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2022 (11) TMI 863 - Tri - Insolvency and BankruptcyValidity of order of CoC rejecting the claim -Seeking to release the lawful dues of the Applicant and credit/make payment of TDS for the months of September 2020 and October 2020 towards salary during the CIRP period alongwith interest - scope of Related Party - HELD THAT:- It is an admitted fact that the Applicants were part of suspended board of directors of the Corporate Debtor on the date of initiation of CIRP of the Corporate Debtor and even after initiation of CIRP as they had resigned from the post of directors on 28.10.2021. Thus, in view of Section 5(24) (a) the Applicants fall under the category of related party of the Corporate Debtor. The term related party transaction is not defined under the Code, therefore Section 188 of the Companies Act, 2013 is referred. On reading of Section 188 of the Companies Act, 2013 it is understood that related party transaction includes any contract or arrangement with a related party with respect to availing of any services. Therefore, availing of services from the Applicants would amount to related party transactions. The Code has given ample power to the CoC and one of the powers as provided under Section 28(1) (f) includes to take commercial decision to undertake or not to undertake related party transactions during the CIRP of the Corporate Debtor. Accordingly, the Resolution Professional in various CoC meetings had placed a resolution for payment of salary to the Applicants but the CoC in its commercial decision has rejected the resolution - the decision of COC should not be interfered with, since the Resolution Professional had time and again placed proposal before CoC for payment of salaries to the Applicants and CoC after detailed deliberations rejected the proposal. If in commercial wisdom the CoC has rejected the resolution for payment of salary to the Applicants, the question of reversing the decision cannot be considered. It is noted from the master data available on MCA portal that Applicant No. 1 was holding position of director since 30.11.2018 and Applicant No. 2 & Applicant No. 3 had held position of directors since 07.07.2019. In addition to the post of directors, the Applicant No. 2 & 3 were also holding the post of General Manager-Finance & Accounts and Vice President- Operations since 30.11.2013 & 03.12.2014 respectively and drawing the salaries of Rs. 5,06,452/- p.m. and Rs. 5,45,728/- p.m. This reflects that Applicants had considerable control over the management of affairs of the Corporate Debtor and in view of Section 19 of the Code are bound to extend all assistance and cooperation to the Interim Resolution Professional/Resolution Professional as may be required by him in managing the affairs of the corporate debtor. Application dismissed.
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