The expression ‘control’ in Section 29A(c) of the Code symbolizes only the positive control i.e. that the mere power to block special resolutions of a Company cannot amount to control – Telangana State Trade Promotion Corporation Vs. A.P. Gems & Jewellery Park Pvt. Ltd. & Anr. – NCLAT Chennai

Referring the decision of the Hon’ble Supreme Court in Phoenix ARC Pvt. Ltd. V. Spade Financial Services Ltd. & Ors. (2021) ibclaw.in 03 SC at paragraph 71 to 77 and at 1.4 under the caption Related parties – Interpretation in praesenti paragraph 82-96, NCLAT held that it must be borne in mind that the expression ‘control’ in Section 29A(c) of the Code symbolizes only the positive control i.e. that the mere power to block special resolutions of a Company cannot amount to control. In reality, the word ‘control’ juxtaposed with the term ‘management’ means ‘De facto control of actual management or policy decisions that may be or are in reality taken.

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If any Public depositor applies showing due of the debt claiming itself as operational creditor and the Resolution Professional or the Tribunal do not accept the claim on the ground that they are not financial creditor, we allow the appellant to raise the question before the Tribunal and if any adverse decision is given by the Tribunal, it will be open to the appellant to raise the issue before NCLAT- Hind Motors India Ltd. Vs. Adjudicating Authority NCLT, Chandigarh – NCLAT New Delhi

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