TMI Blog2023 (2) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... ce or Service by Litigant, directly. Where the Registered Office of a Company is intact and working, it was held that the Service of Statutory Notice, for payment of Debt, a condition necessary for preserving a Winding up Petition, should have been served at the Registered Office. In Palmer s Company Law (21st Edition at Page 543), it is stated that, a Director, can at any time, Resign, from his Office, and usually the Articles, make express provision accordingly. If he communicates his Resignation, to the Company, for instance, by a Notice, upon the Company, served in the manner, provided by Section 437, his Resignation, is effective. A Resignation, once made, cannot be Withdrawn, except with a Consent of a Company. One cannot ignore the vital fact that the Nominee Directors filed the e-form DIR-11 only on 03.03.2022. But, the Corporate Insolvency Resolution Process of the Corporate Debtor, had commenced on 18.02.2022, which indicates that only as an afterthought, the said e-form DIR-11, was filed by the Nominee Directors. Also that, no Form DIR-12, which is required to be filed by the Company, Viz. the Corporate Debtor, was ever filed. In effect, this Tribunal, is of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no Irregularity or Illegality, in regard to the conclusion, arrived at in partly allowing the two Applications / Petitions. Petition dismissed. - Comp. App ( AT ) ( CH ) ( INS ) No. 331 of 2022 & Comp. App ( AT ) ( CH ) ( INS ) No. 332 of 2022 - - - Dated:- 20-2-2023 - [ Justice M. Venugopal ] Member ( Judicial ) And [ Naresh Salecha ] Member ( Technical ) For the Appellant : Mr. M.S. Krishnan, Senior Advocate For Mr. Sivanandaraaj and Mr. Kaushik Ramaswamy, Advocates For Respondent No. 1 : Mr. Y. Suryanarayana, and Mr. Sachin Sarma, Advocates For the Respondent No. 3 : Mr. P.H. Arvindh Pandian, Senior Advocate For Mr. Avinash Krishnan Ravi, Advocate For Respondent No. 4 / : Mr. Narasimha Sarma, Advocate CoC For the Appellant : Mr. M.S. Krishnan, Senior Advocate For Mr. Sivanandaraaj and Mr. Kaushik Ramaswamy, Advocates For the Respondent No. 1 : Mr. P.H. Arvindh Pandian, Senior Advocate For Mr. Avinash Krishnan Ravi, Advocate For the Respondent No. 3 : Mr. Y. Suryanarayana, and Mr. Sachin Sarma, Advocates For the Respondent No. 4 /: Mr. Narasimha Sarma, Advocate CoC JUDGMENT ( Virtual Mode ) Justice M. Venugopal, Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er could not be furnished to the Applicant. Bafna however furnished the information which unfortunately shows that the consignment which was booked on 11.02.2022 by Bafna could not be delivered due to door being locked. The Senior Counsel appearing for Bafna , prior to placing this document, on record has relied on Section 20 of the Companies Act, 2013 and Section 27 of the General Clauses Act, in support of the contention that the notice served on the CD with regard his resignation has to be deemed as served, once it is sent to the registered office of the Company by registered post or by speed post or by courier service or by leaving the register office of the Company and other mode. In this case, the resignation was sent by courier service. But it was not served on the CD even as per memo filed by the Counsel for Bafna himself. The contention of the counsel for Bafna, is based on the fact that the resignation letter was sent to the company prior to the CD going in CIRP and hence Bafna ceases to be a related Party. There is no material placed by the FC to deny the fact that the letter was sent to the Company. But whether it is served as per section 168 is the contentious i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Companies Act. 11. By Virtue of the notice of the resignation not reaching the Company, Bafna continues to be nominee director in the CD and hence his status as related party does not cease. Apart from the above, the counsel for the FC contends that even if it is accepted that the notice of the resignation is served on the Company as per Section 168 of the Companies Act, 2013, the same has to be ignored in the light of the judgment of the Apex Court in the matter of Phoenix ARC Private Limited vs. Spade Financial Services Limited and others wherein it was held that in case related party FC ceases to become a related party with the sole intention of participating in the CoC, then it should be considered as a related party for the purpose of Section 21 (2) of the Code and shall not be entitled to participate in the CoC. As the facts of this case reveal, the order admitting the CD in to CIRP is on 18.02.2022 and the resignation letter was sent through courier on 11.02.2022 which is 7 days prior to the CD being taken into CIRP. Inspite of the differences, disputes and the breaches which took place much prior to the moving of the Application under Section 7 of IBC by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted party is allowed to be part of CoC. Though Bafna is an FC as held in Section 7 petition filed by it and though it became entitled to recall the ICD due to the breaches committed by the CD, the agreements nevertheless, show that Bafna had good control over the affairs of the CD and it continued to have the control. Hence it taking part in the CoC meetings would be against the intent of the above-mentioned provisions of IBC. 13. The next issue is with regard to bonafides of the Resolution Professional. The allegations against the Resolution Professional are that he has failed to diligently carry out his duties and is merely relying on a legal opinion furnished to him for determining whether Bafna is a related party of the CD or not. The IRP in his reply, has enclosed an email dated 28.02.2022 sent to M/s. Vaish and Associates seeking for an opinion on whether Bafna is a related party of the CD or not. The contention is that there was no need for the IRP to seek opinion when as on 28.02.2022, the names of the nominees of the Bafna were still being reflected as directors on the MCA Portal. It is argued that as per the own admission of the IRP in his additional affidavit da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby cautioned to be vigilant hereafter. This would be a stricture when his performance comes into question in future. 15. The allegation that Bafna had purposefully misled the IRP does not receive much support. The affidavit of Shri Krishna Purohit, Management Executive of M/s. PP Bafna Ventures Private Limited, is on record which states that he personally gave the cover to the courier service. There is absolutely no reason to disbelieve the said fact and there is ample proof to show that the cover was given on 11th February. But it did not reach the Company is the contention, which is supported by the track record of the courier filed on behalf of Bafna itself. The wrong pin code in all probability is a mistake, as there would not be any intention on the part of Bafna to see that wrong address is mentioned so as to see that the resignation notice is not served on the Company. When Bafna decides to become part of CoC, they would, by all means, endeavour to serve the notice in compliance of section 168. But however, due to non-service of the resignation letter on the Company, section 168 of the Companies Act stands un-compiled with and Mr. Praful and Yogesh Bafna continue to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment that, as the Articles of Association of the Corporate Debtor , was not amended, the Appellant , cannot be considered to be a Related Party , to attract the provisions of Section 5 (24) of the I B Code, 2016. 9. The Learned Counsel for the Appellant contends that the Adjudicating Authority ( Tribunal ), had not considered that as per Section 20 of the Companies Act, 2013 , a Courier Service , is recognised form of Service , and a Notice , is also considered to be served, if it was left at the Registered Address of the Company . In this connection, the Learned Counsel for the Appellant, adverts to Section 12 (1) of the Companies Act, 2013, which enjoins that a Company , is obligated to have a Registered Office , capable of receiving and acknowledging all communications and notices which might have been addressed to it. 10. The Learned Counsel for the Appellant submits that the Resignation Notices , were served upon the Company , through a Private Courier , which was recognised as per Section 20 of the Companies Act, 2013, and that the Corporate Debtor , is to ensure persons / facility to acknowledge Courier at its Registered Address , to receive / a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors had resigned on 11.02.2022. Furthermore, even if the Letter date Viz. 03.03.2022, is taken as the Date of Resignation , as per the Company Law , the Appellant had no Directors , in the Corporate Debtor , from 03.03.2022. 18. The Learned Counsel for the Appellant points out that it is a settled Law on the Statutory Interpretation , that the Proviso , ought to be interpreted, to give life to the provision itself and cannot go beyond the main provision. 19. The Learned Counsel for the Appellant falls back upon the decision of the Hon ble Madras High Court in the matter of M. Vetri Selvan v High Court of Judicature at Madras 2015-1-L.W., and Tribhovandas Haribhai Tamboli v Gujarat Revenue Tribunal Ors (1991) 3 SCC 442, to lend support to his contentions that the proviso to Section 21 of the I B Code, 2016, should be interpreted, in the light of the main provision. Also that, Section 21 of the Code and the proviso to Section 21 of the Code are to be interpreted, to achieve the Object and Purpose of the Act, which is to have External Creditors , and not Related Parties , in the Committee of Creditors . 20. It is represented on behalf of the Appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab National Bank , by permitting the Corporate Debtor of opening another Bank Account , Viz. Account with Axis Bank ,and routing through Sales , through it, which is against the Letter and Spirit of the Reserve Bank of India, mandate . 26. The Learned Counsel for the Appellant points out that the Punjab National Bank , had remained a mute spectator , while Promoter Group , through Suspended Managing Director , had opened and operated the Account between 2017 and 2019. As a matter of fact, the Punjab National Bank , had only addressed Letters , and had not deemed the action of the Corporate Debtor , as a Wilful Default , under the Income Recognition and Asset Classification Master Circular , of the Reserve Bank of India , which shows an understanding between the Punjab National Bank and the Corporate Debtor , and further that the Punjab National Bank / being the only Member in the Committee of Creditors , is against the aim and purpose of the I B Code, 2016. 27. The Learned Counsel for the Appellant points out that the Appellant , projected Petitions (under Section 9 17), of the Arbitration and Conciliation Act, 1996 , against the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of the Hon ble Supreme Court of India in Phoenix Arc Pvt. Ltd. v Spade Financial Services Limited Ors., reported in (2021) 3 SCC at page 475 at Spl. Pgs.516 and 517, wherein at Paragraph 76, it is observed as under: 76. In an instructive article published in the Yale Law Journal, titled Bankruptcy, Non-Bankruptcy Entitlements, and the Creditors Bargain , Thomas H. Jackson, argues that creditors prefer a collective process as opposed to a race to grab as many assets, which often leads ultimately to the demise of the corporate debtor (Thomas H. Jackson, Bankruptcy, Non-Bankruptcy Entitlements, and the Creditors Bargain , 91 Yale Law Journal (1982), pp. 857, 859-71. The reason why a collective process is considered superior is because individual creditors, left to their own whims, are motivated to act solely in their own interests, even when their interests may directly conflict with the creditors collective interests as a group. This self-interest creates a collective action problem, such that creditors eventually enter a grab race, operating under the belief that they would have recourse to fewer or no assets, if they delay their actions in the hope that cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borne in mind that the expression control in Section 29A(c) of the I B Code symbolizes only the positive control i.e. that the mere power to block special resolutions of a Company cannot amount to control. In reality, the word control juxtaposed with the term management means De facto control of actual management or policy decisions that may be or are in reality taken. 35. The Learned Counsel for the Appellant, refers to the Judgment of the Hon ble Supreme Court in Arcelor Mittal India Pvt. Ltd. v Satish Kumar Gupta Ors., reported in India Kanoon (vide Civil Appeal Nos.: 9402 9405 of 2018 dated 04.10.2018), wherein at Paragraphs 45 to 50, it is observed as under: 45. The expression management would refer to the de jure management of a corporate debtor. The de jure management of a corporate debtor would ordinarily vest in a Board of Directors, and would include, in accord with the definitions of manager , managing director and officer in Sections 2(53), 2(54) and 2(59) respectively of the Companies Act, 2013, the persons mentioned therein. 46. The expression control is defined in Section 2(27) of the Companies Act, 2013 as follows:- (27) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreements or in any other manner. This definition is an inclusive one and not exhaustive and it has two distinct and separate features: i) the right to appoint majority of directors or, ii) the ability to control the management or policy decisions by various means referred to in the definition. This control of management or policy decisions could be by virtue of shareholding or management rights or shareholders agreement or voting agreements or in any other manner. This definition appears to be similar to the one as given in Black's Law Dictionary (Eighth Edition) at page 353 where this term has been defined as under: Control - The direct or indirect power to direct the management and policies of a person or entity, whether through ownership of voting securities, by contract, or otherwise; the power or authority to manage, direct, or oversee. Control, according to the definition, is a proactive and not a reactive power. It is a power by which an acquirer can command the target company to do what he wants it to do. Control really means creating or controlling a situation by taking the initiative. Power by which an acquirer can only prevent a company from doin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition of the word control contained in Section 2(27) of the Companies Act, 2013, which is inclusive and not exhaustive in nature. Pleas of 1st Respondent 3rd Respondent / Bank (in Comp. App (AT) (CH) (INS.) Nos. 331 332 of 2022): 36. According to the Learned Counsel for the 1st Respondent and 3rd Respondent ( Punjab National Bank ), the Appellant and the Corporate Debtor , had entered into three Agreements on 29.12.2018 (a) Inter Corporate Deposit Agreement (b) Business Management Agreement and (c) Share Subscription and Shareholders Agreement, pursuant to which, the Appellant has Substantial Rights , in Operations and the Management of the Corporate Debtor . 37. The Learned Counsel for the 1st Respondent and 3rd Respondent ( Bank ), adverts to the fact that in terms of the above Agreements , the Appellant , had appointed its Nominees Mr. Yogesh Prakash Bafna and Mr. Praful Prakash Bafna on the Board of the Corporate Debtor , on 29.12.2018, who were also the Directors on the Board of the Appellant i.e. P.P. Bafna Ventures Private Limited , since 28.11.2014. Also that, the Nominee Directors hold 33% of the Total Share Capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard of the CD resigned on 11.02.2022 i.e. just 6 (six) days before the commencement of CIRP of the Corporate Debtor i.e. 18.02.2022. 5 a public company in which a director, partner or manager of the corporate debtor is a director and holds along with relatives, more than two per cent of its paid-up share capital NA No Respondent No.3 is a Private Company 6 Anybody corporate whose board of director, managing directors or manager, in the ordinary course of business, acts on the advice, directions or instructions of a director, partner or manager of the corporate debtor Whether Respondent No.3 s Board acts on directions or instructions of a director, partner or manager of the corporate debtor? Yes As per the MCA records, Mr. Praful Bafna and Mr. Yogesh Bafna the directors of the Corporate Debtor were also on the board of the Respondent No.3 and have also signed the directors report and balance sheet of the Respondent No.3 for several years which clearly reflects that the Board of the Respondent No.3 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Respondent No.3 holds 10% of the total paid up share capital of the CD 11 any person in whom the corporate debtor controls more than twenty per cent of voting rights on account of ownership or a voting agreement Whether CD controls more than 20% of voting right in Respondent No.3? No - 12 any person who can control the composition of the board of directors or corresponding governing body of the corporate debtor Whether Respondent No.3 can control the composition of board of director in CD? Yes Respondent No.3 had two nominee directors on the board of CD. Further, as per Clause 9(II) of the SSHA, the Board of the CD shall comprise of maximum of 4 (four) directors out of which the Respondent No.3 has the right to appoint 2 (two) directors on the Board of the CD. Therefore, the Respondent No.3 has control over the composition of the board of directors of the CD. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he I B Code, 2016. 39. The Learned Counsel for the 1st Respondent and 3rd Respondent ( Bank ), comes out with a plea that the aforesaid Nominee Directors Mr. Yogesh Prakash Bafna and Mr. Praful Prakash Bafna, had resigned from the Board of the Appellant Company , on 16.02.2022, i.e. just two days, before the commencement of Corporate Insolvency Resolution Process date i.e., 18.02.2022, and purportedly resigned from the Board of the Corporate Debtor, on 11.02.2022, just 6 days, before the commencement of the Corporate Insolvency Resolution Process . 40. The Learned Counsel for the 1st Respondent and 3rd Respondent ( Bank ), brings it to the notice of this Tribunal , that the Two Nominee Directors , who equally represent the Board of the Corporate Debtor , along with the other Two Promoter Directors , could have taken measures, to file the Balance Sheets , in order to avoid disqualification, under the Companies Act, 2013 . Furthermore, the Appellant , had not cited any reason, for the resignation of the aforesaid Nominee Directors , from the Board of the Appellant / Company , on 16.02.2022, which proves that the purported Resignation , from the Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tracking numbers ranging around PNU800000799 and PNU00000800 , the date of dispatch was around 21.02.2022 and so on. 45. Besides this, in fact, the Tracking Numbers , are not assigned in the strict order of Booking / Dispatch , and it is inconceivable as to how the Tracking Number , could vary to an extent of more than 100 S.Nos. i.e. to 799 / 800 , when the running Series for dispatch on 11.02.2022 is 924 to 945 , in an ascending order. 46. The Learned Counsel for the 1st Respondent and 3rd Respondent ( Bank ), points out that as per Section 114 of the Indian Evidence Act, 1872, a Court of Law / Tribunal , can safely presume that, what could have been normally sent by email was not sent and the story of resignation and sending the same through Courier (vide Tracking Nos. : PNU800000799 and PNU800000800) is an afterthought, considering the fact that the e-form DIR-11, was filed on 03.03.2022, and no form DIR-12, to be filed by the Company , was not filed by the Corporate Debtor . 47. The Learned Counsel for the 1st Respondent and 3rd Respondent ( Bank ), submits that even assuming, but not conceding that the Resignation Letters , were received by the Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectors , of the Appellant , were appointed in accordance with SSHA and they were equally representing the Board of the Corporate Debtor , together with other Two Promoter Directors . Also that, the Nominee Directors , were operating the Corporate Debtor s Bank Account , jointly with the Promoter Director of the Corporate Debtor . 51. The Learned Counsel for the 1st Respondent and 3rd Respondent ( Bank ), brings to the notice of the Tribunal , even payments to Vendors , were being made by the Corporate Debtor , only upon by email confirmation from the Nominee Directors of the Appellant. That apart, the plea of the Appellant is that, because of the fact that the Corporate Debtor , never amended the Articles of Association to incorporate the Agreement s Terms , the Investor Nominee Directors , remained merely on Paper , is a baseless and a misconceived one. In this connection, the Learned Counsel for the 1st Respondent / Bank , refers to the decision of the Hon ble Supreme Court of India in Vodafone International Holdings BV v. Union of India Another, reported in (2012) 6 SCC, wherein, it is observed that only those Clauses of the Shareholders Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of India in Phoenix Arc Private Ltd. v. Spade Financial Services Ltd. and Ors., reported in 2021, 3 SCC at Page 475 at Spl Pgs: 527 and 528, wherein at Paragraphs 103 to 105, it is observed as under: 103. Thus, it has been clarified that the exclusion under the first proviso to Section 21(2) is related not to the debt itself but to the relationship existing between a related party financial creditor and the corporate debtor. As such, the financial creditor who in praesenti is not a related party, would not be debarred from being a member of the CoC. However, in case where the related party financial creditor divests itself of its shareholding or ceases to become a related party in a business capacity with the sole intention of participating the CoC and sabotage the CIRP, by diluting the vote share of other creditors or otherwise, it would be in keeping with the object and purpose of the first proviso to Section 21(2), to consider the former related party creditor, as one debarred under the first proviso. 104. Hence, while the default rule under the first proviso to Section 21(2) is that only those financial creditors that are related parties in praesenti would be debarr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the present case is concerned, this Tribunal points out that, the Appellant's Managing Director was also a Director of the first Respondent Company. Moreover, the Director nominated by the Appellant, in fact, advises the Appellant / Company in matters relating to the first Respondent / Company. To put it precisely, the part played by the two nominee Directors clearly point out that the first Respondent / Company acts on the advice, direction and instructions of the Appellant in its normal business affairs relating to the first Respondent. As such, this Tribunal is of the earnest opinion that the Appellant 'squarely comes within the ambit of related party as per clause (f) of Sub Section 24 of section 5 of the Code. 68. The other important fact that cannot be brushed aside is that that the First Respondent had reported the transactions between the Appellant and it, in their 'Annual Reports' and 'Audited Financial Statements'. Besides this, as perceived from the 'Articles of Association' and the requisite majority needed for taking important business decisions, the conduct of the business of the First Respondent, the establishment of First Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first proviso to Section 21 (2) of the Code, which disqualifies a Financial Creditor or the authorized representative of the Financial Creditor under Sub-section (6A) or Sub-section (5) of Section 24 of the Code, if it is a related party of the Corporate Debtor, from having any right of representation, participation or voting in a meeting of CoC. The purpose of excluding a relating party of the Corporate Debtor from the CoC is to obviate conflicts of interests that are likely to arise if the Related Party is allowed to become a part of the CoC. The Insolvency Law Committee Report of 2020 has clarified that the exclusion under the 1st proviso to Section 21 (2) under the Code is related not to the debt itself, but the relationship between a related party Financial Creditor and the Corporate Debtor. As such, the Financial Creditor, who in praesenti is not a related party, would not be debarred from being a member of the CoC. While the default rule under the 1st proviso to Section 21 (2) of the Code is that only those Financial Creditors that are related parties in praesenti would be debarred from the CoC, those related party Financial Creditors that cease to be related parties to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egulation 17(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons, 2016). 62. According to the Resolution Professional / 4th Respondent, to place on 26.09.2022 with the Agenda Items were circulated. The Expression of Interest , in Form-G for calling EOI , was invited on 27.09.2022 in Financial Express (English) and Prajasakthi Telugu for an appointment of Transaction Auditor, the EOI , was invited on 29.09.2022. On 29.09.2022, the Expression of Interest , for the appointment of Statutory Auditor , was invited by the Resolution Professional . Appellant s Submissions in Comp. App (AT) (CH) (INS.) No. 332 / 2022: 63. The Learned Senior Counsel for the Appellant submits that the undermentioned Sums, were disbursed to the Corporate Debtor by RTGS dated 31.12.2019; (i) INR 12,55,00,000 (Rupees Twelve Crore Fifty-Five Lakh Only) as Intercorporate Deposit under ICDA (in short); (ii) INR 2,45,00,000/- (Rupees Two Crore Forty Five Lakh Only) as Equity Investment for 10% Share in the Company under the SSSHA , ( Share investment Money ); and (iii) A tranche of Working Capital Loan of INR 24,66,665 (R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service . Also that, a Notice , is considered to be served, it was left at the Registered Address of the Company, as per Section 20 of the Companies Act, 2013. Furthermore, as per Section 12 (1) of the Companies Act, 2013, a Company , is required to have a Registered Office , to receive and acknowledge all communications and notices , to be addressed to it. 72. The Learned Counsel for the Appellant takes a stand that the Adjudicating Authority , should have considered the aspect of addressing the said Resignation Notices , in terms of Section 168 of the Companies Act, 2013, is not disproven. 73. The Learned Counsel for the Appellant comes out with a plea that the Corporate Debtor , had failed to ensure availability of Personnel / Facility, to acknowledge Service of Notices , served upon the Company . Also that, the Appellant , is not a Related Party in Praesenti , and hence, it cannot be considered as a Related Party . 74. Advancing his argument, the Learned Counsel for the Appellant contends that, if inference of the Adjudicating Authority ( Tribunal ), is given effect, then, the Corporate Debtors or Companies , intending to obligate Liabilities or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in IA(IBC) No. 54 of 2022 in CP(IB) No. 204/7/AMR/2019, passed by the Adjudicating Authority , ( Tribunal ). Service of Notice : 79. Be it noted that, if a registered Summons , is sent to Defendant , at the correct / proper address, there arises a presumption of Service , in the considered opinion of this Tribunal . 80. In fact, the Onus , to prove Service of Summons , is on a Plaintiff . Where a question of Service of Notice , arises, the Court , is duty bound to Record a Finding , thereon, as per decision of the Hon ble Supreme Court of India in AIR (2001) SC 1253. 81. The Service of Summons , by a Courier , at the instance of Plaintiff , is permissible, as per decision of the Hon ble Supreme Court of India (2005) 6 SCC 344. Other Mode of Service are such as (a) Courier (b) Facts and (c) Electronic Mail Service or Service by Litigant, directly. 82. Where the Registered Office of a Company is intact and working, it was held that the Service of Statutory Notice , for payment of Debt , a condition necessary for preserving a Winding up Petition , should have been served at the Registered Office , as per decision in Pearks, Gunston ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally Resign , his Withdrawal of Resignation , cannot be Unilateral , and unless and until, the Board of Directors , accept his request , and permitted the Director , to Withdraw his Resignation . Agents: 90. A Resignation of a Director of a Company , is an Unilateral act, which comes into an operative play , as soon as the Resignation , is tendered by a Director , of a Company . After all, a Director , is an Agent , of a Company , and the Agent , is competent to determine the Agency , at his own end. Related Party, under I B Code, 2016: Section 5 (24) Accustomed to act: 91. Any Person , on whose advice, directions or instructions, a Director , Partner or Manager or Corporate Debtor , is accustomed to act, is a Related Party (Sub-Clause h). Section 5 (24) of the Code: 92. Any person who controls more than twenty per cent of voting rights in the corporate debtor , on account of ownership or a voting agreement (Sub-Clause j). Associated Persons: 93. Any Person , who is associated with the Corporate Debtor , on account of Participation in Policy Making Processes of a Corporate Debtor or ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (IB) No. 204/7/AMR/2019, assailing the Constitution of the Committee of Creditors . 99. The stand of the 3rd Respondent / 1st Respondent / Petitioner , in IA No. 53 of 2022 in CP (IB) No. 204/7/AMR/2019 , is that the Resolution Professional , had not applied his mind to the opinion given by a Law Firm , and took the opinion as Resolution Professional s conclusion, without any determination being made based on the facts of the case. Hence, the 3rd Respondent / 1st Respondent / Petitioner , in IA No. 53 of 2022 in CP (IB) No. 204 / 7 / AMR / 2019 , had prayed for, the Relief of Staying the Conduct of any further Meetings of the Committee of Creditors , pending disposal of IA No. 53 of 2022 , and for the Relief of Declaration that the Appellant / 1st Respondent , as a Related Party , in terms of 5(24)(d), 5(24)(f), 5(24)(h), 5(24)(l) and section 5(24)(m)(i) to 5(24)(m)(iv) of the Insolvency and Bankruptcy Code, 2016 and resultantly, in directing the 2nd Respondent , to Reconstitute the Committee of Creditors of the Corporate Debtor , without the Appellant / 1st Respondent / 3rd Respondent . 100. The 3rd Respondent / 1st Respondent / Petitioner ( B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision, relates to the specific event of Committee of Creditors , being constituted. 104. The version of the Appellant is that the Nominee Directors of the Appellant , on the Board of Corporate Debtor , had resigned on 11.02.2022 and the two Directors , also ceased to be Directors on the Board of the Appellant / Company , on 16.02.2022. Hence, it is represented on behalf of the Appellant, that there were no common Directors , between the Appellant and the Corporate Debtor , on the relevant date , i.e., on 15.03.2022, the Date of Constitution of Committee of Creditors , and even on the Inter Corporate Deposit . Besides, this, the details of MCA Website clearly reflect the end date of the directorship of the two Nominee Directors of the Appellant on the Board of the Corporate Debtor as 11.02.2022. 105. It is the stand of the Appellant that the Committee of Creditors , was constituted on 15.03.2022, and that the Appellant , ceased to be Related Parties , well before the relevant date , as envisaged by the Code . 106. On behalf of the Appellant, it is pointed out that the Consignment was booked on 11.02.2022 and that the same could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Insolvency Resolution Process commencement date i.e. 18.02.2022 and purportedly resigned from the Board of the Corporate Debtor on 11.02.2022, just six days before the commencement of the CIRP . 113. The plea of the Appellant is that, the Resignation Letters , were correctly addressed to the Corporate Debtor , is an incorrect one , because of the fact that the Courier Receipt from the Consignor (Mr. Praful Bafna), addressed to the Consignee (KVR Industries Private Ltd.) dated 11.02.2022, shows the destination is Vishakapattinam and the Pin Code mentioned, under the head Mobile No. , is 430016 , but the fact of the matter is, the correct Pin Code of the place of Registered Office of the Corporate Debtor is 530016 . 114. Also that, the Courier Consignment Nos. PNU800000799 and PNU800000800 (as seen from Vol. I of Paper Book in Comp. App (AT) (CH) (INS.) No. 332 of 2022 vide Diary No. 796 dated 25.08.2022), only goes to show that the purported Resignation Letters , were sent to the address of the Corporate Debtor , were not received by the Corporate Debtor , and the Tracking Status , points out that we are sorry that your Consignment Status Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resignation , had not reached the Company , Bafna remains as a Director , in the Corporate Debtor , and his position as Related Party , may not get erased, in the eye of Law . 119. In the instant case, it cannot be brushed aside that the Corporate Debtor was admitted into CIRP on 18.02.2022 and the Resignation Letter , was sent on 11.02.2022, one week before the Corporate Debtor , being taken into the Corporate Insolvency Resolution Process . Also that, till the filing of Section 7 Petition, under the Code , by Mr. Bafna, he continued as Nominee Director , till 11.02.202, which is a stark reality. Therefore, one can presume that they are Related Parties , and they performed their role, as mentioned in the Agreements , between the Corporate Debtor and Bafna . 120. It is to be remembered that the ingredients of Section 3 (24) of the Code, do not exclude those Directors , who are not under the Control of the Promoter of the Corporate Debtor , from the ambit of the Related Parties . Even otherwise, in a given case where a Related Party / Financial Creditor , ceases to be a Related Party , with the prime aim of taking part in the Committee of Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto the purview of the definition of the Related Party . 126. In the instant case, on behalf of the 1st Respondent / 3rd Respondent / Bank , it is brought to the notice of this Tribunal , the Two Nominee Directors of the Appellant , who were appointed on the Corporate Debtor s Board , were representing the Board of the Corporate Debtor , coupled with other Two Promoter Directors . 127. Indeed, the Nominee Directors , had operated the Bank Account of the Corporate Debtor , with the Promoter Director of the Corporate Debtor . Also, the payments to Vendors, were made by the Corporate Debtor only upon email confirmation from the Nominee Directors of the Appellant . 128. Be that as it may, in view of the foregoing detailed qualitative and quantitative discussions and reasons, this Tribunal , taking note of the divergent contentions advanced on either side, keeping in mind the surrounding facts and circumstances in an integral manner , and also on going through the impugned order dated 22.08.2022 in IA (IBC) Nos. 53 and 54 of 2022 in CP (IB) No. 204/7/AMR/2019, passed by the Adjudicating Authority ( NCLT , Amaravati Bench), comes to a consequent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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