Case Law Details
Babubhai Shrimali Vs Committee of Creditors (NCLT Ahmedabad)
NCLT Ahmedabad held that Committee of Creditors (CoC) has power to take commercial decision to undertake or not to undertake related party transaction during CIPR of Corporate Debtors. If in commercial wisdom the CoC has rejected the resolution for payment of salary to the Applicants, the question of reversing the decision cannot be considered.
Facts-
After initiation of CIRP, on request of Resolution Professional the Applicant No. 1 has rendered service as Director, Legal and Administrative Head, Applicant No. 2 has rendered service as Director, CFO and Applicant No. 3 has rendered service as Director, Head of Operations and were assured that salaries during the period of CIRP would be paid.
The Committee of Creditors (COC) in its 1st meeting, took note of the engagement of Applicants by Resolution Professional. The CoC in its 1st and 2nd meeting discussed on the salaries of the Applicant but did not come to any conclusion.
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