2017 (9) TMI 1879 - AT - Insolvency and Bankruptcy

Status of a Secured Creditor in the committee of Creditor - effect on Corporate Debtor - it was submitted that the Insolvency Resolution Professional has opposed the continuity of 'Exim Bank' as one of the creditor - HELD THAT - While we are of the view that appeal at the instance of 'Corporate Debtor' is not maintainable, but make it clear that the Resolution Professional has right to oppose induction of a third party as a creditor. However, in view of the fact that the Exim Bank has been provisionally permitted to continue as a member of the Committee of Creditors and final order is yet to be passed by the Adjudicating Authority, Allahabad Bench and time has been granted to the contesting party to file rejoinder, we are not expressing any view at this stage. It is expected that the Adjudicating Authority will decide the question of continuity of 'Exim Bank' as a member of the Committee of Creditors either way and will not continue with interim arrangement for days together. An early decision be taken on production of copy of this order. Appeal disposed off.

Summary

Issues involved:
1. Appeal preferred by Corporate Debtor against part of the order passed by Adjudicating Authority
2. Continuity of Exim Bank as a creditor challenged by Insolvency Resolution Professional
3. Maintainability of the appeal by Corporate Debtor
4. Provisional permission granted to Exim Bank to participate in Committee of Creditors
5. Resolution Professional's right to challenge induction of a third party as a creditor
6. Adjudicating Authority's pending decision on Exim Bank's status as a creditor

Analysis:
1. The appeal was filed by the Corporate Debtor against part of the order passed by the Adjudicating Authority, where the Resolution Professional had reconsidered and accepted Axis Bank's claim as a Secured Creditor. The Adjudicating Authority disposed of the application as infructuous due to this development, allowing Axis Bank to participate in the Committee of Creditors. Exim Bank was also permitted provisionally to continue as a member of the Committee, subject to the outcome of the petition.

2. The Appellate Tribunal inquired about the potential impact on the Corporate Debtor following the impugned order. It was revealed that the Insolvency Resolution Professional opposed the continuity of Exim Bank as a creditor, raising concerns about its role in the Committee of Creditors.

3. The Tribunal acknowledged the Resolution Professional's right to challenge the induction of a third party as a creditor. While expressing that the appeal by the Corporate Debtor might not be maintainable, it clarified that the final decision on Exim Bank's status as a creditor was pending before the Adjudicating Authority. The Tribunal refrained from expressing a view at that stage, awaiting the final order from the Adjudicating Authority.

4. Emphasizing the need for a prompt decision, the Tribunal directed the Adjudicating Authority to decide on Exim Bank's continuity as a member of the Committee of Creditors without prolonging the interim arrangement. The Tribunal expected a swift resolution upon the submission of the order copy.

5. The appeal was ultimately disposed of with the aforementioned observations, and no costs were awarded considering the circumstances of the case. The Tribunal maintained a neutral stance, awaiting the final decision on Exim Bank's status as a creditor by the Adjudicating Authority before any further action could be taken.