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TMI Blog2022 (11) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... claim on 08.11.2021 as Financial Creditor. (iii) The first Meeting of Committee of Creditors ("CoC") was held on 24.11.2021, in which meeting the Appellant was invited to participate as Member of CoC on the strength of his claim. In the Minutes of the Meeting dated 24.11.2021, an objection was raised by a Member of CoC that Appellant being 'related party' cannot be part of the CoC. (iv) On same day, i.e., 24.11.2021, an email was sent by IRP to the Appellant asking clarification, to which no reply was submitted. (v) On next day, i.e., 25.11.2021, IA No.5535 of 2021 was filed by IRP seeking direction to take action against the Appellant Company under Section 235A of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "Code") for making willful and false disclosure and concealment of facts in Claim Form-C. (vi) On 29.11.2021, an email was sent by IRP to the Appellant holding the Appellant as a 'related party' to the Corporate Debtor on the basis of objection raised by Punjab National Bank in the CoC meeting. (vii) The Resolution Plan was approved by the CoC on 04.05.2022. On 06.05.2022, an IA was filed by the Appellant being IA No.2325 of 2022 seeking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeds to be considered in this Appeal is as to whether the Appellant is a 'related party' of the Corporate Debtor? Section 5(24) defines 'related party. Section 5(24)(i) on which reliance has been placed is as follows: "5(24)(i) a body corporate which is a holding, subsidiary or an associate company of the corporate debtor, or a subsidiary of a holding company to which the corporate debtor is a subsidiary". 8. One of the entities, which is covered under sub-clause (i) is "associate company of the corporate debtor". Associate Company has been defined in Section 2(6) of the Companies Act, 2013, which is as follows: "2(6) ―associate company, in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company." 9. Section 2, sub-section (6) specifically notices the Joint Venture Company, when it uses expression "includes a joint venture company". 10. Memorandum of Understanding, which is admittedly executed between the parties on 26.11.2012, i.e., between the Appellant and the Corporate Debtor. The MoU provides "AND WHEREAS the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner". 12. The 'control' as envisaged under Section 2(27), participation in the policy decision is also indica of control. The expression 'control' came to be considered by the Hon'ble Supreme Court in Arcelormittal India Pvt. Ltd. vs. Satish Kumar Gupta and Ors. - (2019) 2 SCC 1. In paragraph 50 of the judgment, following has been observed: "50. The expression "control" is therefore defined in two parts. The first part refers to de jure control, which includes the right to appoint a majority of the Directors of a company. The second part refers to de facto control. So long as a person or persons acting in concert, directly or indirectly, can positively influence, in any manner, management or policy decisions, they could be said to be "in control". A management decision is a decision to be taken as to how the corporate body is to be run in its day-to-day affairs. A policy decision would be a decision that would be beyond running day-to-day affairs i.e. long-term decisions. So long as management or policy decisions can be, or are in fact, taken by virtue of shareholding, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e where IRP has suo-moto changed its decision. The IRP has corrected its earlier decision of admitting the claim of Financial Creditor by changing the category of Appellant as related Financial Creditor. 16. The learned Counsel for the Appellant relied on judgment of this Tribunal in Rajesh Jain vs. Manoj Kumar Singh-IRP & Ors - (2020) SCC OnLine NCLAT 824, wherein in paragraph 26, 27 and 38, following has been held: "26. The above contention of the Resolution Professional is not acceptable. The IRP after collation of Claims and formation of 'Committee of Creditors' was not entitled to suo-moto review or change the status of a creditor from Financial to Operational Creditor. Updating list and review are different acts. If Resolution Professional was aggrieved, he should have moved the Adjudicating Authority. The aggrieved person can challenge either constitution of 'Committee of Creditors' or for any grievance against rejection, incorrect acceptance or categorisation of creditors before the Adjudicating Authority. But the Resolution Professional cannot arbitrarily on its own overturn earlier decision, to change the status of a creditor from Financial Creditor to Operational Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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