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2020 (12) TMI 1293 - Tri - Insolvency and BankruptcySeeking order from this Tribunal to direct the respondent No. 2 to consider it as a ‘Financial Creditor’ - CIRP proceedings going on - related party or not - Applicants’ main grievance is that they have not been made part of the CoC as they have been considered as “related party” nor their amount invested with the Corporate Debtor is being considered as Financial Debt and, therefore, they have been denied proportionate voting in the Corporate Debtor Company - demand for a Forensic Audit of the Corporate Debtor Company. HELD THAT:- The Bench has no hesitation in accepting the fact that together the Applicants hold about 48% shareholding of the Corporate Debtor and Applicants No. 2 and 3 are shareholders with shareholding of more than 3% each and also were Directors of the Company and now suspended Directors of the Company. They were not only the Directors but also in control of the affairs of the Company. This Bench therefore concludes that the Applicants are “Related Party” in terms of Section 5(24)(a) and also in terms of Section 5(24)(m)(i) - The Applicants were not only the directors of the Company and covered squarely under Section 5(24)(a) of the Code but they were also managing the day-to-day affairs of the Company as per their own submissions and therefore, they are perfectly covered under Section 5(24)(m)(i) of the Code. The Bench has no doubt in its mind that the Applicants were aware of this fact and it is for this reason that the Applicant No. 2, as brought out by the Resolution Professional, has attended the CoC meeting held on 24.06.2020 (1st CoC meeting) as well as the 2nd CoC meeting held on 12.09.2020, as “Suspended Director” of the Company. The claim amount which the Applicants want to be treated as “Financial Debt” - HELD THAT:- The Bench is of the considered view that the payments given, as per MoU dated 10.12.2018, is only for acquisition of shares and not as financial debt - This Bench is aware of the fact that the sum of ₹ 50 Lakhs was paid by the Applicant on behalf of the Corporate Debtor to SIDBI. It has been paid to SIDBI towards settlement of dues of M/s E & G Global Estates Limited. The relevant Para of this letter of October 2019 mentions that “we will pay token amount of ₹ 50 Lakhs towards as token amount for settlement of case of ₹ 4 crores filed by SIDBI against M/s. E & G Global Estates Ltd.”. The Bench notes, subsequently ₹ 50 Lakhs was paid directly by the Applicants to SIDBI on behalf of the Corporate Debtor. This Bench, therefore, have no doubt in its mind that any money given to the Corporate Debtor by the Applicants was only and only for the purpose of acquisition of the Company by way of incremental purchase of shares and not a “financial debt”. This Bench is also clear, as has been demonstrated in the other paragraphs, that the set of the Applicants are “related party”, therefore, have no business to be the part of the CoC. The Resolution Professional has rightly taken them as suspended directors of the Company. Prayer to conduct the forensic audit of the Corporate Debtor Company - HELD THAT:- The Resolution Professional mentions that a forensic audit has already being conducted by M/s. Mazars Business Advisors Pvt. Ltd. and that the Auditors would be submitting their reports in next two months‟ time. Other prayers of the Applicants, regarding the existing CoC, be quashed as it is of no consequence and cannot be considered. Application dismissed.
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