Appellant Promoter Can’t Raise Any Objections at a Belated Stage Regarding Constitution of CoC After Approval of RP | NCLAT

Case Details: Ramesh Kesavan v. CA Jasin Jose - [2024] 167 taxmann.com 407 (NCLAT-Chennai)

Judiciary and Counsel Details

• Rakesh Kumar Jain, Judicial, Member & Shreesha Merla, Technical, Member
• Avinash Krishnan Ravi & Ujjwal Jain, Advs., for the Appellant.
• Akhil Suresh & Ramasubramaniam Raja, Advs., for the Respondent.

Facts of the Case

In the instant case, the appellant was a promoter and suspended director of the corporate debtor. The CIRP was initiated against the corporate debtor and RP was appointed.

RP filed an application seeking approval of a resolution plan, which was approved by the CoC with a 100% voting share. The Adjudicating Authority, by the impugned order, allowed the said application.

The appellant filed an instant appeal contending that the CoC was illegally constituted without including E, assignee of debt from Federal Bank, which enjoyed a charge in relation to a corporate guarantee from the corporate debtor.

Further, the Resolution Plan was discriminatory in nature among creditors who fell within the same class and did not provide Operational Creditors with a minimum Liquidation value. Therefore, the Resolution Plan was in contravention of Section 30(2) of the IBC.

It was noted that the Operational Creditor had voluntarily agreed to accept an amount lower than the Liquidation value. Further, Federal Bank had transferred its debt to E, but E did not choose to file any claim pursuant to public announcement in accordance with regulation 6 of the CIRP Regulations, 2016.

Thus, having not exercised its right in the form of filing a claim, the appellant could not have any grievance that E was not included in the CoC.

The NCLAT observed that the appellant did not raise any objections regarding the constitution of the CoC, having had notice and opportunity to do so as he had the locus to attend CoC meetings.

NCLAT Held

The NCLAT held that, having not been vigilant at that stage, the appellant could not now raise objections at a belated stage, after approval of the resolution plan, that CoC was not properly constituted, specifically when E itself had not chosen to file a claim. Thus, there were no considerable grounds to entertain the instant appeal, and accordingly, the same was to be dismissed.

List of Cases Reviewed

•  Ravi Shankar Vedam v. Tiffins Barytes Asbestos and Paints Limited [2024] 165 taxmann.com 433 (Para 10) followed
• M.K. Rajagopal v. Dr. Periasamy Palani Gounder (Para 10) distinguished

List of Cases Referred to

• Kalparaj Dharamshi & Anr. v. Kotak Investment Advisors Ltd. & Anr. 2021 SCC OnLine SC 204 (para 8)
• Ravi Shankar Vedam v. Tiffins Barytes Asbestos and Paints Limited and Others 2023 SCC OnLine NCLAT 274 (para 10)
• ‘M.K. Rajagopal v. Dr. Periasamy Palani Gounder’ (para 10).