The NCLAT affirmed the exclusion of unsecured creditors from the CoC, holding that the loan disbursed to the SPV did not constitute financial debt under the IBC.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench led by Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka reviewed an appeal and held that a creditor could not be recognized as a financial creditor under Section 5(8) of the IBC unless there is clear evidence of disbursement to the corporate debtor, and loan agreements with SPVs or post-insolvency notices do not establish valid financial claims; the constitution of the CoC must reflect only legitimate creditors with demonstrable debts.
In this case, the appellant, M/s Saratvam Creators, challenged the order passed by the NCLT, Mumbai Bench, directing the Resolution Professional (RP) to reconstitute the Committee of Creditors (CoC) by excluding the appellant and other unsecured creditors. The corporate debtor, Sudhir Construction Infraspace Pvt. Ltd., had availed financial facilities from the Bank of Maharashtra in 2018, with its account classified as a non-performing asset (NPA) on 31.12.2019. The dispute revolved around whether the appellant qualified as a legitimate financial creditor under Section 5(8)(i) of the IBC.
The corporate debtor had formed a Special Purpose Vehicle (SPV) to execute a road project awarded by the Public Works Department (PWD) under the Hybrid Annuity Model (HAM). The appellant entered into agreements with the SPV and the corporate debtor, advancing ₹195 crores through a loan agreement and deed of guarantee executed on 05.08.2022. However, during the CIRP initiated on 03.03.2023, the Bank of Maharashtra challenged the inclusion of the appellant’s claim, alleging that the financial claim was fraudulent and aimed at reducing the bank’s voting share in the CoC. It sought reconstitution of the CoC and a forensic audit of third-party claims.
The NCLT, agreeing with the bank’s objections, directed the RP to exclude the appellant’s claim from the CoC. On appeal, the NCLAT upheld the NCLT's decision, emphasizing that the financial debt in question must demonstrate actual disbursement to the corporate debtor, as required under Regulation 8(2) of the IBBI Regulations. It observed that the loan was advanced not to the corporate debtor but to the SPV, which disqualified the appellant from being treated as a financial creditor. Furthermore, discrepancies in the appellant’s financial transactions, including the operation of an escrow account, raised concerns about the legitimacy of the claimed debt.
The Tribunal also scrutinized the appellant’s argument concerning its alleged related-party status under Section 5(24) of the IBC. While the NCLAT did not conclusively rule on the related-party issue, it allowed the matter to be revisited after a forensic transaction audit. It stressed that claims of financial creditors must reflect clear disbursement records and financial statements confirming the debt, rejecting the appellant's assertion that a financial creditor status could be granted without complete disbursement.
Relying on the principles established in Anuj Jain Interim Resolution Professional for Jaypee Infratech Limited v. Axis Bank Limited and Others, REEDLAW 2020 SC 02502 and Swiss Ribbons Private Limited and Another v. Union of India and Others, REEDLAW 2019 SC 01504, the NCLAT reiterated that financial creditors play a key role in ensuring the financial viability and restructuring of the debtor. It granted liberty to the appellant to file a fresh application seeking recognition as a secured creditor, contingent on the outcome of the forensic audit. This judgment underscores the critical importance of demonstrating the substance of financial transactions and adherence to procedural requirements under the IBC framework, reinforcing the need for transparency and prudence in the constitution of the CoC.
Mr. Ramji Srinivasan, Sr. Advocate with Mr. Gautam Singh, Mr. Shubhendu Anand, Ms. Namrata Sarogi and Mr. Akshat Kaushik, Advocates represented the Appellant.
Mr. Kunal Kanungo, Mr. Mukesh Jain, Mr. Aush Rajani and Mr. Muktesh Punaniya, Advocates appeared for Respondent No. 1.
Mr. Abhijeet Sinha, Mr. Anuj Tiwari, Mr. Chaitanya Nikte, Ms. Monika, Mr. Aditya Shukla and Ms. Heena Kochar, Advocates appeared for Respondent No. 6.
Mr. Piyush M. Dwivedi, Advocate represented Respondent No. 4.
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