2024 (10) TMI 400 - AT - IBC

Direction to RP to reconstitute the Committee of Creditors (CoC) after excluding the Appellant and other unsecured Financial Creditors - Appellant qualifies as a 'related party' or not - Appellant's claim as a financial creditor - disbursement of funds - secured creditor - necessity of a forensic audit to investigate the transactions related to the Appellant's claim - HELD THAT - There can be financial debt only when liability or obligation in respect of a claim, which is due from any person. The whole claim of financial debt by the Appellant is based on Deed of Guarantee-cum-indemnity dated 05.08.2022 executed by the Corporate Debtor. Clause 3 of Deed of Guarantee-cum-Indemnity as extracted above contains undertaking of Guarantor to make good the loss of lender, if the borrower fails to repay such amount to lender. Thus, there can be no liability of Guarantor, if principal borrower is not liable. Regulation 8, sub-regulation (2) provides that existence of debt due to the Financial Creditor may be proved based on- (a) the records available with an information utility, if any, or (b) other relevant documents, including the record evidencing that the amounts committed by the Financial Creditor to the Corporate Debtor under a facility has been drawn by the Corporate Debtor. Further, sub-regulation (b) (i) refers to a financial contract supported by financial statements as evidence of the debt. Thus, financial statements need to be brought on record evidencing that amounts committed by Financial Creditor to the Corporate Debtor under a facility has been drawn by the Corporate Debtor, are the statutory prescription for proving the existence of debt. The debt shall become due only when there is liability or obligation in respect of a claim, which is due from any person. Thus, unless the liability or obligation becomes due on the Corporate Debtor, who is liable to pay the debt to the Appellant, it cannot be said that the amount of Rs.195 crores for which facility was sanctioned has become due without disbursement of Rs.195 crores, to enable the RP to admit the claim of Rs.195 crores submitted by the Appellant - When Financial Creditor has not disbursed the amount of Rs.195 crores to the principal borrower, it is failed to see that how against the guarantor, the claim of Rs.195 crores can be admitted. There are no ground to interfere with the impugned order passed in the present Appeal. However, since Adjudicating Authority has directed for transaction audit report, which report was to be received within 60 days, in the facts of present case, the ends of justice will be served in giving liberty to both the parties to file fresh Application about (A)Whether any material comes in the light of transaction audit report based on which Appellant can be held to be related party ? (B)Whether based on transaction audit report, there is any ground by the Appellant to claim itself as Financial Creditor/ secured creditor? The order dated 02.08.2024 passed by National Company Law Tribunal in IA No.2142 of 2023 is not interfered with - appeal disposed off.

Issues Involved:

1. Whether the Appellant qualifies as a 'related party' and its exclusion from the Committee of Creditors (CoC) was justified.
2. Whether the Appellant's claim as a financial creditor was valid, considering the disbursement of funds.
3. Whether the Appellant can be considered a secured creditor.
4. The necessity of a forensic audit to investigate the transactions related to the Appellant's claim.

Detailed Analysis:

1. Related Party Status:

The Adjudicating Authority found the Appellant to be a 'related party' due to its connections with the Corporate Debtor, such as being a guarantor and having financial dealings. However, the Appellate Tribunal noted that the Adjudicating Authority did not specify under which clause of Section 5(24) of the Insolvency and Bankruptcy Code (IBC) the Appellant was considered a related party. The Tribunal decided to proceed on the premise that the Appellant is not a 'related party' but allowed for the possibility of revisiting this issue after the transaction audit report is received.

2. Validity of Financial Creditor Claim:

The Appellant claimed to be a financial creditor based on a Loan Agreement and a Deed of Guarantee-cum-Indemnity. However, the Tribunal found that the actual disbursement to the Corporate Debtor was only Rs.19,43,13,000/-, not the Rs.195 crores claimed. The Tribunal emphasized that a financial debt requires a liability or obligation that is due, which was not the case here as the full loan amount was not disbursed. The Tribunal upheld the Adjudicating Authority's decision to exclude the Appellant from the CoC, as the claim was unsustainable based on the evidence presented.

3. Secured Creditor Status:

The Appellant argued that it should be considered a secured creditor, citing clauses in the Loan Agreement regarding hypothecation of receivables. The Tribunal noted that this issue was not addressed by the Adjudicating Authority and granted the Appellant liberty to file a fresh application to seek recognition as a secured creditor. The Tribunal referenced the Supreme Court case of Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd., which dealt with secured creditor status, but found that the facts of the present case required further examination.

4. Forensic Audit:

The Tribunal supported the Adjudicating Authority's decision to conduct a forensic audit to investigate the transactions related to the Appellant's claim. The audit is expected to provide clarity on the nature of the transactions and whether they were preferential, undervalued, extortionate, or fraudulent. The Tribunal allowed for the possibility of revisiting the Appellant's status as a financial creditor or secured creditor based on the findings of the audit.

Conclusion:

The Tribunal upheld the Adjudicating Authority's order to exclude the Appellant from the CoC and conduct a forensic audit. It provided the Appellant with the opportunity to file fresh applications regarding its status as a related party or secured creditor based on the audit's findings. The Tribunal's decision emphasized the importance of substantiating claims with evidence of actual disbursement and the necessity of adhering to statutory definitions and requirements under the IBC.

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