Tribunal affirms Resolution Professional's power to engage professionals for re-verification under IBC, 2016; Madhya Pradesh Financial Corporation's voting share fixed at 76.23% in Committee of Creditors
In a significant ruling on 17th July 2026, the National Company Law Tribunal (NCLT), Hyderabad Bench, upheld the powers of a Resolution Professional (RP) to independently verify and quantify financial claims during the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC). The judgment came in the matter of M/s. Global Insolvency Professionals Private Limited, acting as Resolution Professional of M/s. Sri Nagakrishna Chemicals Limited, versus Frontline Enterprises Limited and Madhya Pradesh Financial Corporation.
Background:
The CIRP for Sri Nagakrishna Chemicals Limited was initiated following a petition by Madhya Pradesh Financial Corporation under Section 7 of the IBC, claiming a default amount of approximately Rs. 7.95 Crores as of July 2017. The claim submitted by the financial creditor during the CIRP, however, was substantially higher, amounting to Rs. 73.98 Crores. This discrepancy led to a challenge by Frontline Enterprises Limited, the other member of the Committee of Creditors (CoC), alleging that the admitted claim was disproportionately high compared to the default amount stated in the initial Section 7 application.
Re-verification Direction and Process:
On 19th May 2026, the NCLT directed the Resolution Professional to re-verify the claim of Madhya Pradesh Financial Corporation, including the computation of interest, within seven days based on supporting loan documents. The Tribunal also barred the RP from convening any CoC meetings until this re-verification was completed.
In compliance, the RP engaged M/s. Ajay Johnsaida & Associates LLP, Chartered Accountants, and also sought an independent legal opinion. The Chartered Accountants initially computed the claim at Rs. 29.24 Crores but subsequently revised it upward to Rs. 77.54 Crores after treating the date of Non-Performing Asset (NPA) classification (August 2011) as the starting point for interest calculation, applying contractual and penal interest at 16.5% per annum compounded quarterly.
Findings of the Tribunal:
The RP retained the claim of Rs. 73.98 Crores as originally admitted, since it was subsumed within the higher re-computed figure. Frontline Enterprises Limited contested this approach, alleging that the RP failed to conduct an independent verification and merely affirmed the financial creditor's own computations. They also argued that the RP lacked adjudicatory authority to decide on disputed claims or to accept a legal opinion privately obtained.
However, the Tribunal held that the RP's authority to verify claims and engage professionals such as Chartered Accountants and legal advisors is well-established under Section 25(2)(d) of the IBC and Regulation 34 of the CIRP Regulations, 2016. The Tribunal referred to the NCLAT's precedent in Greenfield Overseas v. Anil Goel (2025), which clarified that the appointment of forensic auditors or professionals by the RP does not require prior judicial approval, but is subject to CoC cost approval.
Importantly, the Tribunal underscored that the quantum of claim is not capped by the amount stated in the Section 7 application. The initial admission of default only establishes the existence of financial debt and default. Precise quantification and verification occur during the CIRP process through the RP's exercise. This principle was reinforced by the NCLAT's decision in Mr. A. Maheshwaran v. Stressed Assets Stabilization Fund (2019).
The Tribunal also emphasized that the RP's treatment of the NPA classification date as the starting point for interest calculation was a permissible verification exercise, not an adjudicatory act. The final admitted claim was therefore correctly retained at Rs. 73.98 Crores, reflecting a verified figure supported by loan documents and computations.
Outcome and Implications:
The NCLT took on record the re-verification exercise and the admitted claim amount of Rs. 73,98,56,306/-. It fixed the voting shares in the Committee of Creditors as follows: Madhya Pradesh Financial Corporation at 76.23% and Frontline Enterprises Limited at 23.77%. The Tribunal allowed the application filed by the RP and dismissed objections regarding the legitimacy of the re-verification process.
This ruling clarifies the scope of the Resolution Professional's powers during CIRP, affirming their discretion to verify claims with professional assistance without requiring the Tribunal's prior approval. It also stresses that the admitted default amount at the initiation stage does not limit the financial creditor's claim, which can be quantified based on contractual and loan documents during CIRP.
The decision further ensures that claims and voting rights in the CoC reflect verified and substantiated financial dues, maintaining fairness in the insolvency resolution process.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Resolution Professional's authority to verify claims and engage professionals for re-verification is valid under Section 25(2)(d) of the Code and related regulations.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 7, 25(2)(d), 60(5); IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 Regulations 8, 13, 34
