IRP was unjustified in excluding FC from CoC on grounds of verification of claims: NCLAT

Case Details: Edelweiss Asset Reconstruction Co. Ltd. v. Mohit Goyal - [2023] 148 taxmann.com 76 (NCLAT-New Delhi)

Judiciary and Counsel Details

• • Justice Ashok Bhushan, Chairperson, Dr Alok Srivastava & Barun Mitra, Technical Member
  • Krishnan Venugopal, Sr. Adv., K. Mishra, Ms Pallavi Srivastava, Advs., Abhinav Sharma & Himanshu K., Advs. for the Applicant.
  • Aditya Madaan, G.P. Madaan, Aishwarya A & A. Bansal, Advs. for the Respondent.

Facts of the Case

In the instant case, pursuant to an application filed u/s 9 of the IBC, the CIRP was initiated against the respondent (i.e. the corporate debtor) and the IRP was appointed. The IRP made a public announcement and called for claims with the last date of submission as 15-4-2022.

The appellant, (i.e. a financial creditor) submitted its claim on 21.04.2022. The IRP constituted the Committee of Creditors (CoC) and filed an application before the Adjudicating Authority (NCLT) without including the appellant in the CoC on the ground that the appellant filed its claim after the expiry of the last date of submission.

The appellant being aggrieved with IRP’s decision filed an application before the NCLT seeking directions for the IRP not to call for any further CoC meeting without making it a part of the CoC and to quash the decision taken by CoC in its earlier meeting.

However, the NCLT dismissed the said application by the impugned order on the ground that the appellant’s application for relief had become infructuous as the appellant had already been made a member of the CoC. Thereafter, an appeal was made to the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

It was noted that during the process of collation, the IRP had provisionally accepted the claim of all creditors including the appellant and, thereafter, in an impropriety manner excluded the appellant from the CoC.

NCLAT Held

The NCLAT observed that since the IRP constituted the CoC on the basis of a provisional list of claims and yet chose to exclude the appellant from CoC on the ground that there was a need to verify provisional claims, such conduct of IRP was unjustified.

The NCLAT held that the non-inclusion of the appellant in the CoC before holding the first meeting was a violation of the IBC. Therefore, the decision taken in such a meeting was vitiated and was to be set aside. Therefore, the impugned order of the NCLT was to be set aside.

List of Cases Reviewed

• • Yogesh Gupta Sole Prop. Rapid Constructions v. Aadi Best Consortium (P.) Ltd. [2023] 148 taxmann.com 75 (NCLT – New Delhi) (para 23) reversed [See Annex].