Allegations Of Proxy Claims, Family Ties Not Enough To Exclude Creditors From CoC: NCLT Delhi

The National Company Law Tribunal (NCLT), Delhi, has held that creditors cannot be excluded from the Committee of Creditors (CoC) merely because they are accused of being proxies or benamidars of the suspended management.

The bench of Judicial Member Mahendra Khandelwal and Technical Member Atul Chaturvedi observed, “However, the mere allegation that a claimant is a proxy, benamidar or connected with the suspended management cannot, by itself, furnish a basis for exclusion from the CoC. The material placed by the Applicants, including references to alleged disparities in payments, common addresses, assured-return payments and transactions reflected in certain records, may give rise to questions requiring examination, but do not, in the absence of a conclusive determination, establish that the concerned persons are not genuine creditors.”

The application was filed by 20 homebuyers led by Vivek Khanna, who sought the exclusion of seven alleged “proxy claimants” from the CoC. They also sought account statements detailing payments and receipts of unit holders in the Spaze Arrow project and challenged two voting decisions taken during the third CoC meeting on January 9, 2025.

The applicants alleged that the seven creditors had entered into assured-return arrangements with Spaze Towers Pvt. Ltd. and were acting as proxies or benamidars of the suspended management to influence CoC decisions. They claimed that some had received assured returns despite allegedly not paying the full sale consideration for their units, raising questions about their genuineness and the suspended management's possible beneficial interest in the properties.

They also pointed to discrepancies in payment records, common addresses and family ties with persons associated with the corporate debtor. The applicants further argued that missing historical Tally data and incomplete accounts made it difficult to verify the claims, and sought a forensic audit.

Opposing the plea, the Resolution Professional argued that the CoC had been formed after claims were verified under Sections 18 and 21 of the Insolvency and Bankruptcy Code and the applicable CIRP Regulations. The NCLT had taken the CoC's composition on record on December 9, 2024. The RP said reopening it on the basis of these allegations was untenable.

The RP also argued that the expression “proxy claimant” had no legal basis under the IBC. The seven creditors were homebuyers whose claims had been admitted by the erstwhile RP and formed the basis of the CoC's constitution.

According to the RP, 89 allottees had filed claims relating to assured returns, of which 41 concerned the Spaze Arrow project. Their claims had been verified and admitted by the erstwhile RP.

The current RP argued that he could not exclude these creditors merely because the applicants had questioned their claims.

The RP also submitted that a closure report had subsequently been received in FIR No. 94 of 2021. He argued that the applicants had selectively relied on an earlier police status report while ignoring this development.

Examining the dispute, the NCLT noted that the CoC had been constituted after claims were received and verified under Sections 18 and 21 of the IBC, read with Regulations 13 and 14 of the CIRP Regulations. Its composition had already been placed on record before the tribunal.

The bench observed that discrepancies in payment records, common addresses and assured-return payments could raise questions requiring examination. However, these circumstances did not establish, without a conclusive determination, that the concerned creditors were not genuine.

The tribunal also rejected the contention that creditors receiving assured returns were automatically disqualified from being treated as allottees. It referred to the NCLAT's ruling in Rita Malhotra v. Orris Infrastructure Pvt. Ltd. and the Supreme Court's observations in Mansi Brar Fernandes v. Shubha Sharma.

The bench held that an assured-return clause, by itself, does not make an allottee ineligible to be treated as a financial creditor or included in the CoC. The nature of the underlying transaction and the material relating to each claim must still be considered.

In this case, the assured-return claims had already been examined and admitted by the erstwhile RP.

The bench also pointed out that the RP does not have adjudicatory powers to conclusively determine disputed questions of fraud, benami ownership or criminality.

“The Resolution Professional is not vested with adjudicatory powers to conclusively determine disputed questions of fraud, benami ownership or criminality. Consequently, where the claims had already been verified and admitted, their exclusion from the CoC cannot be directed merely on the basis of allegations which remain to be established,” the bench observed.

The NCLT further held that the unavailability of historical Tally data did not, by itself, invalidate claims admitted during the CIRP.

The bench noted that the CoC meeting minutes referred to accounting data for certain periods being available and under validation. Records for earlier years had reportedly been lost due to a technical issue.

The absence of complete records could warrant further reconciliation or investigation. However, it could not automatically lead to a presumption that claims supported by the available documents were fabricated.

The applicants had also relied on police proceedings and allegations of siphoning of funds to question the creditors' eligibility. However, the tribunal noted that the closure report did not establish criminality, siphoning of funds, or forgery by the claimants sought to be excluded.

It held that the allegations of siphoning and benami transactions could not be treated as established findings for deciding CoC membership.

The NCLT observed that family ties, common addresses, or financial transactions alone could not establish that the claimants were related parties or ineligible to be part of the CoC. Their status had to be assessed against the law and the facts of each case.

The applicants argued that including the alleged proxy claimants had affected voting strength at the CoC meeting held on January 9, 2025. However, the tribunal refused to set aside the two voting decisions, noting that the applicants had not established the creditors' ineligibility.

It also held that an investigation could not be ordered merely on suspicion to invalidate claims already verified during the CIRP. The tribunal noted that issues concerning potentially preferential, undervalued, fraudulent, or wrongful transactions were pending before the Delhi High Court, and an investigation under the Companies Act had been undertaken.

Finding no sufficient basis to exclude the seven creditors, the NCLT dismissed the application.