National Company Law Appellate Tribunal: Liquidator Required To Process Disputed Claim Of Other Stakeholder
The bench concluded that the Liquidator had avoided performing the duty which was required to be performed under the IBC and its Regulations
The National Company Law Appellate Tribunal (NCLAT) directed the Liquidator to process the claim of the Appellant as ‘other creditor’ and to arrive at the best estimate of the amount of claim made by the Appellant.
The matter titled NTPC Limited v Ram Ratan Modi, Liquidator of DC Industrial Plant Services Pvt Ltd was heard by the Principal Bench of the National Company Law Appellate Tribunal at New Delhi, comprising of Justice A.I.S. Cheema and Dr Alok Srivastava.
The factual background is that the Appellant claimed that it had awarded two contracts to the Corporate Debtor – DC Industrial Plant Services Pvt Ltd in 2006 which the Respondent failed to carry out which led to the termination of the contract on 22 June 2015. The Appellant was constrained to get the balance work executed through a third party namely – ‘M/s MELCO’. The Appellant further claimed that the Corporate Debtor referred the disputes arising from the project with the Appellant, to adjudication. In the meantime, application u/S 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) was admitted against the Corporate Debtor and subsequently, the liquidation order was passed on 19 June 2019. The Appellant filed a claim under Form ‘G’ to the Liquidator, which was rejected by the Liquidator through an e-mail dated 4 September 2019. The application filed by the Appellant before the National Company Law Tribunal at the Kolkata bench against the decision of the Liquidator was partly allowed but the claim was allowed to the extent mentioned in the impugned order.
It was submitted that when disputes arose between the parties as per the contract the matter was referred as per these General Conditions of Contract between the parties to the Adjudicator who passed an award. The Adjudicator had rejected the counter-claim of the Corporate Debtor and accepted the claim of the Appellant with the condition that the exact amount needed to be worked out which would be assessed at the risk and cost of the Corporate Debtor. The figure only remained to be worked out and thus, the matter was referred to the Expert Settlement Council, which heard both the parties. However, the Expert Settlement Council also could not bridge the gap between the parties. The Liquidator referring to the decision of the Expert Settlement Council, found the claim of the Appellant to be inadmissible since the claim was subjected to dispute by the Corporate Debtor and the books of Corporate Debtor did not show the said claim amounts as claimed by the Appellant.
The Appellants contended that it was a matter of calculation for the Liquidator to see the difference between what the original expenses the Appellant would have had to bear for completion of the contract by the Corporate Debtor and what it was required to bear because the project had to be handed over to M/s MELCO.
The Respondent submitted that the Liquidator had in terms of the impugned order treated the Appellant as ‘other creditor’. The amount, however, was not crystallised.
The bench found substance in the recorded observations wherein it was already held that the counter-claim made by the Corporate Debtor was rejected and that claim made by the Appellant was a matter of working out the exact amount, which was to be assessed at the risk and cost of the Corporate Debtor.
The bench found the decision to reject the claim of the Liquidator to be inappropriate based on these documents. The bench found that the Liquidator was required to process the claims submitted in Form ‘G’ by the Appellant as claim by ‘Other Stakeholder’ as per the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. It referred to the various Regulations and how the Liquidator has powers to call for documents and determine the quantum of the claim. They are listed as follows:
• Regulation 20 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 provides for the processing of claims by other stakeholders.
• Regulation 23 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 empowers the Liquidator to call for such other evidence or clarification as he deems fit from a claimant for substantiating the whole or part of its claim.
• Regulation 25 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 provides for the determination of the quantum of the claim.
• Section 39 of the IBC provides for the verification of claims.
The bench concluded that the Liquidator had avoided performing the duty which was required to be performed under the IBC and its Regulations.
The appeal was disposed of by quashing the decision of the Liquidator and directing him to process the claim of the Appellant as ‘other creditor’ and to arrive at the best estimate of the amount of claim made by the Appellant and give the necessary benefit to the Appellant.