TaxTMI 
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2026 (3) TMI 256
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....cation moved by the IRP for issuance of appropriate directions has been dismissed by Ld. Tribunal with the observation that there is no provision in the Code to direct/ permit a claimant to withdraw its claim. 2. The necessary facts required for disposal of instant appeal are that petition CP IB 860 (MB) 2021 titled 'Radhika Chatterji vs. Infinia Solutions and Services Pvt. Ltd.' was filed against the aforesaid CD and vide order dated 28.04.2023, the Insolvency Process was initiated against the aforesaid CD and consequently moratorium was declared and the public announcement was made by the IRP on 06.05.2023, in pursuance of which the appellant being the financial creditor filed claim vide email dated 26.05.2023, for an amount of Rs. 4,35,46,467/- and after receiving the claim the IRP verified and admitted the claim to the tune of Rs. 4,28,73,231/-. 3. It is further reflected from the record that in terms of Section 21 of the Code the IRP constituted Committee of Creditors and convened its first meeting on 29.05.2023 which was also attended by the representatives of the appellant. 4. It is further reflected that Appellant on 29.05.2023 sent an email seeking withdrawal of i....
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....30 P.M. VIA ""The Sender of this email is from non Kotak domain"" Dear Member of COC, This is to inform you that the e-voting window has been set up by the undersigned for the Resolutions discussed in the First meeting of COC held on Monday 29th day of May, 2023 at 03:30 P.M. via Zoom Platform. It may further be noted that the e-voting window shall remain open from Wednesday 31.05.2023 at 10:00 A.M. till Thursday 01.06.2023 at 10:00 A.M. Further, the link to cast the votes has been sent at the e- mail id i.e. [email protected] as provided to the undersigned and the same is mentioned below: E-Voting will be done at the following url: https://infiniasolutions.evotes.in This is for your kind information. Thanks and Regards For and on behalf of Anil Tayal Interim Resolution Professional In the matter of M/s. Infinia Solutions & Services Private Limited IBBI Reg No.:IBBI/IPA-001/IP-P01118/2018-19/11818 AFA Validity: 10.03.2023- 09.03.2024 Address: 201, Sagar Plaza, District Centre Laxmi Nagar, Delhi-110092 Email: [email protected], [email protected]" "Sarwan....
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....mar vs. V Nagarajan and Ors, CA (AT) (Ins) No. 48 of 2021. 9. It is also reflected that vide email dated 05.06.2023, Respondent Bank informed the IRP that they have taken a commercial call to stay out of the insolvency process and stating that the IRP may proceed with the other creditors or may refer the matter to Ld. Adjudicating Authority. The relevant excerpt of the email sent by the appellant to the IRP is also reproduced as under: Dear Sir, Thank you for your email. We have examined the contents of your email and would like to reiterate that engaging in the CIRP process is not a cost-effective exercise for the organization and as such, we have already taken a commercial call to stay out of the process. Said factum has been duly communicated during the 1st meeting itself and as such no prejudice will be caused to anyone if we opt out from the process. The law and the code permits you to engage with the other creditors and proceed further. As such there is no party which shall be effected by this decision. The Hon'ble Apex Court of India have time and again given weightage to commercial wisdom of CoC and it is trite that commercial wisdom of a finan....
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....ity. As such, as a financial institution and custodian of public money, we cannot be forced and burdened with this process and bear its costs. Regards, Sarwan Singh" 10. It is also reflected that the IRP vide email dated 08.06.2023, replied to the appellant and clarified that he is not insisting the Respondent to be a part of the CoC, however, in absence of any expressed provision and in absence of adjudicatory power he cannot allow Respondent to withdraw the claim. The relevant excerpt of the email sent by the IRP to the appellant on 08.06.2023 is also reproduced herein below: "Dear Sir, In reference to the trailing mail, undersigned wants to clarify that he is not insisting Kotak Mahindra Bank for continuing in the Committee of Creditors of the Corporate Debtor namely Infinia Solutions & Services Private Limited. The undersigned has only brought to your notice that in the absence of any express provisions and furthermore, in the absence of any adjudicatory power, the RP cannot allow Kotak Mahindra Bank to withdraw the claim from the CIRP of the Corporate Debtor. Kindly note that in order to withdraw your claim from the CIRP of the C....
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....2023: This is an application filed under section 60(5) for issuance of appropriate directions of this Hon'ble Tribunal to permit the respondent to withdraw its claim as secured creditors from the CIRP of the Corporate Debtor and to reconstitute the CoC. 3. This bench is of the view that there is no provision m the code to direct/permit a claimant to withdraw its claim. Hence, this application is not maintainable. Accordingly, IA-3965(MB)2023 is dismissed". 14. The instant appeal has been preferred by the Appellant-Bank feeling aggrieved by the impugned order. 15. Ld. Counsel for the Appellant submits that it is not in dispute that the CD had ceased operations in or around 2016 and on 22.05.2023 the IRP constituted the CoC with two operational creditors only and it was on 26.05.2023 the appellant had filed the claim. However, the IRP accepted the claim in haste on the very next day of its submission and reconstituted the CoC and followed up with the appellant to attend the CoC meeting which was rescheduled to 29.05.2023. 16. It is further submitted that the claim of the appellant was settled in full through a settlement accorded during the pendency of ....
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....an admitted claim and in the instant case the limited applicability of Regulation 12 A is not relevant as the events relied on by the appellant are subsequent in point of time. Elaborating further it is submitted that the CIRP of the CD has commenced on 28.04.2023, Form A has been issued on 06.05.2023, and thereafter appellant filed its claim and participated as a sole member of the CoC. The constitution of the CoC was placed before the Ld. Adjudicating Authority by the IRP and thus the Appellants reliance on the alleged satisfaction of its claim arises only from events which had taken place much after the filing of the application being IA No. 2216 of 2023 informing Ld. Adjudicating Authority of the constitution of the CoC and therefore the IRP could not act under Regulation 12A of the CIRP Regulations. 22. It is further submitted that the appellants claim may also not be termed as "satisfied" within the meaning of Regulation 12A of the CIRP Regulations, as making unilateral adjustment during the course of moratorium declared under Section 14 of the Code the same could not be adjusted from the account of the Corporate Debtor and any act done in violation of Section 14 of the Co....
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.... resolution professional in the manner as laid down in section 16. (2) The public announcement referred to in clause (b) of sub-section (1) shall be made immediately after the appointment of the interim resolution professional. Section 14. Moratorium. - (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: - (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by a....
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.... or liquidation order, as the case may be. Section 15. Public announcement of corporate insolvency resolution process. - (1) The public announcement of the corporate insolvency resolution process under the order referred to in section 13 shall contain the following information, namely: - (a) name and address of the corporate debtor under the corporate insolvency resolution process; (b) name of the authority with which the corporate debtor is incorporated or registered; (c) the last date for submission of 1 [claims, as may be specified]; (d) details of the interim resolution professional who shall be vested with the management of the corporate debtor and be responsible for receiving claims; (e) penalties for false or misleading claims; and (f) the date on which the corporate insolvency resolution process shall close, which shall be the one hundred and eightieth day from the date of the admission of the application under sections 7, 9 or section 10, as the case may be. (2) The public announcement under this section shall be made in such manner as may be specified. Section 18. Duties of interim resolution....
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.... financial sector regulator. (d) monitor the assets of the corporate debtor and manage its operations until a resolution professional is appointed by the committee of creditors; (e) file information collected with the information utility, if necessary; and (f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including- (i) assets over which the corporate debtor has ownership rights which may be located in a foreign country; (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets subject to the determination of ownership by a court or authority; (g) to perform such other duties as may be specified by the Board. Ex....
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.... debt owed by the corporate debtor to such creditor. (5) Where an operational creditor has assigned or legally transferred any operational debt to a financial creditor, the assignee or transferee shall be considered as an operational creditor to the extent of such assignment or legal transfer. (6) Where the terms of the financial debt extended as part of a consortium arrangement or syndicated facility *** provide for a single trustee or agent to act for all financial creditors, each financial creditor may- a) authorise the trustee or agent to act on his behalf in the committee of creditors to the extent of his voting share; (b) represent himself in the committee of creditors to the extent of his voting share; (c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself in the committee of creditors to the extent of his voting share; or (d) exercise his right to vote to the extent of his voting share with one or more financial creditors jointly or severally. [(6A) Where a financial debt- (a) is in the form of securities or deposits and the terms of the fina....
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....inancial information so required by the committee of creditors under sub-section (9) within a period of seven days of such requisition. Section 25. Duties of resolution professional. - (1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor. (2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:- (a) take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor; (b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings; (c) raise interim finances subject to the approval of the committee of creditors under section 28; (d) appoint accountants, legal or other professionals in the manner as specified by Board; (e) maintain an updated list of claims; (f) convene and attend all meetings of the committee of creditors; (g) prepa....
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....intment or terms of contract of such personnel as specified by the committee of creditors; or (m) make changes in the appointment or terms of contract of statutory auditors or internal auditors of the corporate debtor. (2) The resolution professional shall convene a meeting of the committee of creditors and seek the vote of the creditors prior to taking any of the actions under sub- section (1). (3) No action under sub-section (1) shall be approved by the committee of creditors unless approved by a vote of 1 [sixty-six] per cent. of the voting shares. (4) Where any action under sub-section (1) is taken by the resolution professional without seeking the approval of the committee of creditors in the manner as required in this section, such action shall be void. (5) The committee of creditors may report the actions of the resolution professional under sub-section (4) to the Board for taking necessary actions against him under this Code. Section 29. Preparation of information memorandum. - (1) The resolution professional shall prepare an information memorandum in such form and manner containing such relevant information as may be sp....
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....tative of creditors in each class; and] (c) provide the last date for submission of proofs of claim, which shall be fourteen days from the date of appointment of the interim resolution professional. (3) The applicant shall bear the expenses of the public announcement which may be reimbursed by the committee to the extent it ratifies them. 6A. Communication to creditors. The interim resolution professional shall send a communication along with a copy of public announcement made under regulation 6, to all the creditors as per the last available books of accounts of the corporate debtor through post or electronic means wherever the information for communication is available. Provided that where it is not possible to send a communication to creditors, the public announcement made under regulation 6 shall be deemed to be the communicated to such creditors.] CHAPTER IV PROOF OF CLAIMS 7. Claims by operational creditors. (1) A person claiming to be an operational creditor, other than workman or employee of the corporate debtor, shall 33[submit claim with proof] to the interim resolution professional in person, by post or by elect....
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....n professional or the resolution professional, as the case may be, may call for such other evidence or clarification as he deems fit from a creditor for substantiating the whole or part of its claim. 11. Cost of proof. A creditor shall bear the cost of proving the debt due to such creditor. 12. Submission of proof of claims. [(1) A creditor shall submit claim with proof on or before the last date mentioned in the public announcement. Provided that a creditor, who fails to submit claim with proof within the time stipulated in the public announcement, may submit his claim with proof to the interim resolution professional or the resolution professional, as the case may be, up to the date of issue of request for resolution plans under regulation 36B or ninety days from the insolvency commencement date, whichever is later: Provided further that the creditor shall provide reasons for delay in submitting the claim beyond the period of ninety days from the insolvency commencement.] [(2) ****] (3) Where the creditor in 50[sub-regulation (1)] is 51[a financial creditor under regulation 8], it shall be included in the com....
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....ion by members, partners, directors and guarantors of the corporate debtor 54[or their authorised representatives]; (c) displayed on the website, if any, of the corporate debtor; [(ca) filed on the electronic platform of the Board for dissemination on its website: Provided that this clause shall apply to every corporate insolvency resolution process ongoing and commencing on or after the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2020;] (d) filed with the Adjudicating Authority; and (e) presented at the first meeting of the committee. 14. Determination of amount of claim. (1) Where the amount claimed by a creditor is not precise due to any contingency or other reason, the interim resolution professional or the resolution professional, as the case may be, shall make the best estimate of the amount of the claim based on the information available with him. (2) The interim resolution professional or the resolution professional, as the case may be, shall revise the amounts of claims admitted, including the ....
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....fter being appointed as the IRP of the CD, in pursuance of the acceptance of petition either under Section 7 or 9 or any other provision of the Code, a moratorium under Section 14 of the Code is declared and thereafter a public announcement of Corporate Insolvency Resolution Process is made and thereafter it becomes the duty of the Interim Resolution Professional, under Section 18 (1) (b) to receive and collate all the claims submitted by the creditors to him and to constitute committee of creditors (CoC) under Section 21 of the Code. 27. Section 21 of the Code provides that the Interim Resolution Professional shall after collation of all claims received against the Corporate Debtor and determination of the financial position of the CD would constitute a committee of creditors. Section 25 of the Code deals with the duties of the Resolution Professional and provides inter alia that it shall be the duty of the Resolution Professional, amongst others to maintain an updated list of Creditors. 28. Chapter-IV of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 herein after called as (CIRP Regulations of 2016) provid....
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....d from the CIRP Regulations, 2016, on submission of a claim with proof, the IRP or the RP, as the case may be, has to verify the claim and prepare a list of creditors containing names of creditors along with the amount claimed by them and security interest, if any. On collation of claims received against the CD, the IRP has to constitute the CoC. As per Section 21 (2) of the Code, subject to other provisions of Section 21, the COC must comprise all financial creditors of a CD. Under Section 22 of the IBC, the COC appoints an RP in its first meeting. It may, however, resolve to appoint the IRP as the RP, subject to confirmation by the Board. 33. After going through the Regulations 10 to 14 of the CIRP Regulations, it is also clear that IRP/RP may, under Regulation 10, call clarifications from a creditor for substantiating the whole or part of its claim. Furthermore, under Regulation 12A, the IRP/RP is entitled to updation of the creditor's claim based on the satisfaction of the claim. Finally, Regulation 13 provides to verify every claim as on the insolvency commencement date within seven days from the last date of the receipt of the claims. Under Regulation 14, IRP/RP is further....
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.... the IRP/RP in derogation of the Order passed by the Tribunal and directed to be suspended with a further direction that it shall not exercise any of the Powers as provided under the Provisions of IBC, 2016. This order was challenged by filing an appeal before this Appellate Tribunal. 36. This Appellate tribunal upheld the NCLT's Order on the basis that the resolution professional does not have any 'adjudicatory powers' under the IBC and no change can be made in the CoC when it was already formed and relying on the law laid down in Company Appeal (AT)(Ins) No.519 of 2020 in Rajinish Jain V. Manoj Kumar Singh, the appeal was dismissed. 37. In Rajinish Jain V. Manoj Kumar Singh, Company Appeal (AT)(Ins)No.519 of 2020, decided on 18th December, 2020, this Appellate Tribunal held as under: - "59. Based on the above discussion, we clarify and hold that during CIRP, the IRP is authorised to collate the claims, and based on that he is 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 categorisation of ....
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....eft with no claim at all and in our understanding the term 'update its claim' provided under Regulation 12 A of the CIRP Regulations,2016, would also include 'withdrawal of the claim' by such Creditor. 40. It is also to be recalled that all major decisions with regard to the Resolution of the CD are taken by the CoC wherein the financial creditors have been empowered with voting rights, however, how a financial creditor whose claim has been fully satisfied would be compelled to be the part of the CoC when his claim has been fully satisfied and he may not be having any voting percentage at all and in that scenario why he should be permitted to take decisions with regard to the Resolutions of the CD, when no interest of it has been left in the resolution of the CD. 41. In our considered opinion, a creditor who has filed a claim is duty bound to update its claim, if the same has been satisfied either fully or partly, as provided under Regulation 12A of the CIRP Regulations of 2016 and this updation would also include 'withdrawal' of the claim by such Creditor. However, as no such power of adjudication is available with IRP or the RP, as the case may be, a decisio....