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TMI Blog2018 (9) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets. If these kind of applications are entertained, it is difficult for the RPs as well as COC to complete the process within the time lines given under the Code. Notwithstanding the timelines, since we have not found any merit in this application moved by the suspended director, this application is disposed of with the directions below. This Application is hereby disposed of giving liberty to this applicant to attend the COC meetings but not to insist upon the COC or the Resolution Professional to provide information which is considered as confidential by the Resolution Professional or the COC. - MA NO. 518/2018 And CP (IB) Nos. 1371 And 1372 (MB)/2017 - - - Dated:- 1-8-2018 - MR B. S. V. PRAKASH KUMAR, MEMBER (JUDICIAL) AND MR RAVIKUMAR DURAISAMY, MEMBER (TECHNICAL) For The Applicant : Mustafa Doctor, Sr. Counsel For The Respondent : Dhananjay Kumar, Anush Mathkar, and Nakul Sachdeva ORDER B.S.V. Prakash Kumar, Judicial Member It's an MA taken out by one of the suspended Directors of the Corporate Debtor namely Mr. Vijay Kumar Jain seeking an order for setting aside the decision taken by the Committee of Creditors (CoC) on 28.5.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory Rights. For his rights being violated by the RP as well as the CoC, the applicant says he is constrained to file this application to have not only access to the meetings but also to receive all the documents upon which the CoC takes a call. 4. When the applicant mentioned this MA 518/2018, this Bench, on hearing both sides, passed an interim order on the consent given by the Counsel appearing on behalf of the RP stating that the applicant is at liberty to attend the CoC meetings as before and also at liberty to place his views before CoC and it will record views of him in respect to any resolution plan that comes for discussion. In view thereof, it appears that this applicant has started attending to the CoC meetings till date. Though this interim order was passed on 11.6.2018, mentioning that orders would be passed on 5.7.2018, in view of further developments, oral arguments of either side were heard subsequent to this order, therefore, the following order has been passed on the submissions made by either side. 5. The applicant Counsel submits that Section 24 of the Code mandates that the RP shall give notice of each meeting of the Committee of Creditors to the Suspende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to participate in the meetings of the CoC, but not to share any information in respect to resolution plans with the suspended Board of Directors. As to ANG Industries supra the Counsel of RP submits that the question framed by the Hon'ble NCLAT in the aforesaid judgment is in relation to giving notice of meetings of CoC to the Operational Creditors but not in relation to sharing of documents with the participants at the meeting. The Counsel further submits that the purpose of allowing suspended Board of Directors to attend the meetings of the CoC is to enable them to assess the commercial viability. 12. The Counsel of RP has further referred to Clause 24 of Insolvency and Bankruptcy Bill, 2015 to say that the objective of allowing the directors to attend the meetings of the CoC is to seek information from the directors to assess the financial position of the Corporate Debtor and also to prepare resolution plan, 13. With these submissions, the Counsel on behalf of RP (R1) submits that since the CoC has already allowed this applicant to attend each of the CoC meetings and for the same being in compliance of the objective of the Code, this application shall be dismissed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tend CoC meetings with all necessary information to enable their participation in the meetings. 19. As per Section 24 of IBC, 2016, the suspended Board of Directors are also entitled to receive notice of each meeting of CoC, the text of Section 24 is as follows: 24. Meeting of committee of creditors: - (1) The members of the committee of creditors may meet in person or by such electronic means as may be specified. (2) All meetings of the committee of creditors shall be conducted by the resolution professional. (3) The resolution professional shall give notice of each meeting of the committee of creditors to- (a) members of Committee of creditors; (b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be; (c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent, of the debt. (4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings: Provided that the absence of any su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at the meeting; (ii) a list of the issues to be voted upon at the meeting; and (iii) copies of all documents relevant to the matters to be discussed and the issues to be voted upon at the meeting; and (b) state that a vote of the members of the committee shall not be taken at the meeting unless all members are present at such meeting. (4) The notice of the meeting shall- (a) state the process and manner for voting by electronic means and the time schedule, including the time period during which the votes may be cast: (b) provide the login ID and the details of a facility for generating password and for keeping security and casting of vote in a secure manner; and 14(c) provide contact details of the person who will address the queries connected with the electronic voting. 22. In this Regulation, it is envisaged that copies of all documents relevant to the matters to be discussed and the issues to be voted upon in the meeting shall be provided to all the participants enabling them to participate through video conference and audio and visual means. 23. When it comes to the Chapter dealing with resolution plan in the Regulations, in Regulation 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorised by the Committee to attend the meeting. 26. As per this Code as well as the CIRP Regulations, either the suspended directors or any other person other than CoC will not be called as members, they are defined as participants therefore, wherever participants are entitled to get information, this suspended Board of Directors are equally entitled to get the same, in the event where disclosure is limited to the members alone, such information need not be given to the participants, other than CoC. 27. It is true that Section 24 as well as Regulation 21 indicates that notice has to be given to the suspended directors as well, in the Regulation 21 it has been further detailed that participants are entitled to copies of all documents relevant to the matters to be discussed in the meeting of CoC. 28. Whereas when it has come to resolution plan in Regulation 35, it has been categorically mentioned that the resolution professional shall provide the fair value and liquidation value to the members alone, that too after taking confidentiality undertaking from such members. It has not been mentioned anywhere that this resolution plan or the valuations as mentioned above can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of the directors. 32. It has not been said by him anywhere in the application that the CoC or the RP fraudulently acting with an intention to cause loss to the suspended directors. To my knowledge, it appears that this applicant intended to rake up this issue on the ground that the Resolution Professional has violated the provision of law in providing documents to the applicant perhaps with a view to delay the proceedings. 33. Normally, when a person comes before any court of law, the court will look into as to what grievance the complainant has before the court, here the grievance of this applicant is violation of the procedure laid under Code. We have already stated that providing resolution plan and the liquidation value and the fair value under Regulation is limited to the members, not to the participants. When such is the case, we believe that other participants as of right not entitled to have such disclosure to them. Moreover, it has to be seen by court of law, by such violation what is the loss the applicant sustains in violation of a provision of law. 34. Here, no issue has been raised by this applicant/director that he would sustain some loss by virtue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the RP has been violating the provisions of law therefore, this Adjudicating Authority shall declare holding of meetings, receiving resolution plans to be declared as null and void. 39. It has been further said in Section 24(4) as Provided that the absence of any such director, partner or representative of operational creditors, as the case may be, shall not invalidate proceedings of such meeting. This clearly indicates that their absence will not make any material difference to the proceedings of CoC meetings, therefore they cannot make everything mandate upon CoC that unless Resolution Plan is given, meeting should not happen and meeting should be held as invalid, I believe it is only directory and no doubt if the interest of the promoter directors is jeopardised by the decision of the CoC, then he may have grievance, no such grievance, I have perceived, being caused to this applicant. 40. To cut it short, what appears to us is that this applicant/Director wants to delay these proceedings by projecting this as violation to the rights of this applicant. Assuming violation of provision has happened, then also the Applicant has to show not only violation of some provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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