Odat Gmbh vs Ca Santanu Brahma Interim Resolution ...

[Arising out of order dated 11.12.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata in I.A.(IB) No. 1649/KB/2023 in C.P. (IB) No.1382/KB/2020]

IN THE MATTER OF:

ODAT GmbH Bahnhofstrabe 28, 49356 Diephoiz Deutschland/ Germany. ...Appellant

Vs.

1. CA Santanu Brahma, Interim Resolution Professional of Darjeeling Organic Tea Estates Private Limited Rio AH-276, Salt Lake City, Sector-II, Kolkata - 700091 Email: santanubhrahma@gmail.com.

2. The Committee of Creditors of Darjeeling Organic Tea Estates Private Limited Through the Lead Bank, Indian Bank, SAM Large Branch, 14, India Exchange Place, Kolkata 700001. Email: samlkolkata@indianbank.co.in.

...Respondents Present:

For Appellant: Ms. Purti Gupta and Ms. Henna George, Advocates

For Respondents: Mr. Shaunak Mitra, Mr. Akash Agarwal, Mr. Dripto Majumdar, Advocates with Mr. Santanu Brahma, RP for Respondent No.1. Mr. Abhijeet Sinha, Sr. Advocate with Mr. Ashish Choudhury, Mr. Santosh Kumar Ray, Ms. Ritupuram Sanyal, Ms. Zeba Khan, Mr. Abhishek Arora, Advocates for Respondent No.2 (CoC).

Cont'd.../ -2-

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by a Financial Creditor has been filed challenging the order

dated 11.12.2023 passed in I.A.(IB) No.1649/KB/2023. I.A.(IB)

No.1649/KB/2023 wad filed by the Appellant seeking a direction to the

Resolution Professional to include the Appellant in the Committee of Creditors

(CoC) and also to provide voting rights to the Applicant/ Appellant. The

application has been rejected by the impugned order. Aggrieved by which

order this Appeal has been filed. Brief facts of the case necessary to be noticed

for deciding this Appeal are:

i. The Appellant - ODAT GmbH is a foreign financial lender who extended

loan and advance to Darjeeling Organic Tea Estate Pvt. Ltd. (hereinafter

referred to as 'Corporate Debtor') from the year 2014 to 2020. Total loan

advanced to the Corporate debtor including interest amounts to

Rs.158,97,81,571/-. The financial assistance advanced by the Appellant

was a Reserve Bank of India approved external commercial borrowing.

The Appellant has not appointed any Director in the board of the

Corporate Debtor.

ii. The Corporate Debtor was promoted by a Bansal Family but had to exit

from the company by resignation on 15.06.2022 on account of insistence

by the lenders, especially UCO Bank. The foreign shareholders of the

Corporate Debtor appointed a Director in the Board of Director of the

Company Appeal (AT) Insolvency No. 1683 of 2023 -3-

Corporate Debtor namely Rembert Biemond in the year 2017. Rembert

Biemond, a resident of Sweden has been working as Director in the

Corporate Debtor since his appointment. Rembert Biemond is also one

amongst the three Managing Directors of the Appellant. The Appellant -

ODAT was incorporated on December 4, 2019 as a German company and

was not in existence when Rembert Biemond was appointed as Director

in the board of Corporate Debtor.

iii. CIRP commenced against the Corporate Debtor by order dated

28.10.2022 of the Adjudicating Authority. CIRP process of the Corporate

Debtor was stayed by order of this Appellate Tribunal, which interim

order was vacated. The Appellant filed its claim in the CIRP of the

Corporate Debtor for an amount of Euros 1,77,40,328/- equivalent to

INR 158,97,81,751/- on 20.09.2023. The IRP constituted the CoC, in

which Appelalnt has not been given voting rights on the premise that

Appellant is a related party of the Corporate Debtor. Appellant sent a

communication to the IRP on 26.09.2023 informing that it is not a related

party. IRP having not accepted the Appellant as Financial Creditor with

voting rights, Appellant filed an application being I.A. No.1649/KB/2023

before the Adjudicating Authority, in which application following prayers

were made:

"a) Allow the instant application; and/or

b) Direct the Resolution Professional of Darjeeling Organic Tea Estates Private Limited to include the Applicant in the Committee of Creditors and also provide the voting rights to the Applicant; and/or

Company Appeal (AT) Insolvency No. 1683 of 2023 -4-

c) Restrain the Interim Resolution Professional/Resolution Professional from holding the CoC meeting on 30.09.2023; during the pendency of the present application; and/or

d) Pass any such further orders as deemed fit by this Adjudicating Authority."

iv. By email dated 29.09.2023, the IRP invited the Appellant to be a part of

the CoC without having any voting rights. The I.A. filed by the Appellant

was replied by the IRP. A Supplementary Affidavit was also filed in

support of the I.A. The Adjudicating Authority by the impugned order

dated 11.12.2023 rejected the application, aggrieved by which order this

appeal has been filed.

v. The Adjudicating Authority by the impugned order held the Appellant a

related party under Section 5(24)(h) and 5(24)(m).

2. We have heard Ms. Purti Gupta, learned counsel for the Appellant,

Shri Shaunak Mitra, learned counsel appearing for the Respondent No.1 and

Shri Abhijeet Sinha, learned senior counsel appearing for the Committee of

Creditors.

3. Learned counsel for the Appellant submits that the Adjudicating

Authority committed error in holding the Appellant as a related party of the

Corporate Debtor. Neither Section 5(24)(h) nor Section 5(24)(m) was attracted

in the facts of the present case. Rembert Biemond was one of the three

Managing Directors of the Appellant. The word 'Geshaftsfuhrer' in German

translates to Managing Director in English language but does not have the

Company Appeal (AT) Insolvency No. 1683 of 2023 -5-

same meaning in terms of executive powers that a Managing Director has

under Indian Companies Act. Under the registration of Appellant as German

Company, when there are more than one Managing Director, any business on

behalf of the Appellant can be transacted at least by two Managing Directors.

Rembert Biemond who was one of the Managing Directors in the Appellant

has no authority to act on behalf of the Appellant. Rembert Biemond was

appointed in the Board of Corporate Debtor by its investors in 2017 whereas

the Appellant was incorporated on 4th December, 2019. Rembert Biemond

being Director of the Corporate Debtor had discharged some functions as

Director of the Corporate Debtor, which functions were not functions of

Rembert Biemond on behalf of the Appellant. Rembert Biemond became

involved in the Corporate Debtor's interim and critical decisions only since all

Directors and key Managerial personnel of the Corporate debtor exited/

abandoned the Corporate Debtor. There was no other Director left in the

Company and Rembert Biemond took some critical action in the Corporate

Debtor to protect the Corporate Debtor and to save the livelihood of 8000 tea

garden workers. Rembert Biemond being Director of the Corporate Debtor

may be related party to the Corporate Debtor but the Appellant is not a related

to the Corporate Debtor. ODAT has no direct relationship with Corporate

Debtor except it has extended Loan to the Corporate Debtor as external

commercial borrowing approved by the Reserve Bank of India. The claim filed

by the Appellant before the IRP has been accepted to the extent of

Rs.145,71,99,411/- on 23.12.2023. Section 5(24)(h) shall not apply in case

in hand since a person can be termed as related party only in event of being

demonstrated that the Corporate Debtor accustomed to act on the advice,

Company Appeal (AT) Insolvency No. 1683 of 2023 -6-

directions or instructions of such entity. In the present case, the Corporate

Debtor is neither accustomed to nor shown to have acted on advice, direction

or instructions of the Appellant. The actions of Rembert Biemond has wrongly

been treated as actions of Appellant. All actions by Rembert Biemond were

actions as Director of the Corporate Debtor. The Adjudicating Authority

mistakenly treated Rembert Biemond as ODAT and ODAT as Rembert

Biemond, which is factually incorrect. Appellant is a separate and distinct

entity. Rembert Biemond is neither promoter or owner or controller of ODAT

nor he can singly act on behalf of the ODAT. Actions of Rembert Biemond are

not actions of Appellant. Rembert Biemond was acting as a professional

independent Director of Corporate Debtor and not as ODAT. ODAT has no

participation in policy making of the Corporate Debtor. ODAT has never gave

or sought any technical information from Corporate Debtor. There is not a

single document which show that any technical information was given by the

Appellant to Corporate Debtor or was sought from Appellant by the Corporate

Debtor. Section 5(24)(m) was not applicable. The Adjudicating Authority

erred in holding that since Rembert Biemond was a common Director happen

to be Managing Director of ODAT, he was in effect controlling affairs of ODAT

and Corporate Debtor. There were three Managing Directors in the Appellant

namely Mr. Ulrich Walter, Mr. Rembert Biemond and Mr. Thobias Von Glenk.

As per the constitution documents of ODAT, the majority of two Directors

could take a decision on behalf of ODAT GmbH. Rembert Biemond was also

not a shareholder of Appellant. The Adjudicating Authority without

considering and deciphering the true nature of the relationship of Appellant

Company Appeal (AT) Insolvency No. 1683 of 2023 -7-

with the Corporate Debtor has come to erroneous finding that Appellant is a

related party of the Corporate Debtor.

4. Shri Shaunak Mitra, learned counsel appearing for the IRP refuting

the submission of learned counsel for the Appellant submits that Appellant is

a related party to the Corporate Debtor. It is submitted that in the Appellant's

Company one Rembert Biemond AB holds 20% shareholding. Rembert

Biemond AB is 100% owned by Rembert Biemond, hence, the Appellant is

also related party within the meaning of Section 5(24)(d). Rembert Biemond,

who is common Executive Director for both the Appellant and the Corporate

Debtor, is the sole signing authority for the Appellant. It was Rembert

Biemond who has authorized one Raju Kumar Singh to submit claim on

behalf of the ODAT. Mr. Rembert Biemond, who is Director in the Corporate

Debtor has been functioning as Acting Chairman of the Corporate Debtor.

Rembert Biemond, Director of the Appellant had immediately prior to CIRP,

had direct influence and deep entanglement in the management of the

Corporate Debtor. Rembert Biemond sole Director of the Corporate Debtor

was accustomed to act on the instructions of the Appellant. Even assuming

that sub-clause 5(24)(h) is not applied then sub-clause (f) has to be applied.

The Appellant was involved in policy making of the Corporate Debtor and

there was clear interchange of managerial person. Allowing the Appellant in

the CoC will cause huge prejudice to the Corporate Debtor. Rembert Biemond

signed the loan agreement with the Corporate Debtor on behalf of the

Appellant on 05.01.2020. Rembert Biemond was also signing agreements on

Corporate Debtor's behalf with important clients. Appellant is a part of the

Company Appeal (AT) Insolvency No. 1683 of 2023 -8-

ODAT Group which include Artava AG and AUWA GmbH. Learned counsel

for the Respondent No.1 supported the order of the Adjudicating Authority

and submitted that no error has been committed by the Adjudicating

Authority in rejecting the application. The Appellant is an alter ego of Rembert

Biemond, the sole Director of Corporate Debtor, hence, no fault can be found

in the order of the Adjudicating Authority.

5. Learned counsel for the CoC also supported the order of the

Adjudicating Authority.

6. We have considered the submissions of learned counsel for the

parties and perused the record.

7. Before we come to the impugned order of the Adjudicating

Authority, it is relevant to notice certain details with regard to the Appellant.

The Appellant is a limited liability company incorporated under the laws of

Germany. The IRP has filed details of Commercial Register of the Appellant

along with its reply to the I.A. which details are as follows:

"Commercial register B of the local court Walsrode Imprint Number of the company: HRB 208257 Retrieval from 04.10.2023 19:24

Registr a) company Share a) General Procura a) legal from, a) Date of ation b) Registered office, capital or representation tion commencement, registration number branch office, share regulation articles of b) domestic business capital b) Executive Board, association or Comments address, person Management Body, partnership authorized to receive, Managing Directors, agreement branches General Partners, b) Other legal

c) The object of the Managing Directors, relationships company Authorized Representatives and Special Powers of Representation 1 2 3 4 5 6 7 1 a) 25,000,00 a) a) a) ODAT Ltd. EUR If only one managing Limited liability 03.01.2020 director has been company Lindenthal

Company Appeal (AT) Insolvency No. 1683 of 2023 -9-

b) appointed, he shall Articles of Diepholz represent the association as Business address: company alone. If of 04.12.2019 Bahnhofstrabe 28, several managing 49356 Diepholz directors have been appointed, the

c) company shall be Consulting and represented jointly by support for two managing companies in the directors.

agricultural, food and sustainable b) Managing director:

technology sectors in Walter, Ulrich, Germany and abroad Rehden, *23,08,1949 through coaching, authorized to act as organizational sole representative, development, interim with the power to management and conclude legal financing solutions. transactions in the name of the company with himself in his 2 own name or as representative of a third party.

b) Appointed as Managing Director: Biemond, Rembert Johannes, Jama/ Sweden, *17.07.1958 authorized to act as sole representative, with the power to conclude legal transactions in the name of company with itself in its own name or as representative of a third party.

Appointed as Managing Director: Von Glenck, Tobias, Berlin, *07.071978 authorized to act as sole representative; with the power to enter into legal transactions on behalf of the company in his own name or as representative of a third party.

8. Rembert Biemond was appointed as Director in the Corporate

Debtor in the year 2017. The Appellant has extended loan facility under the

Reserved Bank of India approved route of external commercial borrowing by

Loan Agreement dated 15.01.2020, Advance Agreements dated 16.12.2019

Company Appeal (AT) Insolvency No. 1683 of 2023 -10-

and 20.12.2019 totalling to Euros 13,220,000, Euros 700,000 and Euros

1,660,000, respectively. Rembert Biemond was working as Director of the

Corporate Debtor since 2017. In the application which was filed by the

Appellant before the Adjudicating Authority, it was specifically pleaded that

the Promoter/ Director of the Corporate Debtor Mr. S. P. Bansal resigned on

15.06.2022 and all Directors and key managerial personnel abandoned the

Corporate Debtor and Rembert Biemond being the only Director left to protect

the interest of foreign investors he acted as Director of the Corporate Debtor

to protect the Corporate Debtor and its workmen. It is admitted fact between

the parties that there are three Managing Directors of the Appellant. Email

Dated 29.09.2023 of the IRP sent to the Rembert Biemond is referred, which

email is as follows:

"Dear Mr. Remurt,

Your authorization letter as sent by you is not considered good for the purpose for granting authority on behalf of "ODAT GmbH" on the below mentioned ground which has been already been mentioned in my email dated 27.09.2023

Extract from pt. 1 of email dtd. 27.09.2023 "...Secondly, It is understood that ODAT GmbH has three Directors, Including your goodself. Hence the authorization letter should be signed by any two Directors (in either of the manner stated above) and the KYC document of the Authorized Representative also needs to be attested."

Company Appeal (AT) Insolvency No. 1683 of 2023 -11-

In absence of signature of one Director your representation for authorization letter cannot be accepted.

Thanks & regards, CA Santanu Brahma IRP, Darjeeling Organic Tea Estates Pvt. Ltd. (in CIRP)"

9. The Constitution Documents of the Appellant as has been extracted

above which was filed by the IRP himself clearly indicate that if several

managing directors have been appointed, the company shall be represented

jointly by two Managing Directors. This being admitted position that there

are three Managing Directors in the Appellant Company. The German word

'Geshaftsfuhrer' translates to Managing Director in English language.

Conclusion is that on behalf of the Appellant two Managing Directors have to

act jointly to act on behalf of the Appellant.

10. Now, we come to the impugned order by which the Application of

the Appellant seeking direction to include it in the CoC with voting rights has

been rejected. The Adjudicating Authority upheld the decision of the IRP to

treat the Appellant as a related party relying on Section 5(24(h) and 5(24)(m).

In Para 79 and 80 of the judgement is as follows:

"79. However, we are convinced that sub-clause (h) and

(m) would come to the rescue of the respondent as we find that ODAT's board consists of three persons including Mr. Rembert as the Managing Director/ Director of ODAT and he is actively involved in Executive Director capacity. A Company functions through its Board and Mr. Rembert being Managing Director of ODAT, the Applicant has to be treated as

Company Appeal (AT) Insolvency No. 1683 of 2023 -12-

related party to the Corporate Debtor, at least from 2020, if not before. In light of several emails, documents placed by the Learned Counsel of the Respondent, it cannot be said that manager, director of the Corporate Debtor is not accustomed to act, as per the instructions of the Managing director of the ODAT, Mr. Rembert Beimond.

80. Mr. Rambert has got individual authority to act on behalf of ODAT and this is coming out very clearly from the authorization given by him to Mr. Rajkumar Singh to submit the claim on behalf of ODAT with his own signature."

11. We may notice Section 5(24) which defines related party in relation

to the Corporate Debtor. Section 5(24)(h) and (m) which clauses have been

relied for unsuiting the claim of the Appellant, are as follows:

"5(24) "related party", in relation to a corporate debtor, means--

(h) any person on whose advice, directions or instructions, a director, partner or manager of the corporate debtor is accustomed to act;

x...x...x

(m) any person who is associated with the corporate debtor on account of--

(i) participation in policy making processes of the corporate 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

Company Appeal (AT) Insolvency No. 1683 of 2023 -13-

(iv) provision of essential technical information to, or from, the corporate debtor;"

12. As per Section 5(24)(h), related party in relation to an individual,

means a person on whose advice, directions or instructions, the individual is

accustomed to act. The word 'a person' as contained in Sub-clause (h) has to

be read as per the definition of 'person' under Section 3(23) of the I&B Code.

The definition of 'person' is an inclusive definition and the Appellant can be

held to be a person. The crucial words in the Section 5(24)(h) is "a person on

whose advice, directions or instructions, the individual is accustomed to act".

Thus, for applying Section 5(24)(h) it has to be proved that on the advice of

Appellant a Director, Partner or Manager of the Corporate Debtor is

accustomed to act. The mere fact that one of the Director i.e. Rembert

Biemond is common in Appellant as well as the Corporate Debtor shall not

ipso facto lead to prove fulfilment of Section 5(24)(h). It has to be pleaded and

proved that on advise, direction or instruction of the Appellant, a Director,

Promoter or Manager of the Corporate Debtor is accustomed to act. The

Appellant is only financial lender, who has extended loan facility to the

Corporate Debtor. No material has been placed on record to indicate that

Appellant has given advise, direction or instruction to Director, Promoter or

Manager of the Corporate Debtor who is accustomed to act accordingly. As

noted above, the Appellant has to act jointly through two Managing Directors

since there are more than one Managing Directors and it cannot be held that

Appellant is acting through Rembert Biemond. Rembert Biemond is a

Director in Corporate Debtor and all functions which are being referred to by

the IRP including the emails and communication sent by Rembert Biemond

Company Appeal (AT) Insolvency No. 1683 of 2023 -14-

as Director of the Corporate Debtor and not as Managing Director of the

Appellant. The Adjudicating Authority committed error in treating the actions

of the Rembert Biemond, a Director of the Corporate Debtor to be directions

or instructions of the Appellant. In the reply as well as submission of the IRP,

learned counsel for the IRP has emphasised that it was Rembert Biemond who

has authorised Raju Kumar Singh on behalf of the ODAT for filing claim in

the CIRP which fact has also relied by the Adjudicating Authority in Para 80.

Raju Kumar Singh was authorised to file claim in the CIRP by Rembert

Biemond as Director of the ODAT. Filing of claim by Raju Kumar Singh

authorised by Rembert Biemond which claim was filed on 20.09.2023 cannot

be treated advise, direction or instruction of the Appellant to Director,

Promoter or Manager of the Corporate Debtor. Filing of the claim before the

IRP which is required as per CIRP Regulations, 2016 cannot be treated to be

an incident which can be referred to and relied under 5(24)(h). ODAT-

Appellant being Financial Creditor has to file claim in the CIRP. Appellant

being a German company has to authorise someone to file the claim and

Rembert Biemond authorising one Raju Kumar Singh to file a claim cannot

be said to be an act of the Appellant which is covered under Section 5(24)(h).

Acts of Rembert Biemond as Director of the Corporate Debtor in which

correspondence in some places Rembert Biemond has also referred to as

Acting Chairman were actions of Rembert Biemond as Director of the

Corporate Debtor and behind those actions there is no advice, direction or

instructions of the Appellant. The Adjudicating Authority without any basis

has assumed advice, direction or instruction of the Appellant in actions of the

Rembert Biemond which was Director of the Corporate Debtor. We, thus, are

Company Appeal (AT) Insolvency No. 1683 of 2023 -15-

of the view that finding of the Adjudicating Authority that appellant is related

party under Section 5(24)(h) has no legs to stand.

13. Now we come to Section 5(24)(m). Section 5(24)(m) has four sub-

clauses. Reliance has been placed on Sub-clauses (i) participation in policy

making processes of the corporate debtor and (iv) provision of essential

technical information to, or from, the corporate debtor. For coming to any

conclusion on finding that condition as mentioned in 24(m)(i) are fulfilled,

there has to be any evident material or pleading that Appellant is participating

in policy making of the Corporate Debtor. There is no material on record or

any such document or pleading on behalf of the IRP that there is any material

to prove that Appellant has participation in the policy making process of the

Corporate Debtor. Appellant has not nominated any Director in the Corporate

Debtor. Even Rembert Biemond is Director who was nominated in the

Corporate Debtor in 2017 by a Foreign Investor, at that time Appellant was

not even incorporated. Participation in policy making process has to be

through Director of the Corporate Debtor. There is no iota of evidence that

Appellant has ever participated in policy making process of the Corporate

Debtor. The Adjudicating Authority has again confused with actions of

Rembert Biemond as Director of the Corporate. The actions of the Rembert

Biemond as Director of the Corporate Debtor were his actions as Director of

the Corporate Debtor and not on behalf of the Appellant. None of the

correspondence and email which has been relied proves that functions of

Rembert Biemond were not on behalf of the Corporate Debtor. He even

claimed that he is discharging such functions on behalf of the Corporate

Company Appeal (AT) Insolvency No. 1683 of 2023 -16-

Debtor. The conclusion of the Adjudicating Authority with regard to Section

5(24)(m)(i) has been recorded in Para 86-86, which is as follows:

"85. Further Section 5(24)(m)(i) also supports the case of the Respondent. Through its Managing Director, Mr. Rembert who is director of Corporate Debtor and ODAT was clearly involved in participating in policy making process of CD from 2022. More over one of the reasons for him to be in the board is because of his expertise in agriculture consulting and therefore it is obvious that he has been providing essential technical information to the CD.

86. Considering the several evidence and documents placed on record, we are of the view that ODAT would be covered as "related party" under Section 5(24)(h). Section 5(24)(m) of the Code."

14. The above observation of the Adjudicating Authority was on the

basis that Rembert Biemond is involved in the policy making process of the

Corporate Debtor. Actions of Rembert Biemond in the Corporate Debtor were

on behalf of the Corporate Debtor and they were not on behalf of the

Appellant. Appellant has nothing to do with day to day functions of the

Corporate Debtor, appointment of staff and employees of the Corporate Debtor

or any of the day to day functions. The Adjudicating Authority again

committed error in treating actions of Rembert Biemond as actions of

Appellant. The Adjudicating Authority observed that Rembert Biemond is

Managing Director of the Appellant. We have already noticed that when there

are more than one Managing Director, functions on behalf of the Appellant

can be carried out at least by two Managing Directors. Present is not a case

Company Appeal (AT) Insolvency No. 1683 of 2023 -17-

that there is any evidence that two Managing Directors did any action which

may suggest or indicate participation in the policy making process of the

Corporate Debtor, therefore, finding of the Adjudicating Authority with regard

to Section 5(24)(m)(i) is without any basis and cannot be sustained.

15. Now coming to the next limb finding with regard to Section

5(24)(m)(iv) i.e. provision of essential technical information to, or from, the

Corporate Debtor. What was held by the Adjudicating Authority in Para 85

that one of the reasons for him to be in the board is because of his expertise

in agriculture consulting and therefore it is obvious that he has been

providing essential technical information to the Corporate Debtor. In the

aforesaid observation the Adjudicating Authority has referred to Rembert

Biemond. The Adjudicating Authority failed to notice that Rembert Biemond

is in the Board of Director of the Corporate Debtor since 2017 when he was

nominated by a foreign investor of the Corporate Debtor and Rembert

Biemond was not nominated by the Appellant in the Board of Corporate

Debtor. Hence, the whole observation is fallacious. In spite of pleading of the

Appellant that there was no material to suggest essential technical

information were received by the Appellant or were given by the Appellant to

the Corporate Debtor. No finding has been returned referring to any material.

Appellant was only Financial Creditor who has extended loan to the Corporate

Debtor. There being neither any pleading regarding provision of essential

technical information to, or from, the Corporate Debtor nor any proof, there

was no occasion to come to the conclusion that condition under Section

Company Appeal (AT) Insolvency No. 1683 of 2023 -18-

5(24)(m) were fulfilled. The conclusion of the Adjudicating Authority were

wholly baseless.

16. Shri Shaunak Mitra has also submitted that Rembert Biemond

through its 100% proprietary i.e. Rembert Biemond AB has 20% shareholding

in the Appellant and further the ODAT Group of Companies have considerable

shareholding in the Corporate Debtor. The above submission was also

addressed before the Adjudicating Authority that the Appellant is related

party on the basis of Section 5(24)(d), which submission was rejected in Para

77-78, where the Adjudicating Authority has held following:

"77. Though the argument made by the respondent that the scope of Section 5(24)(d) is wide enough to include shares of relatives also and since in the current case Mr. Rembert holds shares in ODAT through the medium of his 100% owned and entity should be treated as "relative" looks very attractive, we are unable to accept his contentions, in view of several judgments in the context of corporate entity being treated separately from that of its shareholders as it bears its own name and seal of its own.

78. We take support of the Honourable Supreme Court judgement in the case of Tata Engineering and Locomotive (Supra) as reported in [1964] 6 SCR 885 and hold that ODAT is not covered under Section 5(24)(d) of the Code."

17. The Adjudicating Authority having not accepted the Appellant being

related party on the basis of Section 5(24)(d) and holding of related party only

on the basis of Section 5(24)(h) and (m), which we have already found that

Company Appeal (AT) Insolvency No. 1683 of 2023 -19- Section 5(24)(h) and (m) are not attracted, we do not find any substance in

submission of learned counsel for the IRP that Appellant is a related party.

18. In view of the foregoing discussion and conclusions, we are of the

view that the Adjudicating Authority committed error in holding the Appellant

as a related party and rejecting I.A.(IB) No.1649/KB/2023 filed by the

Appellant. In result, we allow the appeal. Set aside the impugned order dated

11.12.2023 and allow I.A.(IB) No.1649/KB/2023 directing the IRP of the

Corporate Debtor to include the Appellant in the Committee of Creditors and

also provide voting rights to the Appellant proportionate to the amount of

claim admitted in the CIRP. Parties shall bear their own costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) NEW DELHI 13th February, 2024.

Archana

Company Appeal (AT) Insolvency No. 1683 of 2023