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2019 (1) TMI 1800 - AT - Insolvency and BankruptcyCIRP process - related party - exclusion from participation in CoC - whether Appellants Spade Financial Services Limited, and it's wholly-owned subsidiary AAA Landmark Private limited are a related party to the corporate debtor AKME Projects Ltd.? - Section 5(24) and Section 21(2) Insolvency and Bankruptcy Code, 2016? - HELD THAT:- The close relationship of the key managerial person of the Corporate Debtor (Mr Anil Nanda) and Appellant (Mr Arun Anand) is quintessential. Based on the claim forms of the appellants, signed by Mr Arun Anand and the documents filed before the Adjudicating Authority, it is evident that Mr Arun Anand (Director of the Appellants) worked for Mr Anil Nanda, Corporate Debtor) for over 25 years and purported transactions from 2010 to 2013 were entered into vide Mr Arun Anand, who had worked as an employee for Escorts Limited/Nanda Group of Companies specifically Mr Anil Nanda including AKME Projects Limited the Corporate Debtor, and also held Key Managerial roles in the companies. On perusal of the letter 25.10.2012, issued by Appellant No 2 to the corporate debtor, it is evident that Agreement Dt 25th Oct 2012 was merely a camouflage, and the Appellant No2 and corporate debtor AKME were partners in developing the project to be sold to third party for profit. Therefore the Appellant No 2 is Related Party to the corporate debtor in terms of Sec 5(24)(a) of the I& B Code 2016 - Thus, Appellant, No 2 is a related party to the corporate debtor in terms of Sec 5(24)(a) of the Insolvency and Bankruptcy Code 2016. On perusal of the documents filed by the parties, it is also apparent that AKME Projects Ltd, i.e. Corporate Debtor, promoted by Sri Arun Anand and his son Mr Aditya Anand, being majority shareholder therein. The Arun Anand and his family members, i.e. his wife, his son and daughter are the majority shareholder in the Appellant SPADE Financial Services. The said Mr Arun Anand, Ms Renu Anand and Ms Gayatree Anand are the directors of the Appellant SPADE, while Appellant No 2, AAA Landmark is wholly owned subsidiary of it - Admittedly in the present case, ICD worth ₹ 26,55,00,000 was provided by Appellant No 1 SPADE to the corporate Debtor AKME bearing interest of 24%.No date is given when the ICD was given to the corporate debtor. It is mentioned that First ICD was given to the Corporate Debtor in mid of 2009, whereas MOU Dt 12.8.2001 shows that ICD were given by the Appellants when Appellant No 1 was a consultant to the corporate debtor. Thus it is clear that on the advice, directions or instructions of the Appellants, a director, partner or manager of the corporate debtor is accustomed to act. Therefore the Appellants are related party to the corporate debtor in terms of Sec 5(24)(h) of the Code. The Adjudicating Authority has rightly excluded the Spade Financial Services Private Limited and AAA Landmark Private Limited for participation in Committee of Creditors - there are no reason to interfere in the order passed by the Learned Adjudicating Authority - appeal dismissed.
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