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2021 (8) TMI 206 - Tri - Insolvency and BankruptcyInclusion of Respondent No. 2 in the Stakeholders' Consultation Committee as the representative of the shareholders of the Corporate Debtor - Whether the nomination of Respondent No. 2 as representative of Shareholders in class made by the Respondent No. 1/Liquidator is in order and is in terms of the provision of Regulation 31A (3) read with Regulation 31A (4) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016? - HELD THAT:- Whereas on the one hand, the Respondent No. 1/Liquidator has assumed that the 'shareholders' (have) failed to nominate their representative, on the other hand he has duly noted that the Applicant has the nomination support of 03 out of total 05 shareholders. The plea taken by the Liquidator that no nomination was made as the other 2 shareholders having 75% shareholding had not nominated the applicant as their representative does not merit consideration since the Applicant has been the nominee of 03 out of total 05 shareholders (and which was duly communicated by the Applicant vide his email dated 10.02.2021 to the Liquidator) and the other 02 shareholders did not participate in the nomination process directly or indirectly. Further, the Regulation 31A(3) does not prescribe any criteria for nomination in terms of value of shareholding. That from perusal of the Regulation 31A(3), which reads as "The liquidator may facilitate the stakeholders of each class to nominate their representatives for inclusion in the consultation committee", we observe that the said Regulation is silent on both "the criteria as well as process of nomination" of a Representative. However, the Regulation 31A(3) has bestowed a duty on the Liquidator to facilitate the stakeholders of each class to nominate their representatives for inclusion in the SCC. Since the Applicant has been nominated by the majority i.e., 3 out of 5 Shareholders as the Representative of the Shareholders-in-class, which was duly communicated by the Applicant to the Respondent No. 1, the question of applicability of the provision under Regulation 31A(4) did not arise. Therefore, we hold that the nomination of the Respondent No. 2 as to represent Shareholders-in-class in the Stakeholders Consultation Committee of the Corporate Debtor made by the Respondent No. 1/Liquidator is not valid in terms of the provision of Regulation 31A (3) read with Regulation 31A (4) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The nomination of Respondent No. 2 to the Stakeholders Consultation Committee of the Corporate Debtor, made by the Respondent No. 1/Liquidator in terms of Regulation 31A(4) of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, is set aside and the Liquidator is directed to accept the nomination of the Applicant as the Representative of Shareholders-in-class for the purpose of constitution of the Stakeholders Consultation Committee (SCC) of the Corporate Debtor. Application allowed.
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