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2020 (11) TMI 846 - Tri - IBCInclusion of name of applicant in the CoC - related party or not - Applicant states that the Respondent/IRP acted in violation of the well established principles of the judicial process - whether this Deed of Assignment was entered to keep bunch of their men in the CoC? - HELD THAT - The Corporate Debtor was already a sinking ship in a very deep financial crisis. At that point of time, the loan was assigned to the Applicant may be with a foresight to put their men in the CoC Meeting. However, the decision of the Respondent/IRP that Applicant is a Related Party is not challenged in this application. The Applicant states that during the meeting of committee of creditors a biased opinion was formed by the Financial Creditors and the creditors alleged that Gita Power is a Related Party of the Corporate Debtor. Therefore, the Applicant being an assignee of Gita Power is Financial Creditor under the IBC, 2016. As to the present case, it is seen that the Applicant was the Assignee of a loan from the Related Party of the Corporate Debtor and by following the principles laid down in the Judgment of the Hon'ble NCLAT, in Pankaj Yadav Anr. 2018 (9) TMI 1223 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI as enumerated in para 7, the rights of the 'Assignee' are no better than those of the 'Assignor', the Applicant is stepping into the shoes of the Assignor and thereby takes over the right of the Assignor with the onerous crown, which also includes the disadvantage as found in the Assignment Agreement. Thus, if the Assignor of a debt is a Related Party of the Corporate Debtor, as per the ratio laid down by the Hon'ble NCLAT, the Assignee, who is a third party, is also liable to be held as a Related Party of the Corporate Debtor. This Tribunal is of the considered view that the Applicant being Assignee of the Loan from the Assignor, is also a Related Party of the Corporate Debtor and as such the Application as filed by the Applicant is liable to the dismissed - Application dismissed.
Issues Involved:
1. Exclusion of the Applicant from the Committee of Creditors (CoC). 2. Determination of the Applicant as a "Related Party" to the Corporate Debtor. 3. Validity of the IRP's decision to keep the Applicant's claim in abeyance. 4. The Applicant's challenge to the IRP's quasi-judicial powers and actions. Detailed Analysis: 1. Exclusion of the Applicant from the Committee of Creditors (CoC): The Applicant, Shoka Tradelink Private Limited, sought to set aside the decision to exclude it from the CoC as recorded in the minutes of the CoC meeting dated 26.02.2020. The Applicant also requested that all resolutions taken at the CoC meetings be quashed until it is included in the CoC. The IRP had initially accepted the Applicant's claim and invited it to participate in the first CoC meeting. However, objections were raised by other financial creditors, leading to the Applicant's exclusion pending further verification. 2. Determination of the Applicant as a "Related Party" to the Corporate Debtor: The primary contention revolved around whether the Applicant was a "Related Party" under Section 5(24) of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016). The IRP, based on objections from other financial creditors and subsequent investigations, concluded that the Applicant was indeed a "Related Party." This conclusion was communicated to the Applicant via a letter dated 27.04.2020. The Applicant did not challenge this determination or provide sufficient evidence to refute the IRP's findings. 3. Validity of the IRP's Decision to Keep the Applicant's Claim in Abeyance: During the CoC meeting, objections were raised regarding the inclusion of certain creditors, including the Applicant, on the grounds of their relationship with the Corporate Debtor. The IRP decided to keep the claims of these creditors in abeyance until a detailed due diligence was completed. The IRP's decision was based on the premise that the assignment transactions were recent and required thorough verification. The Tribunal upheld the IRP's decision, noting that reasonable opportunities were given to the Applicant to provide necessary documentation, which it failed to do satisfactorily. 4. The Applicant's Challenge to the IRP's Quasi-Judicial Powers and Actions: The Applicant argued that the IRP acted beyond its powers by excluding it from the CoC based on allegations from other financial creditors. The Tribunal found that the IRP did not pass any quasi-judicial order during the CoC meeting but merely sought time to verify the claims. The IRP's subsequent determination that the Applicant was a "Related Party" was not challenged by the Applicant. The Tribunal referenced the decision in Pankaj Yadav & Anr. vs. State Bank of India & Anr., which held that an assignee of a debt from a related party steps into the shoes of the assignor and inherits both rights and disadvantages. This precedent supported the IRP's conclusion that the Applicant, as an assignee from a related party, was also a related party. Conclusion: The Tribunal dismissed the Applicant's application, affirming the IRP's decision to exclude the Applicant from the CoC pending verification and the determination that the Applicant was a "Related Party." The Tribunal emphasized that the Applicant did not challenge the IRP's findings or provide sufficient evidence to refute the related party status. The application was dismissed without costs.
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