The NCLAT held that challenges regarding the constitution of the Committee of Creditors and the admission of claims must be raised before the NCLT under Section 60(5) of the Insolvency and Bankruptcy Code.
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 observed that the Committee of Creditors (CoC) and the admission of claims, including challenges on related-party status, must be adjudicated by the NCLT under Section 60(5) of the IBC, and the NCLAT will not interfere with the order admitting the Section 7 petition.
The appeal, filed by the suspended director of Proplarity Infrastructure Pvt. Ltd., challenged the NCLT’s order dated 03.07.2024, admitting a Section 7 petition under the Insolvency and Bankruptcy Code, 2016 (IBC). The petition was filed by four financial creditors, alleging a default of Rs. 10,21,07,880/- as per a loan agreement dated 13.10.2016. The NCLT issued a notice to the corporate debtor, which was deemed served, and since there was no appearance, the petition was admitted. Following the admission, the Interim Resolution Professional (IRP) invited claims, constituted the Committee of Creditors (CoC) on 25.07.2024, and submitted a report to the NCLT.
The appellant argued that a settlement had been reached with the four financial creditors and another creditor, Kshitij Jain, on 26.07.2024. It was further contended that the IRP constituted the CoC hastily and admitted claims of two intervenors, M/s Creta Infrastructure Pvt. Ltd. and M/s Proplarity Infratech Pvt. Ltd., who were allegedly related parties. The appellant sought exclusion of these parties from the CoC, asserting that their claims were time-barred and improperly admitted. In response, the intervenors denied any related-party status, citing share transactions and loan agreements as evidence. The IRP defended the constitution of the CoC, stating that the claims were admitted following proper verification.
The NCLAT noted that the issue of related-party claims and CoC constitution required adjudication by the NCLT under Section 60(5) of the IBC. Therefore, the tribunal declined to interfere with the NCLT’s admission order but granted the appellant liberty to challenge the inclusion of the intervenors in the CoC before the adjudicating authority. To prevent prejudice, the IRP was directed to withhold CoC meetings for ten days to allow the appellant time to file the necessary application. The appeal was disposed of on these terms, and the tribunal clarified that the IRP could convene CoC meetings after two weeks, subject to further orders from the NCLT. All pending interim applications were also disposed of, with parties bearing their own costs.
Mr. Abhishek Anand and Mr. Sugam Mishra, Advocates represented the Appellant.
Mr. Sunil Fernandes Sr. Advocate with Mr. Anjaneya Mishra, Mr. Nidish Gupta, Ms. Rajshree Chaudhary, Ms. Diksha Dadu Advocates appeared for the Intervener.
Mr. Krishnendu Datta Sr. Advocate with Mr. Aditya Nayyar, Ms. Niharika Sharma, Advocates appeared for Intervener in IA- 5505 of 2024.
Mr. Alok Tripathi, Advocate appeared for the Respondent.
Mr. Nidish Gupta, Mr. Alok Tripathi, Advocates appeared for Respondents No. 1 to 4.
Mr. Abhijeet Sinha, Sr. Advocate with Mr. Iswar Mohapatra, Mr. Kunal H., Mr. Vinod C., Advocates represented the IRP.
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