2019 (5) TMI 1715 - Tri - Insolvency and Bankruptcy

Liquidation process - rejection of claim towards interest - dispute is pending in the arbitral proceeding - whether the order passed by the Liquidator admitting the appellant's claim provisionally needs any interference? - HELD THAT - There are no reasoned order passed by the Liquidator accepting or rejecting the claim. The appellant did not produce copy of such formal order. The Liquidator, though filed affidavit in-reply in this proceeding, did not produce the copy of his order for perusal of this authority. In this case, the Liquidator is acting in dual capacity, (i) that he is in control of the assets of the corporate debtor who is under liquidation and (ii) he is sitting as a quasi judicial authority to determine the claims of the creditors. In such situation, it becomes too essential for him to give reasons for his decision about admitting or rejecting the claim. As already pointed, the Liquidator did not produce copy of the order. The matter is remitted back to the Liquidator for passing appropriate reasoned order by rejecting or allowing/ partly allowing the claim of the appellant, as per the rules - appeal allowed by way of remand.

Summary

Issues:
Appeal under section 42 of Insolvency and Bankruptcy Code, 2016 regarding rejection of claim towards interest amount by Liquidator.

Analysis:
The appellant, a creditor of the Corporate Debtor, filed an appeal against the Liquidator's order dated 21.12.2018, rejecting a portion of the claim amounting to interest. The Liquidator admitted the claim provisionally, citing that the disputed amount was subject to an ongoing arbitral proceeding. The appellant argued that the Liquidator should either admit or reject the claim entirely, relying on the Supreme Court ruling in Swiss Ribbons Pvt. Ltd.-vs- Union of India. The Liquidator contended that the interest and other charges were disputed and pending arbitration, hence the claim could not be fully determined at that stage.

The Tribunal deliberated on whether the Liquidator's order admitting the claim provisionally required interference. Referring to the Swiss Ribbons case, it emphasized the quasi-judicial nature of the Liquidator's determination of claims under the IBC. The Tribunal noted the absence of a reasoned order from the Liquidator accepting or rejecting the claim, highlighting the necessity for providing reasons for such decisions. Despite the Liquidator's assertion that the claim was subject to arbitration, the Tribunal found that the Liquidator had not made a definitive determination on the claim, which was deemed essential in his quasi-judicial role.

Consequently, the Tribunal allowed the appeal, remitting the matter back to the Liquidator for a reasoned decision on the appellant's claim within 30 days. The Tribunal emphasized the importance of complying with the rules in determining the claim and directed the Liquidator to provide a certified copy of the order to all concerned parties upon application.

In conclusion, the Tribunal's decision underscored the requirement for the Liquidator to provide a reasoned order when admitting or rejecting claims, especially in cases where disputes are pending in other proceedings. The quasi-judicial nature of the Liquidator's role necessitates a thorough assessment and clear communication of decisions regarding creditor claims under the IBC.