Ghanshyam is a well known jeweler in Delhi. He is known for selling best antique jewelry at an affordable price. Due to dispute within the partners, the business started suffering losses and lost credibility amongst the
CS Professional · Insolvency - Law and Practice · PYQS · June 2023
Ghanshyam is a well known jeweler in Delhi. He is known for selling best antique jewelry at an affordable price. Due to dispute within the partners, the business started suffering losses and lost credibility amongst the customers. Ghanshyam filed an application for his bankruptcy. Raman's appointment was confirmed by the Adjudicating Authority to act as bankruptcy trustee in this case. Bankruptcy commencement date was 1 st January, 2022. Consider the facts below: S. No. Event Date 1 Notice sent by the Adjudicating Authority to creditors for inviting claims 9 th January, 2022 2 List of creditors was prepared by Raman 15 th January, 2022 3 Raman issued notice for calling meeting of creditors 20 th January, 2022 Simba sent a letter to Raman expressing her wish to cast a vote in the meeting since her name was not appearing in the list of creditors prepared by Raman and accordingly notice of the meeting was not sent to her. Further, Pawan (father of Ghanshyam, whose name was included in the list of creditors) wished to cast his vote during the meeting. However, Raman refused stating he cannot cast vote during the meeting. Consider the above facts and answer the following questions: (ii) Whether Simba and Pawan eligible to vote during the meeting of the creditors?
Answer & Explanation:
As per Section 135 of the Insolvency and Bankruptcy Code, 2016, the following creditors are not entitled to vote in a meeting of creditors: Creditors who are not mentioned in the list of creditors prepared under Section 132 of the Code, and those who have not been given a notice by the bankruptcy trustee. Creditors who are associates of the bankrupt. Let's analyze the eligibility of Simba and Pawan: 1. Simba's Eligibility: Simba's name was not included in the list of creditors prepared by Raman. Consequently, Simba did not receive a notice for the meeting. Based on Section 135(a), Simba is not eligible to vote . 2. Pawan's Eligibility: Pawan is the father of Ghanshyam (the bankrupt). Under the IBC, a father is considered an 'associate' of an individual. Based on Section 135(b), Pawan, being an associate of the bankrupt, is not eligible to vote . Therefore, neither Simba nor Pawan can cast a vote in the meeting of creditors.
Topics: Bankruptcy Process
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