In the matter of Amrit Feeds Ltd.

INTHENATIONAL COMPANY LAW TRIBUNAL DIVISIONBENCH,(COURT NO.-II) KOLKATA I.A.(IB) 556/KB/2022 IN C.P. (IB)No 440/KB/2018 An applicationunder Section 60(5) oftheInsolvency andBankruptcy Code,2016read withRule11of theNationalCompany LawTribunal Rules, 2016.

INTHEMATTEROF: Huvepharma Limited, Sea (Pune) Private Limited registered under Private the provisions of theCompanies Act, 1956 and being a Company within the meaning ofthe Companies Act, 2013, having its registered office at 42, Haridwar Bunglow, S.N. 213, Road No.2 A/B, Kalyani Nagar, Pune, MH 411006 and also at 501 & 502, Green Terraces, Lane No.5, South Koregaon Park, Kawdewadi, Pune-411 001. …..Operational Creditor Versus Amrit Feeds Ltd. (In Liquidation) registered under the provisions of Companies Act, 1956 and being a Company within the meaning of the Companies Act, 2013 having its registered office at 158,LeninSarani, Kolkata700013,West Bengal. …..CorporateDebtor And INTHEMATTEROF: HarishBagla, S/OShri Gouri Prasad Bagla, residing at 6,AshokaRoad, Alipore, Kolkata- 700027. …..Applicant Versus Sunil Mohan Acharya, the Liquidator of M/s. Amrit Feeds Limited (In Liquidation), having his office at Intelligent IP Management Solutions Private Limited, YMCA Building, 2nd Floor, 25, Jawaharlal Nehru Road, Kolkata-700087 and also at 245/1, Bhattacharya Para, 6No. Jheel Par Road, Ward No. 15,New Barrackpur, North 24Parganas, Kolkata-700131. …….Respondents Dateof Pronouncement:15.01.2024 Coram: ShriBidishaBanerjee, Member (Judicial) ShriD. Arvind, Member (Technical) Appearances (via HybridMode): Mr. S.Dasgupta, Adv. ]For thePetitionerin IA (1.B.C)/531(KB)2022

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 Mr. A. Kumar Mukherjee, Adv. ] Mr. S.Prasad, Adv. ]

Ms.Sreenita Thakker, Adv. ]For theLiquidator Mr. SunilMohan Acharya, ]Liquidator-in-Person

Mr. D.N. Sharma, Adv. ]For theApplicant in IA (I.B.C)/556(KB)2022 Mr. Nirmalya Dasgupta, Adv. ] Mr. Patrali Ganguly, Adv. ]

Mr. Aritra Basu, Adv. ]For theApplicant in IA (I.B.C)/307(KB)2022 Mr. P.Ghosh, Adv. ]

Mr. Pramit Bag, Adv. ]For theApplicant in IA (I.B.C)/796(KB)2022 Mr. Anuj Mishra, Adv. ]

Mr. Abhrajit Mitra, Sr. Adv. ]For theApplicant in IA (I.B.C)/891(KB)2021 Ms.Manju Bhuteria, Adv. ]And Ms.Rajshree Kajaria, Adv. ]For theRespondent inIA (I.B.C)/556(KB)2022 Mr. Uttam Sharma, Adv. ]

Mr. Avishek Guha, Adv. ]For Respondent No.2 inIA (I.B.C)/1482(KB)2022 Ms.Arunika Dutta, Adv. ] Mr. Kaustav DeSarkar, Adv. ]

Mr. Ratul Das, Adv. ]For Punjab National Bank in ]IA(1.B.C)/1482(KB)2022 Ms.Urmila Chakraborty, Adv. Mr. Snehasish Chakraborty, Adv. ] Mr. Debasish Chakraborty, Adv. ]

Mr. S.R.Kakrania, Adv. ]In IA (1.B.C)/891(KB)2021 Mr. K.Sharma, Adv. ] Mr. N.Das, Adv. ]

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 OR DER

Per: BidishaBanerjee, Member (Judicial)

1. This Court iscongregated through hybrid mode. 2. Heard Ld.Senior Counsels/Counsels forthe Parties. 3. This Application has been preferred to seek thefollowing reliefs interalia: a) Injunction restraining the respondent no. 1/liquidator from taking any steps or further steps to confirm the sale in favour of the respondent no.2 in respect of the subject property situated in Mouza - Rangia, District: Kamrup, Assam more fully showninserial no.3of theSaleNoticedated March 2,2022; b) Till the disposal of the instant application, the sale notice dated March 2, 2022 in so far as it relates to the subject immovable property situated at Rangia, Kamrup, Assammentioned in serial no.3thereof, be stayed; c) The purported sale of the subject Assam property shown by the respondent no.1 in favour of therespondent no.2be cancelled; d) The decision taken by the respondent no. 1/liquidator to declare the respondent no.2 as successful bidder in respect of Assam property mentioned in serial no.3 of SaleNoticedated March 2,2022beset asideand/or quashed; e) Stay of the impugned decision taken by the liquidator/ respondent no. 1 declaring the respondent no.2 as successful bidder in respect of Rangia, Kamrup, Assam property of the corporate debtor, more fully mentioned in serial no.3 of the Sale NoticedatedMarch 2,2022; f) Ad-interimorders in terms of prayers above;

4. Brief Background 4.1The corporate debtor Amrit Feeds is engaged in the business of manufacturing and marketing poultry feeds in the business of poultry. In its usual course of business, the corporate debtor availed certain credit facilities from the Respondent No. 2, and to secure the credit facilities availed of, the corporate debtor mortgaged few immovable

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 properties which include the plant situated at Assam. A detailed description of the property being as under: “ALL THAT a land measuring (1,390 sq.mtr. + 4,180 sq.mtr. at Dag No.350, 43. Industrial Area, IDC, Village Kendurkona, Mouza Rangia, Dist: Kamrup, Assam-781 354 with building thereon, plant and machinery and other fixed assets on a going concern basis.” 4.2By an order dated October 22, 2019, Amrit Feeds, the Corporate Debtor (CD) was admitted into CIRP pursuant to the order of admission passed by the Hon’ble Adjudicating Authority. Mr. Pankaj Kumar Tibrewal was appointed as the IRP pursuant to the order dated October 22, 2019. In the first meeting of the Committee of Creditors (CoC) held on November 19, 2019, Mr. Pamkaj Kumar Tibrewal was confirmed as theResolution Professional (RP). 4.3The Applicant Mr.Harish Bagla is a Director of the suspended Board of Corporate DebtorAmrit Feeds. 4.4The Respondent No. 1 herein is the liquidator who was appointed pursuant to the order ofliquidation,passed onFebruary 19,2021. 4.5The Respondent no.2 is stated to be a company within the meaning of the Companies Act, 2013having its registered office at DK 1103,DLF GALLERIA Premises No. 02- 124 PLOT NO.BG/ 8, Action Area I, New Town, Parganas South, Kolkata-700 156. The Master Data of the respondent no.2, shows that it’s the board of directors of consists ofthefollowing:-

Name DIN/PANNo. 1. Navneet Kumar Ghidia 00409525 2. PriyankaGhidia 09465301 The Memorandum of Association of theRespondent No. 2shows that Navneet Kumar Ghidia and Priyanka Ghidia are theshareholders ofthe Respondent No.2 each holding 50% shareholding. The subject matter of the present application is restricted to one of the properties of the corporate debtor more fully described herein above situated in District: Kamrup (Assam), Mouza-Rangia.

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 4.6A sale notice dated March 2, 2022, issued by the respondent no. 1/liquidator, demonstrates that the liquidator wants to sell off three immovable properties of the corporate debtor situated in Bihar, West Bengal and Assam. The present application is, aimed at restricting sale of immovable property of the corporate debtor situated in the Dist: Kamrup, Assam, Mouza: Rangia (herein after referred to as the 'subject property').

5. Thegrievance oftheapplicantHarish Bagla 5.1The applicant has averred that on an earlier occasion when the respondent no. 1 had taken steps to sell oneof theproperties of theCD situatedat Rampur, Uttar Pradesh in terms of an earlier sale notice dated June 28, 2021, the applicant upon receiving a query from the liquidator by email dated September 11, 2021 had, by way of email dated September 16, 2021 indicated that Mr. Vijai Kumar Ghidia was his maternal uncle being the brother of his mother Smt. Chanda Bagla and Smt. Chanda Bagla was adopted by her father's elder brother and his wife, Radha Krishna Ghidia and Bhagwati Devi Ghidia. As such the Liquidator/ Respondent no. 1 tried to ascertain and seek clarification in regard to the relationship of Vijai Kumar Ghidia and the applicant because one Eva Agro Feeds Pvt. Ltd. (hereinafter referred to as 'Eva Agro) had participated in thesale inrespect of Rampur, UttarPradesh property. 5.2That the applicant, however, subsequently came to know that the Hon'ble Adjudicating Authority by an order dated August 12, 2021 passed at the instance of the said Eva Agro had set aside the decision taken by the liquidator to cancel the -auction sale notice dated June 28, 2021 in respect of Rampur, Uttar Pradesh property and had directed theliquidatorto take further steps to confirm thesale infavour ofthe said EvaAgro in respect ofRampur, Uttar Pradesh property. 5.3The applicant preferred an appeal before the Hon'ble NCLAT in Company Appeal (AT) (Ins.) No.789 of 2021. Prior to filing of the said appeal by the applicant, Punjab National Bank (one of the financial creditors of the corporate debtor) had also preferred an appeal before the Hon’ble NCLAT against the same order dated August 12, 2021. The appeal filed by said Punjab National Bank was numbered as Company Appeal (AT)(Ins) No. 757of2021.

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 5.4The NCLT order dated August 12, 2021 was set aside in the Appeal filed by the Punjab National Bank by the Hon’ble NCLAT by its order dated November 30, 2021. Consequently, the present applicant withdrew its appeal being Company Appeal (AT) (Ins.) No. 789of2021,as it had become infructuous. 5.5The Eva Agro had thereafter filed a civil appeal before the Hon’ble Supreme Court of India, aggrieved with the order passed by the Hon’ble NCLAT being Civil Appeal No. 7906 of 2021. Hon’ble Apex Court has set aside the NCLAT order and affirmed the NCLT order. 5.6The applicant has now in his capacity as one of the erstwhile directors of the corporate debtor has assailed the decision of the liquidator/respondent no. 1 to declare the respondent no. 2 as the purported successful bidder in respect of Rangia, Kamrup, Assam property ofthecorporate debtor. 6. Submissionsof theApplicant 6.1The applicant Harish Bagla has challenged the decision of the liquidator on the ground that respondent no.2 namely Aura Agrotech Pvt. Ltd. and Eva Agro Feed Pvt. Ltd. are the companies under the same management and control, alleging that the respondent no.2isan alterego ofthesaid Eva Agro.

6.2It is submitted that both the respondent no.2 and the said Eva Agro have been recently incorporated by the family members of Vijai Kumar Ghidia which includes his three sons namely Amit Kumar Ghidia, Navneet Kumar Ghidia and Vineet Kumar Ghidia. The respondent no.2 is a related party of the applicant who is erstwhile ex-director of thecorporate debtornowin liquidation. 6.3That Navneet Kumar Ghidia who is the principal shareholder and director of the respondent no.2,istheson ofVijai Kumar Ghidia, thematernal uncle oftheapplicant. The said Vijai Kumar Ghidia is also one of the promoter director and original subscriber to the Memorandum & Articles of Association of the corporate debtor which will appear from the copy of theMemorandum & Articles of Association ofthe corporatedebtor. 6.4It isurged that this isa fit case forlifting ofCorporate Veil to unearth therelations 6.5It is submitted that one Assam Industrial Infrastructure Development Corporation (AIIDCL) had filed an application in 2021 being IA (IB) No.891/KB/2021 to challenge the e-auction of the subject land situated in Assam admeasuring 5570 sq.

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 metres in terms of the earlier sale notice published by the respondent no. 1 dated September 15, 2021. In such application filed by AIIDCL an order was passed by this Tribunal on October 7, 2021 permitting the auction to go ahead but the respondent no.1 has been restrained from confirming the sale without the leave of the Adjudicating Authority.

7. Submissionsof therespondentLiquidator Percontra theliquidatorwould aver as under: 7.1That the credit facilities availed by the Corporate Debtor were provided by the HDFC Bank and not the respondent No.2. In order to avail the credit facilities from HDFC Bank, the corporate debtor had mortgaged a few immovable properties including its plant situated at Assam. The applicant Harish Bagla’s objections regarding saleoftheAssam property isuntenable andliabletobe rejected. 7.2It is contended that the sale in favour of Eva Agro Feeds Pvt. Ltd. was set aside by Hon’ble NCLAT in Company Aplleal (AT) (Ins.) No. 757 of 2021 preferred by Punjab National Bank. The present Applicant had also challenged sale of the property in favour of Eva Agro Feeds Pvt. Ltd. before the Hon'ble NCLAT in Company Appeal (AT) (Ins.) No. 789 of 2021 alleging that Eva Agro Feeds Pvt. Ltd. was a related party of the corporate debtor by reason of the relation between the promoters. As the Company Appeal (AT) (Ins.) No.757 of 2021 was allowed and the sale in favour of Eva Agro Feeds Pvt. Ltd. had been set aside, I.A. 789 of 2021was naturally disposed of.

8. It is urged by the Applicant Mr. Harish Bagla (Son of Chandra Bagla), the promoter of Amrit Feeds that: 8.1Vijay Kumar Ghidia being the promoter of Eva Agro cannot participate in the auction as Vijay Ghidia is the brother of Chandra Bagla and his maternal uncle and thus“related”to Harish Bagla. 8.2Navneet Kumar Ghidia and his wife Priyanka being the promoters of Aura, and Navneet being his cousin (son of his maternal uncle Vijay), Auura too cannot participateinthebid,as itspromoters are “related”to Harish Bagla. 9. In view of the rival contention noted above it has become necessary to consider whether Chanda or Harish are related to Vijay and his family members. For this purpose, the INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 implication of Section 12 of The Hindu Adoptions and Maintenance Act, 1956 has to be considered: Effects of adoption.—An adopted child shall be deemed to be thechild of his or her adoptive father or mother for all purposes with effect from the date of the adoption and from such date all the ties of the child in the family of his or her birth shall be deemed to be severed and replaced by those created by the adoptionin theadoptivefamily: Provided that— (a) the child cannot marry any person whom he or she could not have married if heor shehadcontinued inthe familyofhis or her birth; (b) any property which vested in the adopted child before the adoption shall continue to vest in such person subject to the obligations, if any, attaching to the ownership of such property, including the obligation to maintain relatives in thefamilyof hisor her birth; (c) the adopted child shall not divest any person of any estate which vested in himorher beforetheadoption.

It is noted that Chanda Ghidia is the biological daughter of Nauratanlal Ghidia the brother of his Adoptive Father Radhakrishna Ghidia.. On being adopted by Nauratanlal’s brother Radhakrishna Ghidia (which adoption is not challenged), the ramification ofadoption ofChanda would bethat:  She is no more related to Nauratanlal Ghidia (and hence not to his son Vijay Ghidia and grandson) and the traditional preoccupation with the blood ties is nowonthewane.  The Recognitionof continuingties ofinheritance withnatural family ceases.  She should be deemed to have severed her ties with her putative father Nauratanlal Ghidia and his family members;  She is not a member of the same HUF as that of Nauratanlal Ghidia or his sons or grandsons and for the same reason her son Harish cannot be termed as related to Nauratanlal Ghidiaor hisson Vijay Ghidia orhis grandson Navneet Ghidia.  Nolegal right toinherit from biological parents’ estatecontinues.  Nolegal right ofbiological parents over thechild given inadoption, exists.

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 10.The adoption statutes are replete with statements which make it clear that a primary focus is the well being of the adopted child. The adoptive family treats the adoptee in all respects, including matters of succession as though it had been born into the adoptive family. The legislative intent is that the legal effect of adoption would be substitution of the adoption in place of the natural family and severance of all ties with the child’s natural family, i.e., a total transplantation of the child into his adoptive family. Hence, Chanda Bagla after her adoption legally ceases to be a daughter of Nauratanlal Ghidia bar under Section 5(24A) (a) of the IBC, 2016 does not get attracted in any manner. Under Section 5(24A) (a) of IBC she is neither a member of HUF under (i) nor a daughter of Nauratanlal Ghidia under (vii). Thus, her son Harish cannot be termed as daughter’s son in respect to Nauratanlal Ghidia nor sister’s son in respect ofVijay Ghidia. 11.It is also discernible that Hon’ble Apex Court has elaborated in its judgment that Vijay Ghidia is not a related party of Harish.

The Appeal was preferred by Eva Agro Feeds, the Company belonging to Vijay Ghidia group where an order passed by Hon’ble NCLAT, setting aside an NCLT order confirming sale in favour ofEva Agro, ofland belonging to CDAmrit Feeds, was set aside. Hon’bleApex Court affirmed the order ofNCLT Mr. Harish Bagla, the present applicant was theintervenor therein. 12.The relevant extract of the judgment of the Hon’ble Supreme Court in Civil Appeal 7906 of 2021, as relevant and germane to the present lis is extracted verbatim hereinbelowwith supplied emphasis for clarity. It goes thus: “8. As noticed above, one Mr. Harsh Bagla has filed an application seeking intervention which wehave allowed. 9. In addition to narrating the facts and commenting thereupon, the intervenor has averred that the principal person in control of the appellant is one Mr. Vijay Kumar Ghidia who is a director and principal shareholder of the appellant. Mr. Vijay Kumar Ghidia was also one of the promoter directors and principal shareholders of the corporate debtor. Sale of any asset of the corporate debtor could not have been conducted in favour of a related party of the corporate debtor in view of the specific bar under Section 29A, of the Code.

As a matter of fact, Mr. Viiay Kumar Ghidia is also the maternal uncle of the intervenor who is the ex managing director of the corporate debtor. Mr. Vijay Kumar Ghidia

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 therefore comes within the meaning of related party" as defined under Sections 5(24) and 5(24A) of the Code. Therefore, the auction sale in favour of the appellant is badin lawandcannot besustained. XX XX 10. We have heard Mr. Neeraj Kishan Kaul, learned senior counsel for the appellant; Mr. Rajesh Kumar Gautam, learned counsel for Respondent No. 1; Mr. Krishnaraj Thakker, learned counsel for Respondent No.2; and Mr. Siddharth Bhatnagar, learned senior counsel for theintervenor - Mr. Harish Bagla 11. Mr. Neeraj Kishan Kaul, learned senior counsel for the appellant at the outset submits that Appellate Tribunal fell in complete error in setting aside the order ofthe Tribunal andrestoringtheorder oftheLiquidator. XX XX He has also pointed out that at the time of auction, Mr. Vijay Kumar Ghidia was no longer connected with the corporate debtor having retired from the said company way back in the year 2011. Therefore, he cannot come within the ambit of the expression related party' as defined under the Code.

He submits that the present is a fit case for setting aside the order of the Appellate Tribunal and restoring the order of the Tribunal which as a matter of fact has been complied with bytheLiquidator. XX XX 13. Mr. Krishnaraj Thakker, learned counsel for Respondent No.2 has also adopted and reiterated the above submissions made by learned counsel for Respondent No. 1. Additionally, he submits that Liquidator had received an e-mail dated 10.09.2021 from one Mr. Amit Ghidia informing him that the promoter of the appellant was also the founder promoter of the corporate debtor. Mr. Vijay Kumar Ghidia who is one of the directors of the appellant was also a director and principal shareholder of the corporate debtor. Recent incorporation of the appellant in the month of July 2021 also raised suspicion about the nature of theappellant andits intentions. 14. Mr. Siddharth Bhatnagar, learned senior counsel appearing for the intervenor highlighted the issue of 'related party'. According to him, appellant should have been disqualified from participating in the E-auction by reason of INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 being a 'related party'.

Promoter director of the appellant, Mr. Vijay Kumar Ghidia, is the maternal uncle of Mr. Harsh Bagla, the intervener. Mr. Vijay Kumar Ghidia is one of the directors of the appellant. He was also one of the promoter directors and original subscribers to the Memorandum and Articles of Association of the corporate debtor. Elaborating further, he submits that mother of the intervenor Smt. Chanda Bagla is the sister of Mr. Vijay Kumar Ghidia. Intervenor has a significant stake in the corporate debtor having held about fifty-three per cent of the paid-up share-capital of the corporate debtor. Liquidator, therefore, should have cancelled the auction sale notice only on the ground that appelant is a 'related party' to the corporate debtor. Referring to the e-mail dated 10.09.2021, he submits that Mr. Amit Ghidia, son of Mr. Vijay Kumar Ghidia had brought to the notice of the Liquidator that Mr. Vijay Kumar Ghidia is the maternal uncle of the intervenor. By virtue of such relationship, appellant would attract disqualification under Section 29A read with Section 5(24) and Section 5(24A) of theCode.

15. Referring to the above contentions, Mr. Neeraj Kishan Kaul, learned senior counsel for the appellant submits that it was because of the activities of persons like the intervenor that the corporate debtor has landed in the present situation. Therefore, it is not open to such persons to talk about getting proper valuation of the auctioned assets of the corporate debtor. In so far allegation of related party' is concerned, he submits that the same is no bar at all and cannot be held as a disqualification for the appellant inasmuch as Mr. Vijay Kumar Ghidia had ceased to be a director of the corporate debtor way back in the year 2011. To attract disqualification under Section 29A, the relationship has to be proximate. In this connection, he has placed reliance onthe decision of this Court in the case of Swiss Ribbons Private Limited and Another versus Union of India and Others. XX XX 25. While we are on the powers and duties of the Liquidator, it would be apposite to refer to certain provisions of the Regulations framed in exercise of the powers conferred by Section 5 and other sections of the Code read with Section 240 of INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 the Code as per which the Insolvency and Bankruptcy Board of India may make regulations to carryout provisions of theCode.

XX XX 34.1. A conjoint reading of the aforesaid provisions would make it clear that while the highest bidder has no indefeasible right to demand acceptance of his bid, the Liquidator if he does not want to accept the bid of the highest bidder has to apply his mind to the relevant factors. Such application of mind must be visible or manifest in the rejection order itself. As this Court has emphasized the importance and necessity of furnishing reasons while taking a decision affecting the rights of parties, it is incomprehensible that an administrative authority can take adecision withoutdisclosing thereasons for taking such adecision. XX XX 43. Learned senior counsel for the intervenor argued that Shri Vijay Kumar Ghidia who is the director and principal shareholder of the appellant was also one of the promotor director and principal shareholder of the corporate debtor. Therefore, he is a 'related party' of the corporate debtor and as such is not eligible; rather debarred from participating in the auction of the subject property of the corporate debtor. However, it was pointed out by learned senior counsel for the appellant that Shri Vijay Kumar Ghidia is no longer connected with the corporate debtor having retired from the said company way back in the year 2011. 44. At this stage, we may advert to Section 5(24) of the Code which defines the expression 'related party' in relation to a corporate debtor.

Section 5(24) reads as follows:- 5.Definitions -Inthis part, unless thecontext other requires, - (24) "related party",in relation to acorporatedebtor, means- (a) a director or partner of the corporate debtor or a relative of a director or partner of thecorporate debtor; (b) a key managerial personnel of the corporate debtor or a relative of a key managerial personnel ofthe corporatedebtor;

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 (c) a limited liability partnership or a partnership firm in which a director, partner, or manager of thecorporatedebtor or his relativeis apartner; (d) a private company in which a director, partner or manager of the corporate debtor is a director and holds along with his relatives, more than two per cent. of its sharecapital; (e) a public company in which a director, partner or manager of the corporate debtor is a director and holds along with relatives, more than two per cent. of its paid-up sharecapital; (f) anybody corporate whose board of directors, managing director or manager, in the ordinary course of business, acts on the advice, directions or instructions of a director, partner ormanager of thecorporatedebtor; (g) any limited liability partnership or a partnership firm whose partners or employees in the ordinary course of business, acts on the advice, directions or instructions ofadirector, partner ormanager of thecorporatedebtor; (h) any person on whose advice, directions or instructions, a director, partner or manager ofthe corporatedebtor is accustomed to act; (i) a body corporate which is a holding, subsidiary or an associate company of the corporate debtor, or a subsidiary of a holding company to which the corporate debtor is asubsidiary; (j) any person who controls more than twenty per cent. of voting rights in the corporate debtor onaccount of ownership or avotingagreement; (k) any person in whom the corporate debtor controls more than twenty per cent. of voting rights onaccount of ownership oravoting agreement; (l) any person who can control the composition of the board of directors or corresponding governing bodyof thecorporate debtor; (m)any person whois associated with thecorporatedebtor onaccount of— (i) participation in policymaking processes of thecorporate debtor;or (ii) having more than two directors in common between the corporate debtor and such person; or (iii) interchange of managerial personnel between the corporate debtor and such person; or (iv) provision of essential technical informationto,or from, thecorporatedebtor;

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 44.1 Clause (a) of Section 5(24) says that a director or partner of the corporate debtor or a relative of a director or partner of the corporate debtor would be a related party. Likewise, as per Clause (e) of Section 5(24), ‘related party' in relation to a corporate debtor would mean a private or public company in which a director, partner or manager of the corporate debtor is a director and holds along with relatives more than two percent of its share capital or paid-up share capital, as thecase maybe. 45. Similarly, Section 5(24A) defines ‘related party’ in relation to an individual which is as follows:- 5.Definitions –In this Part,unless the context otherwiserequires,- (24A) “related party”,inrelation toanindividual,means— (a) a person who is a relative of the individual or a relative of the spouse of the individual; (b) a partner of a limited liability partnership, or a limited liability partnership or a partnership firm, inwhich the individualis apartner; (c) a person who is a trustee of a trust in which the beneficiary of the trust includes the individual, or the terms of the trust confers a power on the trustee which may be exercised for thebenefit of theindividual; (d) a private company in which the individual is a director and holds along with his relatives, morethan two per cent. of its sharecapital; (e) a public company in which the individual is a director and holds along with relatives, morethan two per cent. of its paid-upshare capital; (f) a bodycorporate whose board of directors, managing director or manager, in the ordinary course of business, acts on the advice, directions or instructions of the individual; (g) a limited liability partnership or a partnership firm whose partners or employees in the ordinary course of business, act on the advice, directions or instructions of the individual; (h) aperson onwhoseadvice, directions or instructions,the individual isaccustomed to act;

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 (i) a company, where the individual or the individual along with its related party, own more than fifty per cent. of the share capital of the company or controls the appointment of the board of directors of the company. Explanation.—For the purposes of this clause,— (a) “relative”, with reference to any person, means anyone who is related to another,in thefollowing manner, namely— (i) members ofaHindu Undivided Family, (ii) husband, (iii)wife, (iv) father, (v) mother, (vi) son, (vii) daughter, (viii) son's daughter andson, (ix) daughter'sdaughter andson, (x) grandson'sdaughter andson, (xi) granddaughter'sdaughter andson, (xii) brother, (xiii) sister, (xiv) brother's son anddaughter, (xv)sister's son anddaughter, (xvi)father's fatherandmother, (xvii)mother's father andmother, (xviii)father'sbrother andsister,

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 (xix) mother's brother andsister, and (b) wherever the relation is that of a son, daughter, sister or brother, their spouses shall also beincluded;] 45.1. From the above, it is evident that a person who is a relative of the individual or a relative of the spouse of the individual would be a ‘related party’ in relation to that individual. That apart, a private company or a public company in which the individual is a director and holds along with relatives more than two percent of its share capital or paid up sharecapital, as the case may be, wouldbe a ‘related party’ in relation to an individual. Further, as per the explanation, both maternal and paternal uncles would be covered within the definition of ‘related party’. 46. Section 29A of the Code mentions persons not eligible to be a resolution applicant. Section 29Areads as follows:- 29-A. Persons not eligible to be resolution applicant.—A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointlyor in concert with such person,— 46.1. Thus, as per Section 29A(g), a person shall not be eligible to submit a resolution plan if such person or any other person acting jointly or in concert with such person has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the adjudicating authority. Clause(j) says that a person shall not be eligible to submit a resolution plan if such person or any other person acting jointly or in concert with such person has a connected person not eligibleunder Clauses (a) to (i). As per Explanation (i), the expression ‘connected person’ means-(i) any person who is the promoter or in the management or control of the resolution applicant; or (ii) any person who shall be the promoter or in the management or control of the business of the corporate debtor during theimplementation of theresolution plan;etc.

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 47. The expression ‘related party’ appearing in Sections 5(24) and (24A) suffering ineligibility under Section 29A has received considerable attention of this Court. In Swiss Ribbons Private Limited and Another Versus Union of India and Others, a constitutional challenge was made to Section 29A(j) of the Code read with the definition of ‘related party’ as defined under Sections 5(24) and5(24A). Whilerepelling thechallenge, this Courtheld as follows:- 109. We are of the view that persons who act jointly or in concert with others are connected with the business activity of the resolution applicant. Similarly, all the categories of persons mentioned in Section 5(24-A) show that such persons must be “connected” with the resolution applicant within the meaning of Section 29- A(j). This being the case, the said categories of persons who are collectively mentioned under the caption “relative” obviously need to have a connection with the business activity of the resolution applicant.

In the absence of showing that such person is “connected” with the business of the activity of the resolution applicant, such person cannot possibly be disqualified under Section 29-A(j). All the categories in Section 29-A(j) deal with persons, natural as well as artificial, who are connected with the business activity of the resolution applicant. The expression “related party”, therefore, and “relative” contained in the definition sections must be read noscitur a sociis with the categories of persons mentioned in Explanation I, and so read, would include only persons who are connected with thebusiness activityof theresolutionapplicant. 110. An argument was also made that the expression “connected person” in Explanation I, clause (ii) to Section 29-A(j) cannot possibly refer to a person who may be in management or control of the business of the corporate debtor in future. This would be arbitrary as the explanation would then apply to an indeterminate person. This contention also needs to be repelled as Explanation I seeks to make it clear that if a person is otherwise covered as a “connected person”, this provision would also cover a person who is in management or control of the business of the corporate debtor during the implementation of a resolution plan.

Therefore, any such person is not indeterminate at all, but is a person who is in the saddle of the business of the corporate debtor either at an INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 anterior point of time or even during implementation of the resolution plan. This disposes of all thecontentions raising questions as to theconstitutionalvalidity of Section 29-A(j). 47.1. After a careful analysis, this Court opined that the expressions ‘related party’ and ‘relative’ contained in the definition sections must be read noscitur a sociis with thecategories of person mentioned in Explanation I. So read, it would include only persons who are connected with the business activity of the resolution applicant. This Court further clarified that the expression ‘connected person’ would also cover a person who is in management or control of the business of thecorporatedebtor duringtheimplementation of aresolution plan. XX XX 48. In Phoenix ARC Private Limited versus Spade Financial Services Limited, this Court noted that the expression ‘related party’ is defined in Section 5(24) in relation to a corporate debtor and Section 5(24A) provides a corresponding definitioninrelation toanindividual.Thereafter, it has been observed as under:- 88. An issue of interpretation in relation to the first proviso of Section 21(2) is whether the disqualification under the proviso would attach to a financial creditor only in praesenti, or if the disqualification also extends to those financial creditors who were related to the corporate debtor at the time of acquiring the debt.

48.1. Referring to its earlier decision in Arcelor Mittal (India) (P) Ltd. V. Satish Kumar Gupta, where the issue was whether ineligibility of the resolution applicant under Section 29 A(c) of the Code is attached to an applicant at the date of commencement of the corporate insolvency resolution process or at the time when the resolution plan is submitted by the resolution applicant. It was clarified that the opening words of Section 29(A) stating “a person shall not be eligible to submit a resolution plan…..” clearly indicates that the stage of ineligibility attaches when the resolution plan is submitted by the resolution applicant; thus the disqualification applies in praesenti. This Court referred to Section 21(2) of the Code, more particularly to the second proviso thereto which INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 deals with the Committee of Creditors and the ineligibility of a related party in the consideration and voting on a resolution plan by the said committee and held as follows: 101. However, if such an interpretation is given to the first proviso of Section 21(2), all financial creditors would stand excluded if they were a “related party” of the corporate debtor at the time when the financial debt was created.

This may arguably lead to absurd conclusions for entities which have legitimately taken over the debt of related parties, or where the related party entity had stopped being a“related party”longago. 49. Arun Kumar Jagatramka Versus Jindal Steel and Power Limited and Another, also deals with Section 29A of the Code. In that case, this Court observed that the fundamental postulate of the Code is that a corporate debtor has to be protected from its management and corporate debt. Hence it would be anomalous if a compromise or arrangement can be entertained from a person who is responsible for the state of affairs of the corporate debtor. Referring to Arcelor Mittal (India) (P) Ltd. (supra), this Court observed that the said decision adverted to Section 29A of the Code as a typical instance of a see-through provision so that one is able to arrive at persons who are actually in ‘control’ whether jointly or in concert with other persons. It was thereafter that this Court held that Section 29A is a crucial link in ensuring that the objects of the Code are not defeated by allowing ‘ineligible persons’ responsible for running a company (corporate debtor)aground,to return in thenew avatar of aresolution applicant.

50. From the above, it is clearly manifest that the disqualification sought to be attached to theappellant is without any substance as therelated party had ceased to be in the helm of affairs of the corporate debtor more than a decade ago. He was not in charge of the company or an influential member of the company i.e., the corporate debtor when the appellant had made its bid pursuant to the auction salenotice. 51. Thus having regard to the aforesaid discussion, we have no hesitation in coming to the conclusion that Appellate Tribunal was not justified in setting aside

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 the order of the Tribunal dated 12.08.2021. Consequently, we set aside the order dated 30.11.2021 passed by the Appellate Tribunal and restore the order dated 12.08.2021. The appeal is accordingly allowed. However, there shall be no order as to costs.” 13.From the extract supra it is clearly evident that Hon’ble Apex Court has considered therelation ofMr. Harish Baglawith Mr. Vijay Ghidia as under: a. “Mr. Vijay Ghidia is the maternal uncle of Mr. Harish Bagla, the intervenor” (also thepresent Applicant) b. “Vijay Ghidia was one of the promoter and Principal Shareholder of the CorporateDebtor.”(Amrit Feeds) c. “Mother of the intervenor Smt. Chanda Bagla is the sister of Mr. Vijay Kumar Ghidia.” d. Harish Bagla the intervenor (and the applicant herein) “has a significant stake intheCorporateDebtor.” Hon’ble Apex Court considered the implication of Section 5(24) and 5(24A) and Section 29Aof theCode asunder: a. Section 5(24) of the code “defines the expression related party in relation to a corporatedebtor.” b. “Clause (a) of Section 5(24) says that a director or partner of the corporate debtor or a relative of a director or partner of the corporate debtor would be a related party.” c. “ as per Clause (e) of Section 5(24), ‘related party' in relation to a corporate debtor wouldmean aprivate or public company inwhich a director, partner or manager of the corporate debtor is a director and holds along with relatives more than two percentof itssharecapital orpaid-up sharecapital, as thecasemaybe.” d. “Section 5(24A) defines ‘related party’ in relationtoanindividual”as: i. “a person who is a relative of the individual or a relative of the spouse of the individual would bea‘related party’inrelationto that individual.” ii. “a private company or a public company in which the individual is a director and holds along with relatives more than two percent of its share

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 capital or paid up share capital, as the case may be, would be a ‘related party’inrelation toan individual.” and observed that “as per the explanation, both maternal and paternal uncles would be covered withinthedefinitionof‘related party’.” e. Section 29A of the Code mentions persons not eligible to be a resolution applicant.” and held that “as per Section 29A(g), a person shall not be eligible to submit a resolution plan if such person or any other person acting jointly or in concert with such person has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which anorder has been madeby theadjudicatingauthority.” f. Hon’ble Apex Court referred to Swiss Ribbons, Phoenix ARC and other decisions and observed that, “The expression “related party”, therefore, and “relative” contained in the definition sections must be read noscitur a sociis with the categories of persons mentioned in Explanation I, and so read, would include only persons who areconnected withthebusiness activityoftheresolutionapplicant.” g. Further, “that the expressions ‘related party’ and ‘relative’ contained in the definition sections must be read noscitur a sociis with the categories of person mentioned in Explanation I. So read, it would include only persons who are connected with the business activityof theresolutionapplicant.” h. Hon’ble Court also considered “whether the disqualification under the proviso would attach to a financial creditor only in praesenti, or if the disqualification also extends to those financial creditors who were related to the corporate debtor at the time of acquiring thedebt.” i. The Hon’ble Apex Court held “disqualification sought to be attached to the appellant is without any substance as the related party had ceased to be in the helm of affairs of the corporate debtor more than a decade ago” and set aside the order passed by Hon’ble NCLAT.

Thus, there is no gain saying that the setting aside is only on the ground that Mr. Vijay Ghidia had ceased to be a Director in Amrit Feeds, but also on the ground that “the related party” had ceased to be in the helm of affairs of the corporatedebtor.

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 14.We have noted that before the Hon’ble Apex Court, it was urged that Vijay Ghidia, thematernal uncle was a related party as he was a Maternal uncle ofMr. Harish Bagla as well as in the Board of Corporate Debtor for some time. However, there is no Board Commonality between Amrit Feeds (the Corporate Debtor) and Auura the prospective auction purchaser. In the aforesaid context we fail to comprehend or countenance how an objection of the nature as raised by Mr. Harish Bagla in regard to participation ofAuura in theLiquidation SaleofAmrit Feeds, would sustain. 15.Respondent No. 1in his reply affidavit has averred that 1. “Mr. Vijay Kumar Ghidia is neither in the management nor the shareholder of Respondent No.2. Mr. Vijay Kumar Ghidia was the shareholder and director of the Corporate Debtor till 2008. I was advised that the respondent no.2 cannot be classified as a related party of the Corporate Debtor and is eligible to acquiretheassets of thecorporatedebtor.” 2. “I was advised that after the adoption of the applicant’s mother Mrs. Chanda Bagla, her biological brother Mr. Vijay Kumar Ghidia ceased to be maternal uncle of the Applicant by reason of Section 12 of the Hindu Adoption and MaintenanceAct, 1956.” 16.Theapplicant bywayof hisrejoinder has tried to contradict thestand and assert that 16.1“that even after adoption there is no severance because even after adoption of Chanda Bagla by her father's elder brother (that is Radhakrishna Ghidia) the same will not affect the relationship between the applicant and Vijay Kumar Ghidia because the mother of the applicant even after adoption remains in the same family of the two brothers namely, Radhakrishna Ghidia and Nauratmal Ghidia.

Therefore, the relationship between the applicant and Vijay Kumar Ghidia does not change by reason of the adoption of the mother of the applicant tothefamilyof thebrother of thefather of VijayKumar Ghidia.” 16.2“that the present sale notice which relates to the Kamrup property and wherein the respondent no.2 is the successful bidder should be kept in abeyance till the outcome of the pending Civil Appeal being no.7906 of 2021 which also concerns the respondent no.2 herein which is a sister concern of the appellant beforetheHon'bleSupreme Courti.eEva Agro Feeds PrivateLimited.”

INTHENATIONALCOMPANYLAWTRIBUNAL DIVISIONBENCH,(COURTNO.-II) KOLKATA I.A.(I.B.C)556/KB/2022 IN C.P.(IB)No440/KB/2018 17.As extracted above the said Civil Appeal had been allowed by the Hon’ble Apex Court confirming the sale of Amrit Feeds’ land in Punjab in favour of Eva Agro, discarding the objections raised by Mr. Harish Bagla about his relation with Mr. Vijay Ghidia the promoter of Eva Agro. For the same reason, the objection of Mr. Harish Bagla in regard to sale of Kamrup property of Amrit Feeds (the CD) in favour of Auura Agrotech isnot tenable. 18.In the aforesaid backdrop it is also noted that the Applicant does not contend that the liquidatorhas discarded a betterbid tofavour respondent no.2. 19.Thus, wehold that: 19.1That the sale in question is in favour of Respondent No. 2 (Auura) is not barred undertheprovisions ofSection 29Aof theCode. 19.2As such liquidator has not acted contrary to the proviso in Section 35(1)(f) of IBC,2016. 20.Application thus fails and is dismissed.

D.Arvind Bidisha Banerjee Member(Technical) Member (Judicial)

Order Signed onthe15th DayofJanuary 2024

A.J.SLRA