Mere fact that one of Director is common in Financial Creditor as well as Corporate Debtor shall not ipso facto lead to prove fulfilment of Sec. 5(24)(h) of IBC | Filing of claim as authorised by the common Director cannot be treated advise, direction or instruction as referred under Sec. 5(24)(h) – ODAT GmbH Vs. CA Santanu Brahma, IRP of Darjeeling Organic Tea Estates Pvt. Ltd. – NCLAT New Delhi
In this important judgment on related party in CoC, Hon’ble NCLAT holds that:
(i) The word ‘a person’ as contained in Sub-clause (h) has to be read as per the definition of ‘person’ under Section 3(23) of the I&B Code. The definition of ‘person’ is an inclusive definition and the Appellant can be held to be a person.
(ii) For applying Section 5(24)(h) it has to be proved that on the advice of Appellant a Director, Partner or Manager of the Corporate Debtor is accustomed to act.
(iii) The mere fact that one of the Director i.e. Rembert Biemond is common in Appellant as well as the Corporate Debtor shall not ipso facto lead to prove fulfilment of Section 5(24)(h). It has to be pleaded and proved that on advise, direction or instruction of the Appellant, a Director, Promoter or Manager of the Corporate Debtor is accustomed to act.
(iv) Filing of the claim before the IRP which is required as per CIRP Regulations, 2016 cannot be treated to be an incident which can be referred to and relied under 5(24)(h).
(v) ODAT-Appellant being Financial Creditor has to file claim in the CIRP. Appellant being a German company has to authorise someone to file the claim and Rembert Biemond authorising one Raju Kumar Singh to file a claim cannot be said to be an act of the Appellant which is covered under Section 5(24)(h).
(vi) When there are more than one Managing Director, functions on behalf of the Appellant can be carried out at least by two Managing Directors. Present is not a case that there is any evidence that two Managing Directors did any action which may suggest or indicate participation in the policy making process of the Corporate Debtor, therefore, finding of the Adjudicating Authority with regard to Section 5(24)(m)(i) is without any basis and cannot be sustained.