TaxTMI 
TaxTMI 
2025 (8) TMI 1874
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....) No. 149/2023 ("Section 9 Petition") for reliefs in respect of the CIRP of think & Learn Private Limited ("Corporate Debtor"). 2. Brief relevant facts of the Application (filed by the applicant through the Lead Member of the CoC, GLAS Trust Company LLC) are as follows: - (a) The BCCI has filed a petition under Section 9 of the IBC on 23.09.2023 seeking initiation of CIRP against the Corporate Debtor. It was admitted on 16.07.2024, commencing CIRP. Pursuant to an order dated 29.01.2025 in IA No. 660 of 2024 and 820 of 2024, the first meeting of Committee of Creditors of corporate debtor was convened on 11.02.2025. In this meeting, the CoC, with a voting share of 99.81%, appointed Mr. Shailendra Ajmera as the Resolution Professional of the Corporate Debtor. By order dated 29.01.2025 the unlawful reconstitution of the Committee of Creditors (CoC) undertaken by the previous Interim Resolution Professional (IRP) was set aside. The said order was challenged before the Hon'ble NCLAT by Respondent No. 1/Mr. Riju Ravindran by way of CA (AT) (CH) (Insolvency) No. 58 of 2025. It was also challenged by Mr. Byju Raveendran, another suspended Director of corporat....
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....2025 has been instituted by Respondent No. 1, co-founder, promoter and one of the suspended directors of the Corporate Debtor, TLPL, inter alia seeking directions to GLAS to establish its authority to represent the lenders under the Credit and Guaranty Agreement dated 24.11.2021 and further to direct the removal of GLAS from the Committee of Creditors of TLPL. It is averred that the Applicant has, from his personal funds, settled the entire claims of BCCI as on 31.07.2024. (b) It is submitted that, save and except what is borne out from the records and what is expressly admitted herein, all other allegations, contentions and submissions in the said Application are specifically denied. It is contended that the averments made therein, particularly concerning the authority of the Applicant to represent the CoC, are misconceived, erroneous, and intended to mislead this Tribunal. Despite repeated requests, the final copy of I.A. No. 495 of 2025, as filed before the Tribunal, was not supplied to the Answering Respondent. Accordingly, by order dated 10.07.2025, the Tribunal directed that the deficiencies in the documents be cured by permitting the Answering Respondent t....
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....ng effect within three business days from the delivery of disqualification notices. In exercise of the said right, TLPL issued disqualification notices on 05.06.2023 and 25.01.2024 to several lenders. ii. Suppressing the aforesaid fact, GLAS, in Form C, fraudulently projected itself as a financial creditor before this Tribunal and thereby procured several orders on the strength of such misrepresentation. This amounts to a fundamental fraud on this Tribunal, since GLAS has illegally claimed authority to represent lenders under the Credit Agreement without having the requisite mandate of 51% of qualified lenders. iii. It is submitted that GLAS's entire edifice of representation crumbles upon examination of the contractual disqualification mechanism validly exercised by TLPL, which resulted in the disqualification of 61.43% of the Term Loan holders. Consequent thereto, GLAS's actual authority stood reduced to a mere 17.38% of the Term Loan, thereby rendering every action taken by GLAS in these proceedings as ultra vires and void ab initio. iv. The lack of authority is evident from the judicial pronouncement of the Delaware Court of Chancery in GLAS Trust Com....
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....d irresponsible statements without accuracy must be discouraged. In that case, while directing initiation of proceedings under Section 193 IPC for perjury, the Court observed that justice dispensation would be wrecked if litigants were permitted to mislead the court by false evidence, and that effective and stern action is required to prevent the evil of perjury which pollutes the judicial system. The Court categorically held that the survival of the justice delivery system depends on protecting the purity of court proceedings. (i) Perjury, it is submitted, is the willful making of false statements on oath, striking at the root of the justice system. Unlike contempt, it cannot be purged by recantation; affidavits carry sanctity and falsehood therein must invite adverse action [Gokaldas Paper Products v. Lilliput Kidswear Ltd., 2023 SCC Online Del 2191]. In the present case, the final copy of the Application was not supplied to the Answering Respondent, and only upon inspection of the Tribunal's records did the fraudulent actions of the Applicant come to light. (j) It is submitted that this Tribunal may initiate contempt proceedings against the Applicant for its wi....
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....articularly when the lis therein pertains to the status of an entity claiming to be a financial creditor. The directions sought in I.A. No. 466 of 2025 are specifically against GLAS to establish its authority to represent the lenders under the Credit Agreement, and such a dispute lies strictly between the alleged financial creditor, the Corporate Debtor, and the Tribunal. The CoC is neither a proper nor a necessary party. (c) It is well-settled that the Resolution Professional ("RP") does not function as an adjudicating authority, and this Tribunal retains wide powers to scrutinize any decision of the IRP/RP. Acceptance of claims by the IRP is not conclusive proof of validity, particularly where such verification stands disputed. The Hon'ble Supreme Court in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta & Ors., (2021) 7 SCC 209, has clarified that merely because duties are vested in the IRP/RP under the IBC, the jurisdiction of this Tribunal under Section 60(5)(c) of the IBC remains unfettered. (d) It is submitted that GLAS is using the CoC as a mere front, and the filing of the present Application demonstrates the unilateral nature of its actions. Without prej....
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....conceived, legally untenable and premised on an erroneous interpretation of law. The objections are frivolous, raised without locus, and clearly intended to mislead this Tribunal. Respondent No. 1 has no substantive defense on merits and has deliberately raised baseless objections to defeat the rights of the Applicant and prejudice the Corporate Debtor. For brevity, the contents of the Application are reiterated and may be read as part of this Rejoinder. (b) The Statement of Objections demonstrate that Respondent No. 1 has failed to raise any defense on the merits of the Application. The only objection pertains to the authority of GLAS to sign the Application, which is frivolous. Significantly, no objection has been raised to the Applicant being a proper and necessary party, without whose participation no order concerning the CIRP of the Corporate Debtor can be passed. In IA 466, Respondent No. 1 seeks, inter alia, to set aside all decisions of the Applicant/CoC and to stay the CIRP as interim relief. Such reliefs directly affect the Applicant, being the collective body of financial creditors, and hence the Applicant is a necessary party to IA 466. ....
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....ereinabove are reiterated. (g) A copy of the Application along with all supporting documents had been duly furnished to Respondent No. 1, yet Respondent No. 1 has chosen to raise untenable objections before the Tribunal. The allegations regarding lack of authority stand already dealt with in the foregoing paragraphs, and it is reiterated that the present Application has been filed with due and requisite authority. (h) The contents of Para 7 are frivolous and have no relevance to the present Application as they relate to the purported dispute between GLAS and Respondent No. 1, whereas the present Application is filed by the CoC representing all the financial creditors of the Corporate Debtor. (i) The present Application has been filed by the CoC through its Lead Member, duly authorized to sign and institute the same, and Respondent No. 1 has no locus to question such authority. The contention that the issue of authority goes to the root of the matter is specifically denied, it being well-settled that any defect, if at all, is curable. The allegation that GLAS could not have signed the Application pending IA 466 is misconceived since the....
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....ant provisions are extracted below. On an Application made either under Section 7 or 9 or 10 of the IBC, the Adjudicating Authority allows initiation of CIRP in cases which satisfy the criteria laid down and appoints an Interim Resolution Professional (IRP). The IRP then Constitutes a COC, conducts Meetings as per Provisions of Section 21 & 24 of the IBC respectively, which are reproduced below: "21. Committee of creditors. - (1) The interim resolution professional shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors. (2) The committee of creditors shall comprise all financial creditors of the corporate debtor: Provided that a [financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor,] shall not have any right of representation, participation or voting in a meeting of the committee of creditors: [Provided further that the first proviso shall not apply t....
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....t as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors; (b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors; (c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors, and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share. (6B) The remuneration payable to the authorized representative- (i) under clauses (a) and (c) of sub-section (6....
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....esentative of operational creditors, as the case may be, shall not invalidate proceedings of such meeting. (5) [Subject to sub-sections (6), (6A) and (6B) of section 21, any creditor] who is a member of the committee of creditors may appoint an insolvency professional other than the resolution professional to represent such creditor in a meeting of the committee of creditors: Provided that the fees payable to such insolvency professional representing any individual creditor will be borne by such creditor. (6) Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor. (7) The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board. (8) The meetings of the committee of creditors shall be conducted in such manner as may be specified" 9. Further, Section 28 of the Insolvency and Bankruptcy Code, 2016, lays down the actions that the Resolution Professional cannot undertake during the CIRP without the prior approval of the CoC. The provision is intended to ensure that significant decisions affecting the....
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....proved by the committee of creditors unless approved by a vote of [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. 10. The IBBI has laid down the guidelines for the Committee of Creditors on 06.08.2024. They are reproduced below: "GUIDELINES FOR COMMITTEE OF CREDITORS: - Introduction Under the Insolvency and Bankruptcy Code, 2016, the commercial wisdom of the Committee of Creditors (CoC) drives the procedures to attain the objective of value maximization of the distressed assets. 2. The members of the CoC largely represent financial creditors and most of them are under regulatory oversight of the financial sector regulators other than Insolvency and Bankruptcy Board of India (IBBI). 3. Nevertheless, to foster more effective and time bound decisi....
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....tes between the members, particularly in relation to claims, preferably, through dialogue, or other non-adversarial means, with a view to avoid litigation to the extent possible. Confidentiality (l) ensure at all times complete adherence to the undertaking regarding confidentiality of information. Costs (m) take necessary measures to ensure that the insolvency resolution process cost is reasonable. (n) expeditiously decide on all the expenses to be incurred by the Insolvency Professional including the going concern expenses of the corporate debtor and his fee. (o) prudently fix the fee payable to the liquidator while deciding to liquidate the corporate debtor. Meeting of the CoC (p) regularly monitor the activities of the Insolvency Professional and seek rationale of decisions/actions taken by him. (q) diligently recommend for the inclusion or otherwise of the belated claims collated by the Insolvency Professional and categorized as acceptable, in the list of creditors and its treatment in the resolution plan, if any. (r) actively participate in the presentation of valuation methodologies made by the Registered Valuers.....
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....ficer under the Insolvency and Bankruptcy Code, 2016. The Hon'ble Supreme Court in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta [(2021) 7 SCC 209] has observed that the Resolution Professional is the only person authorized to act on behalf of the CoC before the Adjudicating Authority. Similarly, the Hon'ble NCLAT in Punjab National Bank v. Kiran Shah, RP of ORG Informatics Ltd. [Company Appeal (AT) (Insolvency) No. 1023 of 2019] held that the CoC, as a body, cannot independently maintain proceedings before the Adjudicating Authority or Appellate Tribunal, and can only act through the Resolution Professional. Similarly, in Essar Steel India Ltd. v. Satish Kumar Gupta [(2020) 8 SCC 531], it was reiterated that while the CoC takes commercial decisions, its role before the Adjudicating Authority is only through the Resolution Professional who files pleadings and represents the collective will of the creditors. 13. Impleadment in a pending lis can be sought where it cannot be effectively, completely & finally decided without taking the proposed party on board. It was held in Kasturi v. Iyyamperumal, reported in (2005) 6 SCC 733 that an intervener seeking to be impleaded must be d....