does not required to be impleaded in I.A.466 of 2025. Issue of Maintainability of the Appeal 14.1 Since we have taken a decision that there is hardly a need to implead the CoC in I.A.466 of 2025 which the respondent has taken out, this issue is now largely superfluous. However, the issue having been raised, we briefly touch upon it. The appeal is verified by a certain Ramesh, and he has been constituted a....