Resolution Professional's Refusal to Fully Admit Claims by NOIDA Deemed Justified; Appeal Dismissed
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) has upheld the actions of the Resolution Professional (RP) in the case of New Okhla Industrial Development Authority (NOIDA) versus Manohar Lal Vij, dismissing NOIDA's appeal for the full admission of claims amounting to over Rs. 6,07,74,76,966. The decision, delivered by Justice N Seshasayee and Member (Technical) Arun Baroka, reaffirms the RP's role in the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.
The appeal arose from NOIDA's dissatisfaction with the RP's provisional admission of claims, which were reduced to Rs. 5,13,97,26,671 out of the total claim. The RP had rejected additional claims related to farmer compensation and time extension charges, citing insufficient substantiation. NOIDA contended that the RP overstepped by adjudicating claims rather than merely verifying them, an argument that was not upheld by the Tribunal.
The NCLAT examined the RP's actions, particularly the request for additional documentation to substantiate claims and found them justified within the scope of the RP's duties as per the Insolvency and Bankruptcy Code and related regulations. The Tribunal noted that the RP is empowered to seek evidence for claim verification, which does not equate to adjudication.
The judgment emphasized that NOIDA failed to provide the necessary documentation to substantiate the farmer compensation claim, which was a significant portion of the disputed amount. Similarly, the RP's adjustment of time extension charges was found to be accurate, as the claims were initially calculated beyond the insolvency commencement date.
Additionally, the Tribunal observed that the resolution professional's actions were consistent with legal precedents and statutory guidelines, including the Supreme Court's directives on the roles and responsibilities of a resolution professional. The adjudicating authority had previously directed the RP to review NOIDA's claims, which led to the partial admission based on available evidence.
In dismissing the appeal, the NCLAT reiterated the non-adjudicatory role of the RP, emphasizing that the RP's duties are limited to verification of claims and not their adjudication. The Tribunal's decision underscores the importance of substantiated claims in the CIRP and affirms the RP's authority to request additional information for accurate claim assessment.
The ruling is a significant affirmation of the procedural integrity of the insolvency resolution process, ensuring that claims are admitted based on clear and substantiated evidence, thereby protecting the interests of all stakeholders involved in the insolvency process.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 - Resolution Professional's duty involves verification and substantiation of claims; it does not extend to adjudication.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 - Section 25(2)(e), Section 61, CIRP Regulations
