No Provision In IBC For Constitution Of COC With A Single Operational Creditor: NCLAT Chennai
Pallavi Mishra
5 July 2023 2:30 PM IST
The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), while adjudicating an appeal filed in V. Duraisamy v Jeyapriya Fruits and Vegetables Commission Agent, has held that IBC does not contain any provision for constitution of the Committee of Creditors (CoC) with a...
The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), while adjudicating an appeal filed in V. Duraisamy v Jeyapriya Fruits and Vegetables Commission Agent, has held that IBC does not contain any provision for constitution of the Committee of Creditors (CoC) with a single Operational Creditor, when no claims are received by the IRP after public announcement. The Bench has terminated the CIRP of a Corporate Debtor in which claim was received from the only Operational Creditor and there was no Financial Creditor to constitute the CoC.
Background Facts
On 02.08.2019, HGS Dairies and Agro Limited (“Corporate Debtor”) was struck off by the Registrar of Companies (“RoC”). Subsequently, an Operational Creditor filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor.
The NCLT vide an order dated 20.01.2010 initiated CIRP against the Corporate Debtor. The Interim Resolution Professional (“IRP”) received only a single claim from the only Operational Creditor. The IRP filed an application seeking closure of CIRP since there was no Financial Creditor to constitute the CoC.
On 06.12.2021, the NCLT opined that the IRP is obliged to constitute the Committee of Creditors (“CoC”) with the sole Operational Creditor. The IRP was directed to file an application before NCLT to restore the name of the Corporate Debtor under Section 252 of Companies Act, 2013.
The IRP filed an appeal before NCLAT against the order dated 06.12.2021.
NCLAT Verdict
The Bench observed that no claims have been submitted to the IRP after public announcement and the Corporate Debtor’s name has been struck off by the RoC for non-filing of the financial statements.
It has been held that IBC does not contain any provision for constitution of the CoC with a single Operational Creditor, when no claims are received by the IRP after public announcement. Accordingly, the Bench has terminated the CIRP of the Corporate Debtor.
“This Tribunal is of the earnest view that there is no provision in the Code for the Corporate Debtor to constitute the CoC with a single Operational Creditor, when it is seen from the record that despite the public announcement being made inviting claims from its stakeholders, the Appellant has not received a single ‘Claim’ from the date of initiation of the Corporate Debtor into CIRP. As the CoC itself is not constituted and in the light of the fact that not a single ‘Claim’ was received by the IRP even after the public announcement, as well as the fact that the Corporate Debtor Company has been struck off from the Registrar of Companies, this Tribunal is of the considered view that the CIRP may be closed with respect to the subject company.”
The NCLT order has been set aside.
Case Title: V. Duraisamy v Jeyapriya Fruits and Vegetables Commission Agent
Case No.: Company Appeal (AT)(CH)(Ins) No.25/2022
Counsel For Appellant: Mr.B. Thilak Narayanan, Advocate.
