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TMI Blog2020 (11) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... ther CoC meeting till such time as the Applicant is once again included in the CoC, be quashed; 3). INTERIM STAY of operation and functioning of the Committee of Creditors pending disposal of the main application and/or till such time the applicant is included in the CoC". 2. The counsel for the Applicant submits that the Corporate Debtor was sanctioned a loan to the tune of Rs. 100 Crores from M/s. Gita Power & Infrastructure Private Limited ("Gita Power"') through a working capital facility agreement dated 30.03.2016 ("WC Agreement"). The Corporate Debtor availed a loan to the tune of Rs. 95,70,50,029/- Thereafter, this Applicant by a Deed of Assignment dated 09.05.2019 took over the loan from "Gita Power". 3. The counsel for the Applicant stated that vide order of this Tribunal dated 27.01.2020, CIRP of the Corporate Debtor commenced, the IRP made a public announcement on 30.01.2020. Based on this, the Applicant submitted the claim application to the IRP/Respondent. 4. The Respondent/IRP had accepted the claim and vide notice dated 22.01.2020, had invited the Applicant to participate in the first meeting of the CoC. The meeting was held on 26.02.2020. The Applicant part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related parties of the Corporate Debtor and the assignment transactions made by them in favour of Financial Creditors listed in serial No. 7, 9 and 10 during the past one year required detailed due diligence. Banks informed that they have enough documents to prove that OPGRG and GPIPL are Related Parties. IRP requested the Bankers to provide documentary evidence available with them in this regard. The CoC requested the IRP to carry out detailed due diligence of the claim filed by Financial Creditors at serial No. 7 to 10 and their inclusion in the Committee of Creditors be kept in abeyance till it is established that they are not related parties. When the objections were raised by the Financial Creditors 1 to 6, the four Financial Creditors listed in 7 to 10 could not defy the objections or provide any evidence to disprove the above statement made by Financial Creditors during the Meeting. In view of the above facts brought to the notice of the IRP by Financial Creditors listed in 1 to 6 who stated that as per records of the Consortium Bankers they are related parties and considering that the assignment transactions were recent, effected in April - May 2019, the IRP declared that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors pending investigation of the same, it is important to keep the Applicant out of the CoC meeting. It was also due to the failure by the Applicant to provide true and complete information of the account, needed to ensure proper assessment based on such information that warranted the suspension of the Applicant during the proceedings of the CoC meeting held on 26.02.2020. 14. The Respondent/IRP had sent various e-mails dated 02.03.2020, 12.03.2020 and 24.03.2020 and also received reply on 01.04.2020 from the Applicant. 15. The Respondent/IRP states that the Applicant obtained this loan under the Deed of Assignment Cum Novation dated 09.05.2019 from "Gita Power" and "Gita Power" holds 51% of the shareholding of the Corporate Debtor. 16. By letter dated 27.04.2020, the Respondent/IRP has held that this Applicant is a "Related Party" to the Corporate Debtor. 17. Further the counsel for the Respondent/IRP states that clarification was sought from the Applicant, the Applicant did not submit the clarifications/documents sought for and the Applicant has also not challenged the decisions of the IRP holding the Applicant as a "Related Party". 18. We have heard both the counsels and g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty". 26. The Applicant has not challenged the letter dated 27.04.2020 and has also not questioned the conclusion of the IRP that it is a "Related Party". No arguments or documents were filed by the Applicant to satisfy that he is not a "Related Party" to the Corporate Debtor. 27. The Application dated 15.05.2020 was sent by an e-mail dated 17.05.2020 with an urgent application to hear the matter during the lock down period. Immediately the matter was listed for hearing on 22.05.2020. However, this matter was listed before Court-I of NCLT, Chennai. The Hon'ble Judicial member recused from hearing this matter. Hence the matter was placed before Hon'ble President for transfer. By order dated 01.06.2020, the matter was transferred to this Bench. 28. In the meanwhile, the Applicant has initiated Civil Revision Petition (CRP) No. 1123/2020 before the Hon'ble High Court of Judicature at Madras. We do not have the details of the CRP proceedings, neither any orders nor the status of the CRP proceedings, were placed before us. 29. The Corporate Debtor was already under severe financial crisis. Hence, one of the Financial Creditor namely Syndicate Bank has initiated proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an 'issuer'. Undisputedly, the assignment is the transfer of one's right to recover the debt of another person as a contractual right. Rights of an 'assignee' are no better than those of the 'assignor'. It can be, therefore, held that 'assignor' assigns its debt in favour of the 'assignee' and 'assignee' steps in the shoes of the 'assignor'. The 'assignee' thereby takes over the right as it actually did and also takes over all the disadvantages by virtue of such assignment. 8. What cannot be achieved directly by Mr. Sudhakar Mulay, he did it indirectly assigning his debt in favour of the 1st appellant. Mr. Sudhakar Mulay being the 'related party', with the assignment of 'debt', the disadvantage also goes to the 1st appellant. For the reasons aforesaid, we hold that the issue has been rightly decided by the Adjudicating Authority and no ground has been made out to interfere with the impugned order. In absence of any merit, the appeal is dismissed. No cost". 35. As to the present case, it is seen that the Applicant was the Assignee of a loan from the Related Party of the Corporate Debtor and by f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party issue in relation to the submission of a Resolution Plan, has held that provisions of Related Party in IBC, 2016 is a typical instance of a see through provision and stated as follows; "29. The opening lines of Section 29A of the Amendment Act refer to a de facto as opposed to a de jure position of the persons mentioned therein. This is a typical instance of a "see through provision", so that one is able to arrive at persons who are actually in "control", whether jointly, or in concert, with other persons. A wooden, literal, interpretation would obviously not permit a tearing of the corporate veil when it comes to the "person" whose eligibility is to be gone into. However, a purposeful and contextual interpretation, such as is the felt necessity of interpretation of such a provision as Section 29A, alone governs. For example, it is well settled that a shareholder is a separate legal entity from the company in which he holds shares. This may be true generally speaking, but when it comes to a corporate vehicle that is set up for the purpose of submission of a resolution plan, it is not only permissible but imperative for the competent authority to find out as to who are the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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