A case analysis of Mr. Somshankar Das Gupta Vs. Mr. Rakesh Kumar Agarwal (RP) & Ors., decided by the National Company Law Tribunal (NCLT) on 10.09.2023.
Introduction
This case deals with the issue of whether the computation of claims done by a resolution professional (RP) for one corporate debtor’s resolution can be binding on a completely different resolution process of a different corporate debtor. The NCLT held that there is no such provision under the Insolvency and Bankruptcy Code, 2016 (IBC) and its regulations that allows such a practice and that the RP cannot share the information memorandum and the resolution plan approved by the committee of creditors (CoC) with the suspended director of the corporate debtor.
Facts for NCLT
The appellant, Mr. Somshankar Das Gupta, was a suspended director of M/s. Asis Logistics Limited, which was undergoing corporate insolvency resolution process (CIRP) under the IBC. The respondent, Mr. Rakesh Kumar Agarwal, was the RP appointed for the CIRP of M/s. Asis Logistics Limited as well as another corporate debtor, M/s. Asis Industries Limited, which belonged to the same group of companies.
The appellant had filed an application before the NCLT under Section 60(5) of the IBC, seeking directions to the RP to provide him with the information memorandum and the resolution plan approved by the CoC for M/s. Asis Industries Limited. The appellant had contended that he wanted to use the computation of claims done by the RP for M/s. Asis Industries Limited as a reference for filing his claim as an operational creditor for M/s. Asis Logistics Limited.
The RP had opposed the application and submitted that he could not share the information memorandum and the resolution plan approved by the CoC for M/s. Asis Industries Limited with the appellant as it would violate the confidentiality agreement signed by him with the CoC and the resolution applicant. The RP had also submitted that there was no provision under the IBC and its regulations that allows the computation of claims done by him for one corporate debtor’s resolution to be binding on a completely different resolution process of a different corporate debtor.
Issue with Corporate Debtor’s Resolution
The main issue before NCLT was whether the RP could provide the information memorandum and the resolution plan approved by CoC for M/s. Asis Industries Limited to the appellant who wanted to use it as a reference for filing his claim as an operational creditor for M/s. Asis Logistics Limited.
Legal Provisions for Corporate Debtor’s Resolution
The relevant legal provisions for this issue are:
- Section 60(5) of IBC, which provides for jurisdiction of NCLT to entertain any application or proceeding by or against corporate debtor or corporate person or resolution professional or liquidator as the case may be.
- Section 29 of IBC, which provides for preparation of information memorandum by RP containing all relevant information about corporate debtor for formulating a resolution plan.
- Regulation 36(1) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which provides that RP shall provide information memorandum in electronic form to each member of CoC within two weeks of his appointment but not later than fifty-fourth day from insolvency commencement date.
- Regulation 36A(1) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which provides that RP shall issue an invitation for expression of interest containing basic information about corporate debtor and criteria for prospective resolution applicants.
- Regulation 36A(7) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which provides that RP shall issue a provisional list of prospective resolution applicants within ten days of last date for receipt of expression of interest.
- Regulation 36A(8) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which provides that RP shall issue information memorandum, evaluation matrix and request for resolution plan to prospective resolution applicants in provisional list within five days of issue of provisional list.
- Regulation 36A(9) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which provides that RP shall issue final list of prospective resolution applicants within fifteen days from issue of provisional list after considering objections received from members of CoC.
- Regulation 36A(10) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which provides that RP shall issue information memorandum, evaluation matrix and request for resolution plan to prospective resolution applicants in final list within five days from issue of final list.
Analysis of Corporate Debtor’s Resolution
The NCLT analysed the case law on this issue and observed that:
- The Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. held that the IBC is a complete code in itself and that the provisions of the IBC and its regulations must be strictly followed by all stakeholders involved in CIRP.
- The NCLAT in Binani Industries Limited Vs. Bank of Baroda & Anr. held that the information memorandum is a confidential document and that the RP cannot share it with any person who is not a member of CoC or a prospective resolution applicant.
- The NCLAT in Mr. Anil Goel Vs. Mr. Parveen Bansal held that the RP cannot share the resolution plan approved by CoC with any person who is not a party to CIRP or a prospective resolution applicant.
Based on these precedents, the NCLT held that the RP could not provide the information memorandum and the resolution plan approved by CoC for M/s. Asis Industries Limited to the appellant who wanted to use it as a reference for filing his claim as an operational creditor for M/s. Asis Logistics Limited. The NCLT further held that:
- There is no provision under the IBC and its regulations that allows the computation of claims done by a RP for one corporate debtor’s resolution to be binding on a completely different resolution process of a different corporate debtor.
- The appellant cannot use the computation of claims done by the RP for M/s. Asis Industries Limited as a reference for filing his claim as an operational creditor for M/s. Asis Logistics Limited as it would amount to interference in the independent functioning of the RP and violation of the confidentiality agreement signed by him with the CoC and the resolution applicant.
- The appellant should file his claim as an operational creditor for M/s. Asis Logistics Limited on the basis of his own documents and evidence and not rely on any external source.
Conclusion For The NCLT Case
The NCLT concluded that there was no merit in the application filed by appellant and that RP had rightly refused to share the information memorandum and the resolution plan approved by CoC for M/s. Asis Industries Limited with him. The NCLT dismissed the application with costs.
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