9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (9) TMI 224 - AT - Insolvency and BankruptcySeeking direction to Resolution Professional to disclose item wise insolvency resolution process costs - calling for entire records of the Resolution Professional maintained with respect to the present petition - direction to Resolution Professional to follow the steps needed under Section 18 and Section 20(2)(a) of the IBC including Forensic Audit Report before proposing liquidation of Corporate Debtor - HELD THAT - In the present case, the CIRP had commenced on 19.12.2019 and after more than two years, resolution was passed on 28.06.2022 for liquidation. The Application which was filed by the Appellant on the very next day of passing of the resolution was indirectly for challenging the liquidation. The Appellant who is a minority shareholder in the CoC cannot resist the passing of the resolution. The Adjudicating Authority has rightly rejected the application filed under Section 18 of Code and Regulation 34A, which was not to be entertained. The Appellant asked Resolution Professional to disclose item wise insolvency resolution process costs in such manner as required by the Board (IBBI). Question of cost and its approval lays in the domain of the CoC. The CoC may ratify, modify or set aside the cost claimed. These issued may be decided in the meeting of the CoC and are not to be examined by the Adjudicating Authority even before the CoC takes a decision. It shall be always open for the appellant to raise issue regarding the cost in the meeting of the Committee of Creditors. Appeal dismissed.
Issues:
1. Rejection of I.A. No. 656/KB/2022 by the Adjudicating Authority. 2. Appellant's challenge against the rejection. 3. Interpretation of Section 18 and Regulation 34A of the Insolvency and Bankruptcy Code. 4. Appellant's request for disclosure of insolvency resolution process costs. 5. Appellant's objection to the decision for liquidation. 6. Minority shareholder's rights in the Committee of Creditors (CoC). 7. Authority of CoC in approving costs and valuation reports. 8. Dismissal of the appeal. Analysis: 1. The judgment involves the rejection of I.A. No. 656/KB/2022 by the Adjudicating Authority. The Appellant, a Financial Creditor with a 33.07% voting share in the CoC, filed the appeal against the order dated 26.08.2022 passed by the Adjudicating Authority, which rejected the application. 2. The Appellant challenged the rejection by contending that the Resolution Professional did not take necessary steps in the insolvency resolution process, such as conducting an audit or obtaining a valuation report, which, according to the Appellant, should have preceded any decision for liquidation. 3. The judgment delves into the interpretation of Section 18 and Regulation 34A of the Insolvency and Bankruptcy Code, which outline the duties of the Interim Resolution Professional and the disclosure requirements of insolvency resolution process costs. The Adjudicating Authority rejected the application citing that it lacked the right or locus under these provisions. 4. The Appellant requested the Resolution Professional to disclose item wise insolvency resolution process costs as required by the Insolvency and Bankruptcy Board of India (IBBI). However, the judgment emphasizes that the question of costs and their approval falls within the domain of the CoC, which can ratify, modify, or set aside the costs claimed. 5. Regarding the decision for liquidation, the judgment highlights that the Appellant, as a minority shareholder in the CoC, cannot resist the passing of the resolution for liquidation. The Adjudicating Authority rightly rejected the application challenging the liquidation decision. 6. The judgment clarifies that the rights of a minority shareholder in the CoC do not extend to resisting the majority decision for liquidation. The CoC holds the authority to make decisions regarding costs and valuation reports, which are not subject to examination by the Adjudicating Authority before the CoC's decision. 7. It is reiterated that the CoC has the discretion to address issues related to costs and valuation reports during its meetings. The Appellant can raise concerns about costs in the CoC meeting and request the Liquidator to obtain a valuation report if necessary. 8. Ultimately, the appeal is dismissed, affirming the Adjudicating Authority's decision to reject the application and emphasizing the CoC's authority in making decisions related to costs and liquidation in the insolvency resolution process.
|
