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TMI Blog2020 (8) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... solvency Resolution Process was at the instance of Respondent No.3, who was allegedly a related party on the date of filing of application as also on the date of admission of such application, fraudulently i.e. with intent to defraud the Appellant being the Sole Secured Financial Creditor of the Corporate Debtor , the Adjudicating Authority should not have abdicated its duty by deferring the decision on application under Section 65 of the I B Code preferred by the Appellant until final hearing despite recording findings and making observations that the provisions of the I B Code had been blatantly infracted by the Interim Resolution Professional by excluding Appellant from the purview of the Committee of Creditors . Admittedly, the Resolution Process has failed to fructify and the Adjudicating Authority is considering the recommendation for liquidation of the Corporate Debtor . It is queer that the pivotal issue remains to be determined while the Corporate Debtor may go into liquidation leaving the Appellant remediless, which would result in great miscarriage of justice. It is for this Appellate Tribunal to step in and ensure that such miscarriage of justice is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AESI Act, 2002. However, the Adjudicating Authority declined to determine the issue raised by the Appellant in terms of the impugned order which is assailed as being illegal and unsustainable. 3. It is contended on behalf of the Appellant that pursuant to the order of admission dated 28th March, 2019, the first Committee of Creditors meeting of the Corporate Debtor was convened on 1st May, 2019 wherein Respondent No.1 was appointed as Resolution Professional and claim of Respondent No.3 (husband of the suspended Director of the Corporate Debtor ) was accepted and he was given voting rights in Committee of Creditors . The Appellant claims to have pointed out the irregularity afterwards as first Committee of Creditors meeting was conducted in its absence. It is submitted that in the second Committee of Creditors meeting convened on 28th May, 2019, Mrs. Archana Thota (related party) had filed a claim and despite acknowledging her status as related party , she had been assigned a share of 42.96%. 4. It is further submitted that the Appellant had filed I.A. No. 461 of 2019 under Section 65 of the I B Code seeking recall of the order of admission and investigation ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs by providing an intimation on 8th May, 2019. 8. It is further submitted that the Appellant did not approve the resolution for giving extension for receiving Expression of Interest as also for extension of the Corporate Insolvency Resolution Process by another 90 days and since the Corporate Insolvency Resolution Process period of 180 days expired and no Resolution Plan was received, the Resolution Professional was left with no option but to recommend liquidation of the Corporate Debtor which is now pending before the Adjudicating Authority. 9. It is contended on behalf of the Respondent No.3 that Mrs. Archana Thota- wife of the Respondent No.3 was Ex-Director of the Corporate Debtor and it is only because of this position that Respondent No.3 advanced loan to the Corporate Debtor . However, Mrs. Archana Thota resigned in November, 2018 which was accepted by the Managing Director on 1st December, 2018. Thus, Mrs. Archana Thota was not a Director of the Corporate Debtor on the date of filing of the application or on the date of admission of the application under Section 7 of the I B Code . 10. It is further submitted that the Corporate Debtor had borrowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the I B Code since Respondent No.3 could not be made a member of the Committee of Creditors as Mrs. Archana Thota was a Director of the Corporate Debtor on the date of admission of application. While deferring the decision to final hearing with regard to the issue of collusion between the Corporate Debtor and related party , the Adjudicating Authority disposed of application with direction to determine the voting share of Financial Creditors including related party / Financial Creditor afresh which was subsequently done. However, the Appellant secured 63.95% voting shares which could not empower it to seek replacement of the Resolution Professional . The voting share was challenged by the Appellant by seeking recall of the order of admission and enquiry which was declined in terms of the impugned order. 14. While it is true that the findings recorded by the Adjudicating Authority did demonstrate the status of Respondent No.3 as a related party - Financial Creditor (Respondent No.3) being Mrs. Archana Thota s Husband while she was a Director on the Board of Directors of the Corporate Debtor , and that the Interim Resolution Professional had ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sustained. This is notwithstanding the fact that the order of admission of application under Section 7 has not been assailed in appeal. Once it was brought to the notice of the Adjudicating Authority that the initiation of the Corporate Insolvency Resolution Process was at the instance of Respondent No.3, who was allegedly a related party on the date of filing of application as also on the date of admission of such application, fraudulently i.e. with intent to defraud the Appellant being the Sole Secured Financial Creditor of the Corporate Debtor , the Adjudicating Authority should not have abdicated its duty by deferring the decision on application under Section 65 of the I B Code preferred by the Appellant until final hearing despite recording findings and making observations that the provisions of the I B Code had been blatantly infracted by the Interim Resolution Professional by excluding Appellant from the purview of the Committee of Creditors . Admittedly, the Resolution Process has failed to fructify and the Adjudicating Authority is considering the recommendation for liquidation of the Corporate Debtor . It is queer that the pivotal issue remains to be dete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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