The National Company Law appellate tribunal (NCLAT), New Delhi bench comprising Justice Ashok Bhushan, Chairperson and Barun Mitra, Technical Member was recently hearing an Appeal and held that the Appellant who is a minority shareholder in the CoC cannot resist the passing of the resolution. The Adjudicating Authority has rightly rejected the application filed under Section 18 of Code and Regulation 34A, which was not to be entertained.
Facts:
The present Appeal was filed against the order dated 26.08.2022 passed by the Adjudicating Authority by which the Adjudicating Authority rejected I.A. The Appellant was a Financial Creditor holding a 33.07% voting share in the CoC. The CoC in its 7th meeting held on 28.06.2022 passed a resolution for liquidation. The approval was with the majority of 66.93% vote share. After that, the Appellant filed an I.A. challenging the order of liquidation and seeking some relief. The Adjudicating Authority after considering the application of the Appellant has rejected the same.
Appellant’s Submission:
Counsel for the Appellant challenging the order contended that the Appellant had wanted to know steps taken by the Resolution Professional in the insolvency resolution process. It was stated that no steps for any audit were taken nor any valuation Report was obtained, hence, there was no occasion for taking any decision for liquidation.
Court’s analysis:
In the present case, the CIRP commenced on 19.12.2019 and after more than two years, a resolution was passed on 28.06.2022 for liquidation. The Application which was filed by the Appellant on the very next day of passing of the resolution was indirectly for challenging the liquidation. The Adjudicating Authority noted that the Appellant, a minority shareholder in the CoC, cannot resist the passing of the resolution. A Financial Creditor who is a minority shareholder cannot challenge the resolution passed in the CoC. The Adjudicating Authority rejected the application filed under Section 18 of Code and Regulation 34A, which was not to be entertained. The Appellant asked Resolution Professional to disclose item-wise insolvency resolution process costs in such manner as required by the Board (IBBI). The question of cost and its approval lies in the domain of the CoC. The CoC may ratify, modify or set aside the cost claimed. These issues may be decided in the meeting of the CoC and are not to be examined by the Adjudicating Authority even before the CoC takes a decision. It shall be always open for the appellant to raise issues regarding the cost in the meeting of the Committee of Creditors. With reference to the grievance of the Appellant with regard to obtaining a valuation report, it is always open to the Appellant to request the Liquidator to obtain a valuation report, if not already obtained. With these observations, the Appellate Authority dismissed the Appeal.
Click here to Read Order
Comments