Resolution Professional's Duty to Verify Claims Affirmed; Voting Share of Homebuyers in CoC Reduced.
In a significant ruling, the National Company Law Tribunal (NCLT), Mumbai Bench, has dismissed an application filed by Shailendra Kataria, the Authorised Representative of Homebuyers, challenging the re-verification of claims by the Resolution Professional (RP) in the insolvency proceedings of Wadhwa Buildcon LLP. The judgment, delivered by Mr. Vinay Goel and Mr. Charanjeet Singh Gulati, affirmed the RP's duty to verify and update claims as per the Insolvency and Bankruptcy Code, 2016 (IBC), thereby upholding the reconstitution of the Committee of Creditors (CoC).
The application, filed under Section 60(5) of the IBC, sought to declare the re-verification of homebuyers' claims as illegal and to quash the CoC reconstitution report. The applicant contended that the re-verification led to a substantial reduction in the homebuyers' voting share from 66.42% to 30.48%, alleging that the RP acted beyond his jurisdiction by re-verifying claims already admitted by the erstwhile RP, Mr. Vishal Jain.
In defense, the current RP, Mr. Manish Lalji Dawda, argued that upon assuming charge, he discovered several claims were incomplete, unnotarized, and lacked necessary documentation to establish the status of homebuyers as financial creditors under Section 5(8) of the IBC. The RP maintained that his actions were in compliance with Section 25(2)(e) of the IBC and Regulation 13 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which mandate the maintenance of an updated list of claims.
The Tribunal noted that the RP's actions were administrative, aimed at ensuring the authenticity of claims and not an adjudication of disputed rights. It emphasized the RP's duty to verify claims based on available records, especially when discrepancies or suspected forgery are identified. The Tribunal cited a forensic report indicating that 18 out of 19 claim forms examined were forged, underscoring the necessity of the RP's re-verification process.
In light of these findings, the Tribunal ruled that the reconstitution of the CoC was in accordance with the IBC and relevant regulations, dismissing the application and affirming the RP's statutory responsibilities. This decision highlights the critical role of RPs in maintaining the integrity of the insolvency resolution process, ensuring that only substantiated claims influence the CoC's decisions.
Bottom Line :
Insolvency and Bankruptcy Code, 2016 - Resolution Professional, on taking charge, can re-verify claims earlier admitted by the erstwhile RP where records disclose deficiencies, incomplete documentation or suspected forgery - Such exercise is part of statutory duty to verify and update claims and does not amount to adjudication - Reconstitution of CoC based on such verification upheld.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 - Sections 23, 25(2)(e), 60(5); IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Regulations 12, 13.
Shailendra Kataria v. Manish Lalji Dawda, (NCLT)(Mumbai Bench) : Law Finder Doc id # 2989465
