2020 (1) TMI 1532 - Tri - Insolvency and Bankruptcy

Seeking for declaration of BVN traders to be financial creditor or not - Section 5(8) of IBC, 2016 - HELD THAT - This adjudicating Authority is of the view that as the COC has voted in majority in favour of BVN Traders as financial creditor and thus Suspended Management as well as Resolution Professional has no locus to challenge the commercial wisdom and decision of Committee of creditors with regard to determination of respondent as financial creditor. This adjudicating Authority declares BVN Traders as financial creditor as per Sec 5 (7) of IBC,2016 and the loan amount given by BVN traders to corporate Debtor is declared as financial debt under Sec 5(7) (1) of the IBC, 2016 - Application rejected.

Summary

Issues:
1. Declaration of BVN Traders as a "financial creditor" under Sec 5(7) of IBC, 2016.
2. Examination of the loan transaction between BVN Traders and the corporate debtor.
3. COC's authority in determining the status of a creditor.

Analysis:

Issue 1: The application sought a declaration of BVN Traders as a "financial creditor" under Sec 5(7) of IBC, 2016. The applicant contended that the corporate debtor had not taken any loan from BVN Traders and had not created any charge or mortgage in favor of BVN Traders. The RP revisited the claim and found that BVN Traders failed to provide necessary documents as per the requirements of the law. Legal opinions obtained supported the view that BVN Traders did not meet the criteria of a financial creditor as defined under the IBC.

Issue 2: The loan transaction between BVN Traders and the corporate debtor was scrutinized. BVN Traders claimed that a loan of ?80,00,000 was provided against the deposit of the title deed. Evidence submitted included a WhatsApp chat indicating the loan transaction. However, discrepancies were noted in the ledger entries and the timing of the FIR filed by BVN Traders partner, raising questions about the nature of the transaction. The COC initially admitted the claim but later reconsidered based on the RP's findings.

Issue 3: The authority of the COC in determining the status of a creditor was debated. BVN Traders argued that the COC had voted in favor of considering them a financial creditor, indicating commercial wisdom. The adjudicating authority held that since the COC had voted in favor of BVN Traders as a financial creditor, the Suspended Management and RP could not challenge this decision. Consequently, BVN Traders was declared a financial creditor, and the loan amount provided was categorized as a financial debt under the IBC.

In conclusion, the Tribunal dismissed the application, affirming BVN Traders as a financial creditor based on the COC's decision and the provisions of the IBC.