2018 (10) TMI 197 - Tri - Insolvency and Bankruptcy

Claim to IRP on the basis of power of attorney - IRP to accept the claim of the applicant s claim as one of the members of the CoC as a representative of 86 debenture holders of the Corporate Debtor - Held that - The terms of the debenture holders i.e. financial creditors are to appoint their agent to represent them in CoC. In this case, original trustees of a trust created by the Corporate Debtor to manage the affairs of debenture holders are debarred/restrained by the SEBI from acting as an Intermediary of the trust that was created by the Corporate Debtor. Now each debenture holder has to submit his claim to the IRP. Above provision allows the class of creditors to appoint their representative to attend the CoC meetings. IRP has to allow the applicant to act as representative of the creditors. However, it is further made clear that while raising claim of each of the debenture holder, IRP/RP has to keep in his mind the provisions of section 57 of the Companies Act, 2013.

Summary

Issues:
- Application under section 60(5) of the Insolvency & Bankruptcy Code, 2016 filed by a debenture holder to be accepted as a member of the Committee of Creditors (CoC).
- Interpretation of provisions allowing appointment of representatives for financial creditors in CoC meetings.
- Dispute regarding the acceptance of the applicant as a representative of 86 debenture holders by the Insolvency Resolution Professional (IRP).
- Applicability of section 57 of the Companies Act, 2013 in considering claims of debenture holders.

Analysis:
The judgment pertains to an application filed under section 60(5) of the Insolvency & Bankruptcy Code, 2016 by a debenture holder seeking acceptance as a member of the CoC. The applicant submitted his claim based on a power of attorney executed by 86 debenture holders, appointing him as their representative in the CoC. The IRP was directed to accept the applicant's claim as a representative of the debenture holders. The matter arose as the original trustees of a trust created by the Corporate Debtor were restrained by SEBI, necessitating individual debenture holders to submit their claims directly to the IRP.

The judgment delved into the provisions of section 21(6A) of the I&B Code, emphasizing that financial creditors, in this case, the debenture holders, have the right to appoint an agent or representative to participate in CoC meetings. The IRP was instructed to allow the applicant to act as the representative of the debenture holders, ensuring compliance with the Companies Act, 2013, specifically section 57. This requirement was crucial for the IRP/RP to consider while processing the claims of each debenture holder.

The Tribunal acknowledged the applicant's right to represent the debenture holders in the CoC meetings and disposed of the application, directing the registry to communicate the order to all relevant parties. The judgment clarified the procedure for appointing representatives for financial creditors and highlighted the importance of adherence to statutory provisions while considering claims in insolvency proceedings, ensuring fair representation and compliance with legal requirements.