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2022 (7) TMI 661 - AT - Insolvency and BankruptcyAppellant are Financial Creditors or not - no direct disbursal of amount to the Corporate Debtor/Guarantor - Related Parties of the Corporate Debtor or not - individual Homebuyer has the locus to challenge the admission of a Claim of another Creditor/Financial Creditor or not - appellant can make a Claim on the basis of the Guarantee Deed which was never invoked pre-commencement of the CIRP, and remained uninvoked even as on the date of filing of the Claim, thereby meaning that Right to Payment has not yet accrued - Appellants were in a position to control the affairs of the Corporate Debtor, to fall within the ambit of the definition of Related Party as defined under Section 5(24) of the Code or not. Financial Debt or ot - direct disbursal of amount by ECL to the Corporate Debtor - Applicability of decision in the case of Anuj Jain 2020 (2) TMI 1259 - SUPREME COURT , to the facts of the attendant case and holding that the Appellants are not Financial Creditors in view of the fact that there was no direct disbursal of amount to the Corporate Debtor/Guarantor - HELD THAT - This Tribunal is of the considered view that ECL, being the original lender had disbursed the amount in terms of the Facility Agreement entered into and the disbursement of debt is essentially to the Issuer/Borrower and not to the Corporate Guarantor i.e., Palm Developers. By providing Corporate Guarantee, Palm Developers has agreed to incur the debt, if due and payable. A Guarantee is included as one of the illustrations which specifies the definition of Financial Debt under Section 5(8)(i) of the Code - despite the fact that there was no direct disbursal of amount to the Corporate Guarantor, any amounts released to the Issuer/Principal Borrower and not to the Corporate Guarantor does constitute Financial Debt as defined under Section 5(8) of the Code and it cannot be said that such amounts do not have consideration for Time Value of Money. In the facts of the attendant case, it has to be only seen whether there was a default and the amounts are due and payable as on the date of filing of the Claim - thus, the ratio of Anuj Jain is not applicable to the facts of the attendant case on hand. Locus of the Individual Homebuyer/Financial Creditor to challenge the constitution of the CoC - HELD THAT - The fact which is to be kept in mind is that the Appellants have not preferred any Section 7 Applications, but have filed Claims in the ongoing CIRP Proceedings of the Principal Borrower/Saha and the Corporate Guarantor/Palm Developers. - This Tribunal is of the earnest view that the Appellants cannot Claim the amounts in the CIRP of the Corporate Debtor who is a Corporate Guarantor on the basis of the Deed of Guarantee which was never invoked as on the date of filing of the Claims. The record also does not show that any Notice in terms of Clause 2.1(ii) of the Deed of Guarantee was ever issued to the Corporate Debtor. There are no substance in the argument of the Appellant Counsel that no such Notice is required to be issued as invocation of Guarantee is not a pre-condition to file a Claim. The Deed of Guarantee stipulates such a notice to be issued which was never sent as the Deed was never invoked prior to CIRP filing of Form C - When the Appellants Claim has been rejected in the CIRP of the Principal Borrower, the onus is on the Appellants to substantiate how their claims can be admitted in the CIRP of the Corporate Guarantor when they have not even invoked the Guarantee prior to CIRP commencement, or as on the date of filing of Form C, which they have failed to discharge. Issue of Related Party - HELD THAT - It is seen from Clause 21 of the Sanction Letter that ECL had the controlling power to appoint Real Estate Agent/Distribution Agent on behalf of the Corporate Debtor for sale of specific residential units/inventory totaling to 1,77,9000 sq. ft. saleable area in various projects of the promoters - In the terms and conditions of the Facility Agreement, under the caption Special Conditions Clause 24(4) it is clearly stated that The Borrower shall execute irrevocable Power of Attorney authorizing representatives of Lender to execute the sale deed and represent on behalf of the Borrower and Security Providers before the Registrar on its behalf to register the Sale Deed for units to be sold in each of its Projects. The first part of the term Control refers to de jure control, which includes the right to appoint directors of the Company. The second part of the expression Control refers to de facto control, whereby, person/body corporate directly or indirectly can positively influence in any manner, the management or policy decisions. Any decision which has a long term effect, for formulation of Business Plans, comes within the purview of policy making. The argument that the Clauses with respect to Business Plans and any substantial/important charges requiring the approval of the Debenture Holders, is only restrictive and does not construe positive control is untenable. The irrevocable PoA executed in favour of the Debenture Holders suggests Positive and proactive control as the Appellants are in a position to take proactive decisions regarding the rights of the Corporate Debtor. The Appellants do have Positive Powers and are in a position to directly and indirectly Control the management and the policy decisions of the Corporate Debtor and hence there are no illegality in the Impugned Order passed by the Adjudicating Authority affirming the decision of the RP in deleting the Appellants from being part of the CoC as stipulated for under Section 21(2) of the Code. Appeal dismissed.
Issues Involved:
1. Whether the Adjudicating Authority was right in applying the ratio of ‘Anuj Jain (IRP of Jaypee Infratech Ltd.)' to the facts of the case and holding that the Appellants are not ‘Financial Creditors' due to no direct disbursal of amount to the ‘Corporate Debtor'. 2. Whether an individual Homebuyer has the locus to challenge the admission of a Claim of another Creditor/‘Financial Creditor'. 3. Whether the Appellant can make a ‘Claim' on the basis of the ‘Guarantee Deed' which was never invoked pre-commencement of the CIRP, thereby meaning that ‘Right to Payment' has not yet accrued. 4. Whether the Appellants are ‘Related Parties' of the ‘Corporate Debtor' and whether they were in a position to control the affairs of the ‘Corporate Debtor' to fall within the ambit of the definition of ‘Related Party' as defined under Section 5(24) of the Code. Detailed Analysis: 1. Applicability of ‘Anuj Jain (IRP of Jaypee Infratech Ltd.)' Judgment: The Tribunal held that the ratio of ‘Anuj Jain' is not applicable to the facts of the case. The Tribunal noted that despite no direct disbursal to the Corporate Guarantor, the amounts released to the Issuer/Principal Borrower constitute ‘Financial Debt' under Section 5(8) of the Code. The focus should be on whether there was a ‘default' and whether the amounts are ‘due and payable' as on the date of filing of the ‘Claim'. Therefore, the Tribunal disagreed with the Adjudicating Authority's reliance on ‘Anuj Jain' to conclude that the Appellants are not ‘Financial Creditors'. 2. Locus of Individual Homebuyer to Challenge the Claim: The Tribunal held that a single Homebuyer has the locus to challenge the Claim of another Creditor. It referenced the Hon'ble Supreme Court's judgment in ‘Phoenix ARC Pvt. Ltd. Vs. Spade Financial Services Ltd. & Ors.', which stated that ‘Financial Creditors' forming part of the CoC must be heard during proceedings determining the status of other ‘Financial Creditors'. The Tribunal also referred to its own decision in ‘Aashray Social Welfare Society & Ors. Vs. Saha Infratech Pvt. Ltd. & Ors.', which supported the right of Homebuyers to be heard in such matters. 3. Claim Based on Uninvoked Guarantee Deed: The Tribunal agreed with the Adjudicating Authority that the Appellants cannot claim amounts in the CIRP of the ‘Corporate Debtor' based on a Guarantee Deed that was never invoked pre-commencement of the CIRP. The Tribunal cited the Hon'ble Supreme Court's judgment in ‘Ghanshyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited', which held that an uninvoked Corporate Guarantee cannot be considered a ‘Matured Claim'. The Tribunal emphasized that a ‘Claim' gives rise to a debt only when it becomes due, and in this case, the Guarantee was invoked after the initiation of CIRP, making the Claim inadmissible. 4. Related Party Status: The Tribunal analyzed various clauses in the Sanction Letter, Articles of Association, Facility Agreement, and Builder Buyer Agreement to determine the control exercised by the Appellants over the ‘Corporate Debtor'. The Tribunal concluded that the Appellants had ‘positive control' over the ‘Corporate Debtor' and were in a position to influence management and policy decisions. This control included the ability to appoint directors, control project revenue accounts, and influence business plans and key managerial appointments. The Tribunal held that the Appellants fall within the definition of ‘Related Party' under Section 5(24) of the Code, and their inclusion in the CoC would lead to conflicts of interest. Consequently, the Tribunal upheld the Adjudicating Authority's decision to exclude the Appellants from the CoC. Conclusion: The Tribunal dismissed the Appeals, affirming the decision of the Adjudicating Authority to exclude the Appellants from the CoC as they are ‘Related Parties' and their Claim based on an uninvoked Guarantee Deed was inadmissible. The Tribunal also recognized the locus of an individual Homebuyer to challenge the Claims of other Creditors.
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