CoC-Decision, Meeting & Voting of CoC

Can Assignee be treated as non-related party and voted in CoC meetings when Financial Debt transferred by related party Financial Creditor on an arm-length transaction during ongoing CIRP – Peanence Commercial Pvt. Ltd. and Anr. Vs. Mamta Binani, RP for Rolta India Ltd. – NCLAT New Delhi

In this case, Rolta Pvt. Ltd. entered into MoU with Peanence Commercial Pvt. Ltd. for assignment of debt for a one-time consideration. It was argued that the Assignment for consideration of Rs.50 Crore is an arm-length transaction and Peanence Commercial Pvt. Ltd. is not a related party to the Corporate Debtor nor there is any disqualification attached to the Assignee to be part of the Committee of Creditors.
Hon’ble NCLAT held that:

(i) Present is a case where in fact no assignment has taken place. What is entered between the parties is agreement for assignment that is contingent on approval by the Resolution Professional that Assignee will be given a seat in the CoC.
(ii) The Adjudicating Authority has rightly noticed the judgment of the Hon’ble Supreme Court in Phoenix ARC Pvt. Ltd. vs. Spade Financial Services Ltd. & Ors. (2021) ibclaw.in 03 SC.
(iii) At this stage, the Assignment Agreement which has been entered by the parties and has been communicated to the Resolution Professional, clearly indicates that Rolta Pvt. Ltd. is trying to bring its Assignee to create hurdles and delay in the CIRP of the Corporate Debtor.

Can Assignee be treated as non-related party and voted in CoC meetings when Financial Debt transferred by related party Financial Creditor on an arm-length transaction during ongoing CIRP – Peanence Commercial Pvt. Ltd. and Anr. Vs. Mamta Binani, RP for Rolta India Ltd. – NCLAT New Delhi Read Post »

Voting as contemplated in Section 25A(3A) of IBC is not to be applied when an application under Sec. 12A is to be considered which requires 90% vote shares of the CoC (Homebuyers) – Vijay Saini Vs. Shri Devender Singh and Ors. – NCLAT New Delhi

In this case, Adjudicating Authority held that the Resolution Professional ought to have followed the method prescribed under sub-section 3A of Section 25A and come to a conclusion that since more than 50% of the voting has been done in favour of 12A proposal, he should have taken it as 100% since the Financial Creditor have to be treated as a class.

Hon’ble NCLAT holds that:

(i) The voting under sub-section (3A) which is to be cast by Authorised Representative is to be on the basis of vote of more than 50% of the voting share of the Financial Creditor in a class but the said provision of sub-section (3A) was subject to the proviso which proviso created a different voting pattern for 12A.
(ii) For computing voting with regard to 12A proposal, the voting has to be computed as per Section 25A (3A) proviso r/w Section 25A(3). As per Section 25A(3), if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each financial creditor in accordance with instructions received from each financial creditor, to the extent of his voting share.
(iii) When the statute i.e. Section 12A provides 90% voting for approval of Section 12A proposal, 90% of the voting share of the creditor in class have to be taken into consideration.
(iv) Since voting by each homebuyers who represented creditor in class has to be computed as per his voting share and adding all vote shares of the creditor in class with any other Financial Creditor if it is at least up to 90% only then 12A proposal is held to be passed.
(v) The present is a case where the Resolution Professional is required to conduct the proceeding of the CoC according to the IBC and take a decision on the result of voting. There can be no question of Resolution Professional taking, in the present case, any sides. In so far as computation of votes is concerned, the Resolution Professional is required to compute the votes as per the statute. Hence, the judgment of the Hon’ble Supreme Court in Regen Powertech Private Limited vs. Giriraj Enterprises & Anr. (2023) ibclaw.in 111 SC which was in the facts of the said case cannot be said to be applicable in the present set of facts.

Voting as contemplated in Section 25A(3A) of IBC is not to be applied when an application under Sec. 12A is to be considered which requires 90% vote shares of the CoC (Homebuyers) – Vijay Saini Vs. Shri Devender Singh and Ors. – NCLAT New Delhi Read Post »

Resolution Professional shall give notice of each meeting of CoC as per CIRP Regulation 19(2) even in case of adjournment of meeting where agenda modified | Reasons should be recorded in writing in case any reduction of notice time limit – Mr. Farooq Ali Khan v. Punjab National Bank – Karnataka High Court

In this case, on 11-02-2020 at 12.20 pm an e-mail is sent communicating that the second meeting of 19th CoC which was sought to be adjourned on 10-02-2020 is scheduled on the same day i.e., 11-02-2020 at 3.00 p.m.

Hon’ble High Court held that:
(i) Section 24(3) mandates that the Resolution professional shall give notice of each meeting of the CoC. The section does not depict the manner in which notice should be given. It only indicates that notice shall be given of each meeting to the CoC. In the considered view of this Court, ‘each’ would mean each and every.
(ii) The time limit for issuance of notice of meeting was reducible to 24 hours. This should be in the considered view of the Court, for reasons to be recorded in writing, as the words used are ‘as it deems fit’.
(iii) This Court, in exercise of its jurisdiction under Article 226 of the Constitution of India would not enter into venturing a fact finding enquiry to examine whether the resolution professional has acted in accordance with the duties and responsibilities under the Act.
(iv) Reserve liberty to the petitioner to submit a representation/complaint before the Board within a fortnight from the date of receipt of the copy of this order and if such a complaint is received, the Board would decide the issue, in accordance with law.
(v) The CoC shall reconsider the restructuring proposal submitted on behalf of the petitioner in terms of Section 12A of the Code.

Resolution Professional shall give notice of each meeting of CoC as per CIRP Regulation 19(2) even in case of adjournment of meeting where agenda modified | Reasons should be recorded in writing in case any reduction of notice time limit – Mr. Farooq Ali Khan v. Punjab National Bank – Karnataka High Court Read Post »

Can a single person CoC approve Resolution Plan? – Jaykay Enterprises Ltd. Vs. National Oil Company Ltd. – NCLT Kolkata Bench

In this important judgment, NCLT Kolkata Bench held that:

(i) The right regarding the land has not been defined, and it is not under our jurisdiction to decide upon the matter.
(ii) The Resolution Professional is in no fault at not providing the information provided in the Information Memorandum to the application as the Applicant is not a member of the Committee of Creditors or a prospective Resolution Applicant, hence it is not entitled to the Information Memorandum.
(iii) The word “Committee” has not been defined in the Part 1 or Part 2 of the Code which deals with Insolvency Resolution and Liquidation for Corporate Persons.
(iv) There can be no meeting when a single person represents CoC (since other persons who attended are only invitees in this case and they don’t form part of CoC) and consequently, “meeting” cannot been held as contemplated under Section 24 of the Code.
(v) There can be no two view that stake holders in a CIRP process is not restricted only to financial and operational creditors.
(vi) A decision to approve the resolution plan by the CoC should be in a validly convened and conducted CoC meeting.
(vii) The resolution plan is sent back to the CoC.
(viii) Once the Resolution Plan is approved by the Adjudicating Authority, then it will no more be a confidential document.
(ix) The Workers’ Union have no locus standi to question the assignment of a debt by Bank.

Can a single person CoC approve Resolution Plan? – Jaykay Enterprises Ltd. Vs. National Oil Company Ltd. – NCLT Kolkata Bench Read Post »

There is no concept of dissenting homebuyers within Creditors in class – Mrs. Taruna Suhas Saraph Vs. Mr. Dyaneshwar Chaudhari (Suspended Director) – NCLT Mumbai Bench

NCLT Mumbai Bench held that Home Buyers can vote for or against the Plan only as a class and if there are some Home Buyers pitted against the Resolution Plan, who are otherwise in minority, they have absolutely no locus to oppose the Plan in the capacity of dissatisfied or dissenting Home Buyers. It is also abundantly clear that such dissenting minority segment within the class of Home Buyers cannot arrogate themselves to be dissenting Financial Creditors.

There is no concept of dissenting homebuyers within Creditors in class – Mrs. Taruna Suhas Saraph Vs. Mr. Dyaneshwar Chaudhari (Suspended Director) – NCLT Mumbai Bench Read Post »

Once the majority of CoC decide on one of Resolution Plan, the decision of the CoC attains finality, Unsuccessful Resolution Applicant has no locus to challenge the commercial decision of the CoC – G. S. Constructions Vs. Mr. Gajesh Labhchand Jain – NCLT Mumbai Bench

NCLT Mumbai Bench held that:
(i) Once the majority of CoC decide on one of the Resolution Plan, the decision of the CoC attains finality.
(ii) Since the CoC comprising of SIDBI and the home buyers approved the Resolution Plan presented by Mrs. Asha Sanap, the Unsuccessful Resolution Applicant has no locus to challenge the commercial decision of the CoC.
(iii) The Applicant who himself was Prospective Resolution Applicant had submitted its Resolution Plan. At no stage, the Applicant challenged the constitution of the CoC. The Applicant is seeking relief to set aside and quash the CoC only after his plan not approved with the requisite voting of the CoC.

Once the majority of CoC decide on one of Resolution Plan, the decision of the CoC attains finality, Unsuccessful Resolution Applicant has no locus to challenge the commercial decision of the CoC – G. S. Constructions Vs. Mr. Gajesh Labhchand Jain – NCLT Mumbai Bench Read Post »

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