NCLT Chandigarh: Speculative Intent Does Not Disqualify Allottee from CoC Participation
Pranav B Prem
The Chandigarh Bench of the National Company Law Tribunal (NCLT), comprising Justice Harnam Singh Thakur (Judicial Member) and Sh. Shishir Agarwal (Technical Member), dismissed an application seeking exclusion of certain respondents from the Committee of Creditors (CoC). The Tribunal held that an allottee cannot be denied the status of a financial creditor merely on the ground that they are speculative investors, especially when the agreement between the parties qualifies them as allottees within the meaning of the Insolvency and Bankruptcy Code (IBC), 2016.
Background
The application was filed by one Tajinder Pal Setia under Section 60(5) read with Section 21 of the IBC, seeking exclusion of Respondents No. 2 and 3 from the Committee of Creditors constituted during the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor, M/s K. Soni Builders and Developers Pvt. Ltd. The applicant alleged that the respondents were not genuine homebuyers but speculative investors, and were thus not entitled to be treated as financial creditors. It was also contended that the names of these respondents were not reflected in the balance sheet of the Corporate Debtor and that one of the respondent entities had been struck off from the Register of Companies under Section 248 of the Companies Act, 2013.
Submissions of the Applicant
The applicant submitted that:
Respondent Nos. 2 and 3 were speculative investors and not genuine allottees or homebuyers.
Their names were not reflected in the balance sheet of the Corporate Debtor.
The respondents had been involved in the project as marketing and selling agents, and hence could not qualify as financial creditors.
One of the respondent companies had been struck off from the Register of Companies, and therefore, its claim was not admissible.
The inclusion of such parties in the CoC distorted the voting power and undermined the CIRP.
Submissions of the Respondents
The respondents raised a preliminary objection regarding the maintainability of the application, arguing that the matter was barred by principles of res judicata as similar allegations had already been raised and rejected earlier. It was contended that:
The applicant was a chronic litigant attempting to derail the CIRP.
They had valid agreements with the Corporate Debtor as allottees.
The liquidator had admitted their claims after due consideration.
The striking off of their company’s name under Section 248 does not affect their right to recover dues or file claims, as per Section 250 of the Companies Act, 2013.
No material had been placed on record by the applicant to prove that the respondents were still related parties or that their claim was fraudulent.
Tribunal’s Findings
The NCLT rejected the applicant’s arguments and held that there was no valid ground to exclude the respondents from the Committee of Creditors. It observed that:
The balance sheet is not the sole criterion for determining the validity of a creditor’s claim. Absence of an entry in the balance sheet does not invalidate a claim if otherwise supported by documentation.
Merely labeling a claimant as a “speculative investor” does not automatically disqualify them from being treated as a financial creditor. The Tribunal referred to the judgment of the NCLAT in Everlike Real Estate & Developers Pvt. Ltd. v. Mr. Mohit Goyal [(2024) ibclaw.in 429 NCLAT], where it was held that even if an allottee is a speculative investor, they cannot be excluded from the class of financial creditors.
While speculative investors are barred from initiating CIRP, they are not barred from filing claims and being treated as part of the class of financial creditors under the Code.
The Tribunal also dealt with the argument regarding the respondent being a struck-off company. It referred to Section 250 of the Companies Act, 2013, which explicitly allows struck-off companies to be subjected to proceedings relating to recovery of dues or discharge of liabilities. The NCLT also cited the Delhi High Court’s ruling in A.B. Creations and Anr. v. Bhan Textiles Pvt. Ltd [(2024) ibclw.in 1155 HC], which reaffirmed that striking off a company does not prevent it from initiating or defending legal proceedings.
On the issue of related party status, the Tribunal noted that there was no evidence to prove that the respondents continued to be related parties at the time of CIRP initiation. The applicant had failed to rebut the respondents’ contention that any such relationship had ceased as early as 2014.
The Tribunal held that the claims of Respondents No. 2 and 3 had been validly admitted by the Resolution Professional and that they were entitled to be part of the CoC. It ruled that their status as allottees could not be questioned merely on the basis of their classification as speculative investors. Since no material irregularity was found in the claim admission process and the respondents' claims were supported by valid agreements, the application was dismissed.
Appearance
For the Applicant: Mr. Naman Singhal, Advocate
For the Respondent No 1 RP: Mr. Atul V. Sood, Advocate
For the Respondent No 2 & 3: Mr. Surjit Bhadu & Ms. Saniya Thakur Advs.
Cause Title: Tajinder Pal Setia V. Sh.Arvind Kumar, Resolution Professional and Ors.
Case No: IA (I.B.C)/2105(CH)2023 in CP(IB) No. 248/Chd/Chd/2019
Coram: Justice Harnam Singh Thakur [Judicial Member], Sh. Shishir Agarwal [Technical Member]
