Merely because Husband is in Corporate Debtor as Managing Director and his wife is Director in Operational Creditor, will not attract Section 5(24)(d) of IBC, 2016 – Viswaroopa Info Services India Pvt. Ltd. Vs. SITI Visions Digital Media Pvt. Ltd. – NCLT New Delhi Bench Court-II

As per the contention of the Corporate Debtor, the Operational Creditor is its related party because Ms. M. Sujatha, the authorized representative/ Director of the Operational Creditor, and her husband (who is Managing Director of CD) are shareholders of Corporate Debtor Company holding together 9% of equity share capital. The Adjudicating Authority held that both parties have not indicated under which specific Clause of Section 5(24), the Operational Creditor is a related party to Corporate Debtor. Since the Operational Creditor is a Private Limited Company, therefore, we would like to examine the criteria stipulated under Section 5(24)(d) of IBC. Applying Section 5(24) of IBC 2016, on the facts of the case, we found that none of the Directors of the Operational Creditor Company is a Director/Manager in the Corporate Debtor Company. Merely, because one of the Directors i.e., Ms. M. Sujatha in Operational Creditor Company and her husband, who is Managing Director in Corporate Debtor Company who together hold 9% of shares of CD, will not attract Section 5(24) (d) of IBC, 2016.

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