TMI Blog2018 (6) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mukhopadhaya And Mr. Bansi Lal Bhat, JJ. For The Appellant : Mr. Jayant K. Mehta, Mr. Ishan Madaan and Mr. Rahul Kukreja, Advocates For The Respondent : Ms. Prita Srikumar Iyer and Mr. Nishanth, Advocates And Mr. Rahul Lal Akhriya and Mr. Raj Dev Singh, Advocate JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. M/s Shah Brothers Ispat Pvt. Ltd. and M/s Ashok Leyland Limited (both Operational Creditors) filed applications before the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench to direct the Resolution Professional to allow them to attend the meeting of Committee of Creditors. Their grievance was though M/s Shah Brothers Ispat Pvt. Ltd. owed operational debt of ₹ 26,44,17,155/- inclusive of interest and M/s Ashok Leyland Limited owed an operational debt of ₹ 15.50 Crores, and total of which is more than 10% of the aggregate of the debt but they have not been given notice to attend the meeting of Committee of Creditors in terms of Section 24(3)(c) of the Insolvency and Bankruptcy Code, 2016 ( I B Code for short). 2. By impugned order dated 16th February, 2018, the Adjudicating Authority allowed the application and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Some of the stakeholders in the memorandum/views furnished before the Committee were of the opinion that whereas operation creditor has right to make application for initiation of corporate insolvency resolution process, operational creditors like workmen, employees, suppliers have not been given any representation in the Committee of Creditors which is pivotal in whole resolution process. In this regard, one of the stakeholders has suggested that Committee of Creditors may contain operational creditors as well, with some thresholds. In this context, while appreciating that the operational creditors are important stakeholders in a company, the Committee took note of the rationale of not including operational creditors in the committee of creditors as indicated in notes on Clause 21 appended with the Bill which states as under:― The committee has to be composed of members who have the capability to assess the commercial viability of the corporate debtor and who are willing to modify the terms of the debt contracts in negotiations between the creditors and the corporate debtor. Operational creditors are typically not able to decide on matters relating to com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7. After deliberations and taking into consideration the Report of the Joint Committee on The Insolvency and Bankruptcy Code, 2015 , the Parliament enacted Insolvency and Bankruptcy Code, 2016 and Section 24 now reads as follows: 24. Meeting of committee of creditors .- ( 1) The members of the committee of creditors may meet in person or by such electronic means as may be specified. ( 2) All meetings of the committee of creditors shall be conducted by the resolution professional. ( 3) The resolution professional shall give notice of each meeting of the committee of creditors to- ( a) members of Committee of creditors; ( b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be; ( c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent of the debt. ( 4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings: Provided that the absence of any such d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Adjudicating Authority . Section 30(5) reads as follows:- 30(5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered: Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor. From the aforesaid provision it is clear that the Resolution Applicant(s) have also been allowed to attend the meeting of the Committee of Creditors in which their resolution plan(s) are considered. 10. Similar issue fell for consideration before this Appellate Tribunal in Rajputana Properties Pvt. Ltd. V/s. Ultra Tech Cement Ltd. Ors. in I.A. No. 594 of 2018 in Company Appeal (AT) (Insolvency) No. 188 of 2018 . This Appellate Tribunal by its order dated 15.05.2018 having noticed the relevant provisions held:- 8. Prima facie, in absence of any information through any source while scrutinizing the resolution plan under Section 30(2), the Resolution Professional cannot hold or decide as to who is ineligible under Section 29A. Section 30(2) does not confer such power to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members of the Committee of Creditors have voting right but others who attend the meeting as noticed above including the Board of Directors, Partners, Operational Creditor(s) and the Resolution Applicant(s) have no voting right. 15. From the aforesaid provisions the intention of the legislature is clear that the Committee of Creditors while approving or rejecting one or other resolution plan should follow such procedure which is transparent. Those who will watching the proceeding such as (suspended) Board of Directors or its Partners; Operational Creditors or its representatives and Resolution Applicant(s) are not mere spectator but may express their views to the Committee of Creditors for coming to conclusion in one or other way.- 16. For the reason aforesaid we are of the view that the Committee of Creditors should record reasons (in short) while approving or rejecting one or other resolution plan. 17. Views, if any, are expressed by the (suspended) Board of Directors or it s Partners; Operational Creditors or its representatives and Resolution Applicant(s), are also required to be taken into consideration by the Committee of Creditors before approving or rej ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
