Tribunal directs Resolution Professional to admit full claims of SREI Equipment Finance and SREI Infrastructure Finance as financial creditors, rejecting related-party exclusion under IBC
In a significant decision impacting insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC), the National Company Law Tribunal (NCLT), Chennai Bench, has set aside the classification of M/s. SREI Equipment Finance Limited (SEFL) and SREI Infrastructure Finance Limited (SIFL) as related parties of the Corporate Debtor, M/s. AMRL Hitech City Limited. The ruling, delivered on July 27, 2026, underscores the necessity of clear legal provisions and conclusive evidence before deeming financial creditors as related parties, which would otherwise exclude them from the Committee of Creditors (CoC).
The dispute arose during the Corporate Insolvency Resolution Process (CIRP) of AMRL Hitech City Limited, where SEFL and SIFL had extended substantial financial assistance aggregating over Rs. 1142 crores. The Resolution Professional (RP) had classified these entities as related parties based on a chain of corporate relationships involving SIFL's shareholding in Trinity Alternative Investment Managers Limited (TAIML), which manages the SREI Alternative Investment Trust (SAIT), a SEBI-registered Alternative Investment Fund holding a majority stake in the Corporate Debtor through its Infrastructure Resurrection Fund (IRF).
However, SEFL and SIFL challenged this classification, submitting that the RP's inference relied on assumptions of historical association and commercial linkages rather than the legal criteria under Section 5(24) of the IBC. They argued that TAIML acts only as a delegated investment manager under a fiduciary regulatory regime prescribed by SEBI, with an independent Investment Committee making final decisions and voting powers vested in the independent Trustee of the Trust. Thus, there is no direct or indirect control by SEFL or SIFL over the management or affairs of the Corporate Debtor.
The Tribunal meticulously analyzed the contractual documents, including the Trust Deed and Investment Management Agreement, and the SEBI (Alternative Investment Funds) Regulations, 2012. It found that TAIML's powers are strictly fiduciary and delegated, precluding any unilateral control by SIFL or SEFL. The Tribunal also noted statutory safeguards such as the composition and decision-making process of the Investment Committee, which ensure independent and binding investment decisions, further severing the alleged control chain.
The NCLT emphasized that classification as a related party must be anchored in statutory criteria, not merely commercial or institutional associations. It noted that the RP himself admitted the absence of clear legal provisions or precedents to support the related-party classification in this case, describing it as a peculiar mixed question of law and fact. Relying on Supreme Court precedents, the Tribunal reiterated that "control" in the legal sense requires the ability to direct or materially influence management or policy decisions, which was not established here.
Furthermore, the Tribunal found the RP's partial rejection of SEFL's claim-specifically excluding interest and overdue installments-was legally unsustainable. The Rupee Loan Agreement explicitly entitled SEFL to claim these amounts, and the RP's failure to record reasons for rejection violated Regulation 13(1A) of the IBBI Regulations. The Tribunal directed the RP to re-examine and admit the full claim, including all contractual dues.
Consequently, the Tribunal set aside the exclusion of SEFL and SIFL from the Committee of Creditors and ordered the RP to reconstitute the CoC by including these entities as eligible financial creditors with appropriate voting rights within four weeks. The judgment clarified that these findings are confined to the issue of related-party classification and admission of claims and do not prejudice any ongoing avoidance or other proceedings under the IBC.
This judgment reinforces the principle that insolvency proceedings must be conducted fairly with transparent admission of claims, and that exclusion of financial creditors as related parties requires stringent proof beyond commercial or historical linkages. It also highlights the role of regulatory frameworks, such as SEBI's fiduciary regulations for Alternative Investment Funds, in determining control and related-party status under the IBC.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Classification of financial creditors as "related parties" must be based on clear legal provisions and factual evidence. Historical associations or commercial linkages do not automatically establish related-party status.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 5(24), 21(2), 60(5); Insolvency and Bankruptcy Board of India (IBBI) Regulations; Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012
M/s. SREI Equipment Finance Limited v. Mukul Kumar, (NCLT)(Chennai) : Law Finder Doc Id # 2980729
