9911796707
TMI Blog2022 (11) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, the Adjudicating Authority had held the application filed by the present Appellant/Financial Creditor against the Interim Resolution Professional ('IRP' in short) for their non-inclusion in the Committee of Creditors ('CoC' in short) as infructuous. Aggrieved by this impugned order, the present appeal has been filed by the Appellant, inter-alia, for the reason of the Adjudicating Authority having not set aside the decisions taken by the CoC in respect of Corporate Insolvency Resolution Process ('CIRP' in short) initiated against the Corporate Debtor. 2. The brief facts of the case necessary to be noticed for deciding the appeal are: On a Section 9 application filed by the Operational Creditor-M/s Aadi Best Consortium Private Limited, the Corporate Debtor was admitted for CIRP vide orders of the Adjudicating Authority in CP(IB)-708 (ND) 2021 dated 31.03.2022. Vide this order, the Adjudicating Authority had appointed an IRP to take steps under IBC for completion of CIRP of the Corporate Debtor. In terms of Section 18(1) (c) of the IBC, the IRP made a public announcement under Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the IRP on 27.04.2022 stating that since the complete book of accounts had not been received from the Corporate Debtor, the verification process is not completed and would be verified only after receipt of the documents/information from the Corporate Debtor. 4. The Learned Counsel for the Appellant has further submitted that without verifying any claim including their claim, the IRP illegally constituted the CoC and filed a report before the Adjudicating Authority and convened the first meeting of the CoC on 28.04.2022 without including the Appellant in the CoC. The Learned Counsel for the Appellant referred to the minutes of the first CoC meeting on Agenda Item No. A3 at page 292 of the Appeal Paper Book ('APB' in short) in which it is clearly recorded that the IRP had informed the CoC that all claims have been accepted provisionally as papers/documents from the Corporate Debtor are yet to be received. That being the case, the Learned Counsel for the Appellant expressed surprise as to why the Appellant was kept out of the CoC by the IRP on the ground that his claims were not yet verified at a time when none of the other claims were verified either. 5. Quite apart from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as their claims were found complete in all respect. Since Regulation 17(1) of the CIRP Regulations mandated the IRP to constitute the CoC within 2 days of the verification of the claims, it has been submitted that the IRP filed an application bearing IA No. 2188/2022 on 19.04.2022 before Adjudicating Authority with a Report certifying constitution of CoC. This Report was taken on record by Adjudicating Authority vide order dated 29.04.2022. Further in compliance of Regulation 19(3) of CIRP Regulations, the notice and agenda of the first CoC was circulated on 22.04.2022 and the first CoC meeting convened on 28.04.2022 and the meeting did not suffer from quorum infirmity in terms of Regulation 22 of CIRP Regulations. 8. Refuting the submissions made by the Appellant regarding their wrongful exclusion from CoC, it has been contended that the claim of the Appellant was received on 21.04.2022 and that on the date of filing of the Report under Regulation 17(1) before the Adjudicating Authority regarding constitution of the CoC, the IRP was not in receipt of the claim of the Appellant. Since the Appellant had submitted claim after a delay of 6 days from the last date of submission of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns upon the IRP the duty to constitute the CoC and for this purpose Section 18(1)(b) provides that the IRP shall receive and collate all the claims submitted by the creditors to him, pursuant to public announcement made by him. Section 13 (2) lays down that the public announcement calling for submission of claims under Section 15 shall be made immediately after appointment of the IRP. Further, CIRP Regulation 6 prescribes that the IRP shall make a public announcement calling for claims not later than 3 days from the date of his appointment and shall provide the last date for submission of proof of claims, which shall be 14 days from the date of appointment of IRP. CIRP Regulation 12(1) enables the creditor to submit claim with proof on or before the last date mentioned in the public announcement. However, Regulation 12(2) permits a creditor to avail extended time period to submit such claims on or before the ninetieth day of the insolvency commencement date. Regulation 12(3) specifically provides that a financial creditor shall be included in the CoC from the date of admission of such claim. 13. The modalities of the constitution of CoC and holding of the first meeting is provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the IRP had filed a report certifying constitution of COC before the Adjudicating Authority on 19.04.2022 on the ground that he was required to do so within two days of the verification of claims in terms of Regulation 17(1). At this stage also we therefore do not notice any breach of the CIRP timeline on the part of the IRP. 16. The root cause of the present dispute stems from the fact that the report sent by the IRP to the Adjudicating Authority certifying the constitution of CoC did not include the Appellant thereon. This exclusion has been challenged by the Learned Counsel for the Appellant holding it as illegal constitution of the CoC. We note the rebuttal from the submissions made by the Learned Counsel of the Respondent in that the Appellant was not made part of the CoC because he did not show due diligence in filing his claim on time. Secondly, the IRP having already completed the verification of claims received by him till the last date of submission of claims, he was under mandate of Regulation 17 to certify the constitution of COC within two days and hold the first meeting of the CoC within seven days of filing of the report. 17. A close scrutiny of the material on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l cross verify the amount claimed after receipt of documents/information and if any change will communicate to you." The Learned counsel for the Appellant has also referred to the minutes of the first COC meeting at agenda item A3 at page 292 of the APB wherein the IRP has recorded that: "All the claims have been accepted provisionally as papers/documents from the CD are yet to be received and will be revised accordingly if required." Thus, we find force in the contention of the Appellant that when the IRP had only accepted provisionally the claim of all creditors including that of the Appellant, then why the Appellant was kept out of the CoC inspite of being a secured financial creditor in the category of lenders. The argument of the Appellant gains more credibility as we find that the IRP was well aware that the Appellant had submitted his claim and was staking his inclusion in the COC since 21.04.2022 and this fact has been recorded by the IRP himself in the minutes of the first COC meeting held on 28.04.2022 in respect of agenda at item number A1, that "The FC Edelweiss is sending email and calling IRP allowing him to be included in the first COC or postpone the COC". 19. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the creditors. The success of CIRP of the Corporate Debtor therefore largely depends upon a validly constituted CoC. For putting in place a validly constituted CoC, the IRP after due collation of claims has to form the CoC from among the financial creditors and each creditor has to be assigned the voting share on the financial debts owed to such creditor. Section 21(2) of the IBC provides that the CoC shall comprise all financial creditors of the Corporate Debtor. In the present case, the non-inclusion of the Appellant/Financial Creditor on the CoC before holding the first meeting was thus an infraction of the IBC. The CoC, therefore not having been validly constituted, the logical corollary is that decisions taken in the first meeting of the CoC stood vitiated. 21. We are also not inclined to agree with the Respondent that the decisions taken in the first CoC meeting were not substantive decisions. This meeting had taken decisions to confirm the appointment of the IRP as the Resolution Professional including determination of his fees as IRP (Item B16); appointment of other staff like Process Advisor, Project Manager and Legal Advisor including their fees (Items No. B17, 19, 21) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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