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2020 (12) TMI 951 - Tri - IBCValidity of deed of assignment - appellant is Assignee of the Loan from the Assignor case of Respondent is that that the Applicant is a Related Party , hence they are not entitled to participate in the proceedings of 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 an idea to put their men in the CoC. However, the decision of the Respondent/IRP that Applicant is a Related Party is not challenged in this application. In 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 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. In view of the dispositive reasoning that have been set out, 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. Whether the Applicant should be included in the Committee of Creditors (CoC) as a Financial Creditor. 2. Determination of the Applicant's status as a "Related Party" to the Corporate Debtor. Detailed Analysis: Issue 1: Inclusion in the CoC as a Financial Creditor The Applicant, M/s. Radha Industries Private Limited, filed the application under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016), seeking to set aside the Minutes of the Committee of Creditors (CoC) dated 26.02.2020 and to be included in the CoC meeting as a Financial Creditor. The Applicant claimed its right as a Financial Creditor based on a Deed of Assignment Cum Novation dated 02.04.2019, wherein the debt owed by the Corporate Debtor to OPG Power Generation Private Limited was assigned to the Applicant for a consideration of ?13,61,07,978/-. The Corporate Debtor's CIRP commenced on 27.01.2020, and the Applicant submitted its claim, which was initially accepted by the Interim Resolution Professional (IRP). During the CoC meeting on 26.02.2020, objections were raised by other Financial Creditors (Nationalized Banks) regarding the inclusion of the Applicant, alleging that the Applicant was a "Related Party" to the Corporate Debtor. Consequently, the IRP decided to keep the Applicant's claim in abeyance pending verification. Issue 2: Determination of "Related Party" Status The primary contention was whether the Applicant was a "Related Party" to the Corporate Debtor. The IRP conducted a detailed due diligence process, collecting relevant documents and providing the Applicant with opportunities to submit evidence. Despite these efforts, the IRP concluded that the Applicant was a "Related Party" based on the nexus between the Corporate Debtor and the Applicant. The Tribunal referred to the decision of the Hon'ble NCLAT in Pankaj Yadav & Anr. v. State Bank of India & Anr., where it was held that the rights of an Assignee are no better than those of the Assignor. If the Assignor is a "Related Party," the Assignee also inherits this status. Applying this principle, the Tribunal concluded that the Applicant, as the Assignee of a loan from a Related Party of the Corporate Debtor, is also a "Related Party." The Tribunal also considered the decision in Edelweiss Asset Reconstruction Company Ltd. v. Synergies Dooray Automotive Ltd. & Ors., noting that the facts of the present case were distinguishable. The Tribunal emphasized that the determination of "Related Party" status depends on the specific facts of each case. The Tribunal further referenced the Hon'ble Supreme Court's decision in Arcelormittal India Private Limited v. Satish Kumar Gupta & Ors., which highlighted the importance of a "see through provision" to identify the real individuals or entities in control, thereby preventing ineligible persons from circumventing the provisions of IBC, 2016. Conclusion: The Tribunal concluded that the IRP acted within its powers and followed due process in determining the Applicant's status as a "Related Party." The Applicant failed to challenge the IRP's findings or provide sufficient evidence to rebut the "Related Party" status. Consequently, the Tribunal dismissed the application, upholding the IRP's decision to exclude the Applicant from participating in the CoC meetings. The application was deemed infructuous, and no costs were awarded.
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