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2022 Supreme(Online)(NCLAT) 84
A Company Appeal (AT) (Insolvency) No. 785 of 2020 & 647 of 2021 NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No. 785 of 2020 AND Company Appeal (AT) (Insolvency) No. 647 of 2021 INDEX S. NO. CONTENTS Para PAGES
1. Factual Background of CA No.785 of 2020 1 3-6
2. Factual Background of CA No.647 of 2020
1.10 6-7
3. Appellant’s Submission 2 7
4. Right to participate in the Committee of Creditor of DHFL 3 7-12
5. Respondent No.
1 / Administrator’s submission 4 12-15
6. Points arising for consideration
4.6 15
7. Analysis 5 15-38 Contention by Appellant
5.3 16-17 Section 45-IE of the Reserve Bank of India Act explained
5.6 17-21 Section 24(3)(b) of the Insolvency and Bankruptcy Code explained
5.12 21-25 Obligations of Directors as guarantors for DHFL
5.18 25-26 Relevant Rules explained
5.20 26-29 Observation of Adjudicating Authority with reference to IA 701 of 2021
5.25 29-30 B Company Appeal (AT) (Insolvency) No. 785 of 2020 & 647 of 2021 Resolution Plan to obtain critical Information relating to the CIRP
5.27 30-31 Regulation 36 explained
5.30 31-33
7. Conclusion
5.34 Company Appeal (AT) (Insolvency) No. 785 of 2020 & 647 of 2021 1 of 39 NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No. 785 of 2020 & 647 of 2021 [Arising out of Order dated 28 April 2020 in MA No. 518 of 2020 in Company Petition No.4258 of 2019 passed by the Adjudicating Authority/National Company Law Tribunal, Mumbai Bench, Mumbai] 1. Company Appeal (AT) (Insolvency) No. 785 of 2020 IN THE MATTER OF: Dheeraj Wadhawan Having his address at: 22/23, Sea View Palace Pali Hill, Bandra, Mumbai – 400050 Appellant Versus The Administrator Dewan Housing Finance Corporation Limited Having a registered office at: 6th Floor, HDIL Towers, Anant Kanekar Marg Station Road, Bandra (East) Mumbai – 400051 Respondent Present: For Appellant : None Mr Ashish Bhan, Mr Ketan Gaur, Ms Chitra Rentala, Mr Aayush Mitruka, Mr Kaustub Narendran, Ms Samriddhi Shukla, Ms Lisa Mishra and Mr Vishal Hablani, Advocates for Intervenor (Piramal Capital & Housing Finance Ltd., SRA). Ms Liz Mathew, Ms Sonali Jain, Mr Rohan Rajadhyaksha, Advocates for Administrator. Mr Raunak Dhillon, Mr Animesh Bisht, Ms Saloni Kapadia, Ms Madhavi Khanna, Mr Shubhankar Jain, Mr Aniruddh Gambhir, Advocates for COC. With 2. Company Appeal (AT) (Insolvency) No. 647 of 2021 Company Appeal (AT) (Insolvency) No. 785 of 2020 & 647 of 2021 2 of 39 IN THE MATTER OF: Kapil Wadhawan R/o 13th, 14th, 15th & 16th Floor D.B. Breeze, 16th Road, Khar (West) Mumbai – 400 052 Presently in judicial custody, Maharashtra Email: mail@aglaw.in Appellant Versus 1. Administrator of Dewan Housing Finance Corporation Limited Having a registered office at: 6th Floor, HDIL Towers Anant Kanekar Marg Station Road, Bandra (East) Mumbai – 400051 Email: dhfladministrator@dhfl.com lizmathew.law@gmail.com Respondent No.1 2. Piramal Capital & Housing Finance Limited Having its registered office at: 4th Floor, Piramal Tower Peninsula Corporate Park Ganpatrao Kadam Marg, Lower Parel West, Mumbai – 400013 Email: bipin.singh@piramal.com Respondent No.2 Present: For Appellant : None For Respondent : Mr Ashish Bhan, Mr Ketan Gaur, Ms Chitra Rentala, Mr Aayush Mitruka, Mr Kaustub Narendran, Ms Samriddhi Shukla, Ms Lisa Mishra and Mr Vishal Hablani, Advocates for Intervenor (Piramal Capital & Housing Finance Ltd., SRA). Mr Raunak Dhillon, Mr Animesh Bisht, Ms Saloni Kapadia, Ms Madhavi Khanna, Mr Shubhankar Jain, Mr Aniruddh Gambhir, Advocates for COC. CORAM: Hon'ble Mr Justice M. Venugopal, Member (J) Hon'ble Mr V. P. Singh, Member (T) Hon'ble Dr Ashok Kumar Mishra, Member (T) Company Appeal (AT) (Insolvency) No. 785 of 2020 & 647 of 2021 3 of 39
JUDGEMENT
(Virtual Mode) [Per; V. P. Singh, Member (T)]
1. Factual Background
1.1 The Company Appeal CA (AT) (Ins) No 785 of 2020 is filed by Appellant Dheeraj Wadhawan, erstwhile Promoter/Director of DHFL, against the Order dated 28 April 2020 in the Miscellaneous Application being numbered as MA 518 of 2020 in Company Petition (IB) No. 4258/2019 under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (in short 'I&B Code'), seeking participation in the CoC1 of DHFL, rejected by the Adjudicating Authority/NCLT holding that the Appellant is not entitled to attend the meetings of the Committee of Creditors as member of the erstwhile Board of Directors.
1.2 The Appellants are the superseded Directors on the Erstwhile Board of Directors of the Corporate Debtor, i.e. Dewan Housing Finance Corporation Limited ("DHFL"). The Appellants are also personal guarantors for various loans the Corporate Debtor avails. The Corporate Director is a Housing Finance Company regulated under the National Housing Bank Act, 1987(for brevity 'NHB Act') and Reserve Bank of India Act, 1934 ('RBI Act'). On 15 November 2019, the Central Government made Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and 1 Committee of Creditors Company Appeal (AT) (Insolvency) No. 785 of 2020 & 647 of 2021 4 of 39 Application to Adjudication Authority) Rules, 2019 (for brevity 'FSP Rules') that provide CIRP for Financial Service Providers such as DHFL.
1.3 On 20 November 2019, RBI exercised its power under Section 45-IE of the Reserve Bank of India Act, 1934 and superseded the Board of Directors of DHFL by appointing Mr R. Subramaniakumar as the Administrator. Subsequently, on 29 November 2019, RBI initiated the Insolvency Resolution Process of the Corporate Debtor by filling the CP (IB) No. 4258 of 2019.
1.4 By an order dated 03 December 2019, the AA/NCLT2 admitted the Petition and the Administrator appointed by RBI on 20 November 2019 was appointed as the Administrator under the 'FSP Rules'.
1.5 Given the express provisions of the IBC and settled law, the Appellant being directors of the erstwhile Board of DHFL, anticipated that the Administrator shall give due notice of the meetings of the Committee of Creditors ("CoC") to them along with the agenda for the meeting to be held.
1.6 On 10 January 2020, 12 January 2020, 14 & 15 January 2020, the Appellant addressed an email to the Respondent/Administrator requesting him to send notice of every meeting of the CoC along with the agenda of such meetings. The respondent/Administrator, vide email dated 12 January 2020, replied that members of the erstwhile Board of Directors of the Financial Service Provider were not legally entitled to attend CoC meetings. Moreover, since the insolvency commencement date, the superseded Board of Directors 2 Adjudicating Authority Company Appeal (AT) (Insolvency) No. 785 of 2020 & 647 of 2021 5 of 39 were no longer directors of the Financial Service Provider. Hence, the 'superseded' Directors could not be treated as 'suspended' Directors within the meaning of Section 24 of the IBC.
1.7 However, on account of the Respondent's refusal to provide the Appellants with due and meaningful notice of the CoC meetings despite repeated correspondence in that regard, constrained the Appellant to file Miscellaneous Application being IA No.518 of 2020 in CP 4258 of 2019, wherein the relief sought against the Resolution Professional to provide the Appellants with a copy of Company Application, i.e. IA 518 of 2020 filed in CP IB 4258 of 2020 along with the copy of the Resolution Plan submitted by IInd Respondent.
1.8 Accordingly, the relief sought by the Appellants in the above IA 518 of 2020 is given below for ready reference.
a) A declaration that the Appellant is entitled to attend each and every meeting of the COC as a
