Case Law Details
Peanence Commercial Private Limited Vs Rolta Private Limited (NCLAT Delhi)
The case of Peanence Commercial Private Limited vs. Rolta Private Limited revolves around the complexities of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC) of India. This case was heard by the National Company Law Appellate Tribunal (NCLAT) in Delhi, following an appeal against an order passed by the National Company Law Tribunal (NCLT), Mumbai Bench-I.
Case Background: CIRP was initiated against the Corporate Debtor, Rolta India Limited, by an order dated 19.01.2023. Rolta Private Limited filed a claim amounting to Rs. 634,55,43,228/- which was admitted by the Resolution Professional. However, due to its status as a related party to the Corporate Debtor, Rolta Private Limited was not allowed to participate, represent, or vote in the Committee of Creditors (CoC). On 15.01.2024, Rolta Private Limited entered into a Memorandum of Understanding (MoU) with Peanence Commercial Private Limited to assign the debt for a one-time consideration of Rs. 50 crores on an “as is where is” basis. Rolta Private Limited sought approval for this assignment from the Resolution Professional on 06.02.2024. The Resolution Professional responded, stating that he lacked the authority to approve such an assignment and reiterated this position in subsequent communications. Aggrieved by the Resolution Professional’s refusal, Rolta Private Limited and Peanence Commercial Private Limited filed I.A. 724 of 2024, which was dismissed by the NCLT on 24.04.2024. This dismissal led to the present appeal.
Arguments Presented: The appellant argued that the assignment was legitimate and should be recognized, claiming that Peanence Commercial Private Limited, not being a related party, should be entitled to the rights of an unrelated financial creditor, including participation and voting in the CoC. They cited the Supreme Court’s judgment in “Phoenix ARC Private Limited vs. Spade Financial Services Limited” to support their claim that the assignment should be recognized as an arm’s length transaction. On the other hand, the Resolution Professional argued that the application was premature since the MoU indicated a future assignment contingent upon his approval, which he was not authorized to grant. He also suggested that the assignment was a ploy by Rolta Private Limited to circumvent the restrictions on related parties, thereby indirectly gaining a position in the CoC.
Tribunal’s Observations: The NCLAT noted that Rolta Private Limited, being a related party, was correctly excluded from the CoC as per the IBC provisions. The tribunal observed that the assignment agreement specified that the payment consideration was conditional upon the approval of the Resolution Professional, indicating that the transaction was not straightforward or unconditional. Referring to the Supreme Court’s ruling in “Phoenix ARC vs. Spade Financial Services”, the tribunal emphasized scrutinizing transactions designed to circumvent related party restrictions. The Supreme Court had ruled that even if a related party divests its interests to appear as an unrelated party, the intent behind such divestment should be critically examined. Agreeing with the Resolution Professional’s stance, the tribunal concluded that the assignment was a malafide exercise intended to gain CoC representation indirectly.
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