3. In Girish Nalavade v. Bhrugesh Amin (Company Appeal (AT) (Insolvency) No. 1542 of 2023), the NCLAT held that a debenture holder/ lender cannot be considered to be a related party of the corporate debtor merely based on having protective rights under the debenture trust documents, unless it can be shown that the director, promoter or manager of the corporate debtor was accustomed to act on the advice, direction or instruction given by such lender. Further, merely because certain clauses contained in the debenture trust deed can be inferred to attract provisions of Section 5(24)(m) (Related party based on participation in policy making process of the corporate debtor), without there being specific evidence to establish such participation of the financial creditor in the policy making process, the creditor cannot be treated to be a related party.
It was further observed when no irregularity was pointed out in the constitution of the CoC prior to the CoC approving the resolution plan, the same cannot be challenged belatedly after approval of the plan.
The NCLAT observed that once the CoC has approved a resolution plan by requisite majority and the same is in consonance with applicable law and nothing has come to light to show that the resolution professional had committed any material irregularities in the conduct of the CIRP proceedings, the same cannot be a subject matter of judicial review and modification.
The NCLAT held that the Code, having envisaged time bound resolution insolvency process, does not allow dissatisfied individual homebuyers in a minority to challenge the commercial wisdom of the majority homebuyers in the CoC.
Source: Barandbench
