Case Note & Summary
The appeal was filed by Ellison Oil Field Services Pvt. Ltd. against an order of the NCLT, Mumbai Bench 1 dated 21.08.2024, which dismissed an application seeking declarations that an Assignment Deed dated 13.12.2023 was void and that the assignee, CITOC Ventures Pvt. Ltd., was not an operational creditor. The Corporate Debtor, SES Energy Services India Pvt. Ltd., was admitted to CIRP on 25.11.2022 under Section 10 of the Insolvency and Bankruptcy Code, 2016. The IRP made a public announcement on 26.11.2022, and the Assistant Commissioner of Central GST and Excise Division (Respondent No.2) submitted a claim of Rs. 7,88,52,896/- based on a show cause cum demand notice. Subsequently, Respondent No.2 assigned its debt to Respondent No.1 via an Assignment Deed dated 13.12.2023. The appellant, a shareholder of the Corporate Debtor, challenged the assignment, arguing that Respondent No.1 could not be an operational creditor and that the assignment was void. The NCLAT considered the validity of the assignment under general law and the IBC. It held that the IBC does not prohibit assignment of debt, and the assignee steps into the shoes of the assignor, becoming an operational creditor. The NCLAT found no merit in the appeal and dismissed it, upholding the NCLT order. The court did not find any irregularity in the assignment or the CoC composition.
Headnote
A) Insolvency and Bankruptcy Code - Assignment of Debt - Validity of Assignment Deed - Sections 5(20), 5(21), 7, 9, 25(2)(e) IBC - The appellant challenged the assignment of debt by a government authority (Respondent No.2) to a private entity (Respondent No.1) during CIRP, arguing that the assignee cannot be an operational creditor. The NCLAT held that assignment of debt is valid under general law and the IBC does not prohibit such assignment. The assignee steps into the shoes of the assignor and becomes an operational creditor entitled to participate in the CoC. The appeal was dismissed. (Paras 1-10)
B) Insolvency and Bankruptcy Code - Committee of Creditors - Reconstitution of CoC - Sections 21, 25(2)(e) IBC - The appellant sought reconstitution of the CoC to exclude the assignee's voting rights. The NCLAT held that since the assignment is valid, the assignee is entitled to vote in the CoC based on the assigned debt. The CoC composition reflects the current creditors, and the assignment does not require prior approval of the adjudicating authority. (Paras 5-10)
Issue of Consideration
Whether the Assignment Deed dated 13.12.2023 transferring debt from Respondent No.2 (government authority) to Respondent No.1 is void and unenforceable, and whether Respondent No.1 can be treated as an operational creditor.
Final Decision
The appeal is dismissed. The order of NCLT dated 21.08.2024 is upheld. No costs.
Law Points
- Assignment of debt is valid under law
- assignee steps into shoes of assignor
- government authority can assign debt
- operational creditor definition includes assignee
- CoC composition can change due to assignment
Case Details
2024 LawText (NCLAT) (01) 35
Comp. App. (AT) (Ins) No. 1876 of 2024 & I.A. No. 6923 of 2024
Justice Rakesh Kumar Jain
Mr. Gaurav Mitra, Shubham Kulshreshtha, Satya Rath (for Appellant); Mr. Abhinav Vasisht, Sr. Adv. with Diwakar Maheshwari, Pratiksha Mishra, Vishnu Shriram (for Respondent); Mr. Abhijeet Sinha, Sr. Adv. with Nikhil Bhat, Darpan Bhatia, Sanjay Agarwal (for RP/R3); Mr. Gopal Jain, Rohan Rajadakshaya, Subash Bhat, Abhishek Sharma, Abhishek Jain (for R4/SRA); Mr. Anurag Ojha, Sr., Vipul Kumar, Dipak Raj (for R2)
Ellison Oil Field Services Pvt. Ltd.
CITOC Ventures Pvt. Ltd. & Ors.
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Nature of Litigation
Appeal against order of NCLT dismissing application challenging assignment of debt and seeking reconstitution of CoC.
Remedy Sought
Declaration that Assignment Deed dated 13.12.2023 is void, declaration that Respondent No.1 is not an operational creditor, reconstitution of CoC, and interim relief.
Filing Reason
Appellant challenged the assignment of debt by a government authority to a private entity during CIRP, arguing it was invalid and affected CoC composition.
Previous Decisions
NCLT, Mumbai Bench 1 dismissed I.A. No. 2277 of 2024 on 21.08.2024.
Issues
Whether the Assignment Deed dated 13.12.2023 is void and unenforceable.
Whether Respondent No.1 can be treated as an operational creditor for the assigned debt.
Whether the CoC should be reconstituted to exclude the assignee's voting rights.
Submissions/Arguments
Appellant argued that assignment of debt by a government authority is not permissible under the IBC and that the assignee cannot be an operational creditor.
Respondents argued that assignment is valid under general law and the IBC does not prohibit it; the assignee steps into the shoes of the assignor.
Ratio Decidendi
Assignment of debt is valid under general law and the IBC does not prohibit it. The assignee steps into the shoes of the assignor and becomes an operational creditor entitled to participate in the CoC. The CoC composition reflects current creditors, and the assignment does not require prior approval of the adjudicating authority.
Judgment Excerpts
This appeal is against the order dated 21.08.2024 passed by the NCLT, Mumbai Bench 1 by which an application bearing I.A No. 2277 of 2024 filed by the Appellant for grant of the prayers mentioned herein below has been dismissed.
The brief facts of this case are that SES Energy Services India Pvt. Ltd. (Corporate Debtor) was admitted to CIRP on 25.11.2022 on an application filed under Section 10 of the Code and Ms. Dipti Mehta was appointed as the Interim Resolution Professional (IRP) who was later on confirmed as RP.
Procedural History
The Corporate Debtor was admitted to CIRP on 25.11.2022. The IRP made a public announcement on 26.11.2022. Respondent No.2 submitted its claim on 29.12.2022. Respondent No.2 assigned its debt to Respondent No.1 via Assignment Deed dated 13.12.2023. The Appellant filed I.A. No. 2277 of 2024 before NCLT, which was dismissed on 21.08.2024. The Appellant then filed the present appeal before NCLAT, which was dismissed on 17.09.2025.
Acts & Sections
- Insolvency and Bankruptcy Code, 2016: Section 10, Section 5(20), Section 5(21), Section 7, Section 9, Section 21, Section 25(2)(e)
