TMI Blog2020 (11) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... ignee of a loan from the Related Party of the Corporate Debtor and by following the principles laid down in the Judgment of the Hon'ble NCLAT, in Pankaj Yadav Anr. [ 2018 (9) TMI 1223 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] as enumerated in para 7, the rights of the 'Assignee' are no better than those of the 'Assignor', the Applicant is stepping into the shoes of the Assignor and thereby takes over the right of the Assignor with the onerous crown, which also includes the disadvantage as found in the Assignment Agreement. Thus, if the Assignor of a debt is a Related Party of the Corporate Debtor, as per the ratio laid down by the Hon'ble NCLAT, the Assignee, who is a third party, is also liable to be held as a Related Party of the Corporate Debtor. This Tribunal is of the considered view that the Applicant being Assignee of the Loan from the Assignor, is also a Related Party of the Corporate Debtor and as such the Application as filed by the Applicant is liable to the dismissed - Application dismissed. - IA/345/2020 in IBA/967/2019 - - - Dated:- 24-7-2020 - Sucharitha R., Member (J) and S. Vijayaraghavan, Member (T) For the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount Claimed Amount Admitted Voting % 1 REC Ltd. 12,77,29,97,091.00 12,77,29,97,091.00 53.39 2 Punjab National Bank 3,73,03,08,082.00 3,37,97,94,238.00 14.13 3 State Bank of India 3,11,28,96,180.00 3,02,28,96,180.00 12.63 4 Indian Bank 92,68,00,742.00 73,15,99,853.00 3.06 5 Syndicate Bank 34,23,34,826.00 34,23,34,826.00 1.43 6 Bank of Baroda 15,99,49,686.00 6,99,49,686.00 0.29 7 Garg Iron and Energy Pvt. Ltd. 73,24,88,381.00 73,24,88,381.00 3.06 8 OPG Power Generation P Ltd. 1,65,69,95,921.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the claims of four Financial Creditors listed in serial No. 7 to 10 will be kept in abeyance and they will not form part of Committee of Creditors till verification is completed. The above four Creditors requested the IRP that they be allowed to attend the proceedings of First CoC pending due diligence to be carried out by the IRP. However, CoC Members objected to this. IRP informed them that their claims were not declined but only kept in abeyance for consideration on merits of facts. Financial Creditors listed in serial No. 7 to 10 vacated the Meeting room. After ensuring that only authorized persons were inside the meeting room, the IRP proceeded with other agenda items. 7. The counsel for the Applicant states that the Applicant has challenged the order of admission of this Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 gone through the typed set of documents and written submissions made by both the parties. 19. The Original Application IBA/967/2019 was filed by the Syndicate Bank on 30.07.2019 against the Corporate Debtor for initiation of Corporate Insolvency and Resolution Process (CIRP). The Syndicate Bank in the Application stated that the loan account of the Corporate Debtor was declared as an NPA on 30.06.2018 when the company has already been declared as an NPA and the Corporate Debtor was in a deep financial crisis, it is surprising as to why the Deed of Assignment was signed between the Corporate Debtor and the Applicant. 20. Thereafter, CIRP was commenced against the Corporate Debtor vide Order dated 27.01.2020. 21. From the counter filed by the Respondent/IR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proceedings by filing an application 30.07.2019 u/s 7 of IBC, 2016. 30. This Applicant by a Deed of Assignment dated 09.05.2019 has taken over the debt. The Applicant is neither a Stressed Asset Company nor a Debt Collector. The reason for the Applicant ought to take this bad loan of the Corporate Debtor and become a Debt Collector of OPG Power Generation Limited is not clear, but rather surprising. 31. It is surprising by the very reading of the Balance Sheet of the Company that the Applicant would have known the status of the Corporate Debtor, as the Banks have declared the loan account of the company as NPA on 30.06.2018. 32. Therefore, the question arises that whether this Deed of Assignment was entered to keep bunch of their men in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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 following the principles laid down in the Judgment of the Hon'ble NCLAT, in Pankaj Yadav Anr. (supra) as enumerated in para 7, the rights of the 'Assignee' are no better than those of the 'Assignor', the Applicant is stepping into the shoes of the Assignor and thereby takes over the right of the Assignor with the onerous crown, which also includes the disadvantage as found in the Assignment Agreement. Thus, if the Assignor of a debt is a Related Party of the Corporate Debtor, as per the ratio laid down by the Hon'ble NCLAT, the Assignee, who is a third party, is also liable to be held as a Related Party of the Corporate Debtor. 36. Interestingly, this Tribunal was confronted with the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, 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 constituent elements that make up such a company. In such cases, the principle laid down in Salomon v. A Salomon and Co. Ltd. [1897] AC 22 will not apply. For it is important to discover in such cases as to who are the real individuals or entities who are acting jointly or in concert, and who have set up such a corporate vehicle for the purpose of submission of a resolution plan. Further, it has held as follows; 57. It is important for the competent authority to see that persons, who are otherwise ineligible and hit by sub-clause (c), do not wriggle out of the proviso to sub-clause (c) by other means, so as to avoid the consequences of the proviso. For this purpose, despite the fact that the relevant time for ..... 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