2018 (10) TMI 1941 - Tri - Insolvency and Bankruptcy

Seeking direction to Resolution Professional to admit the entire claim with interest - Resolution Professional had rejected part of the claim - HELD THAT - At the outset it is worth to mention that as per Regulation 7 of IBBI Regulations, 2016 in respect of Insolvency Resolution Process for Corporate Persons a claim can be made by an Operational Creditor. However, under Regulation 14 it is prescribed Determination of Amount of Claim according to which where the amount claimed by a Creditor is not precise due to any contingency, the IRP or the Resolution Professional shall make the best estimate of the amount of the Claim based on the information available. The IRP/ Resolution Professional can revise the amount of claim admitted as soon as he comes across additional information warranting such revision. In my humble opinion the Resolution Professional has been provided this authority to adjudge the veracity of a Claim. The amount which according to him is not admissible can be revised as prescribed under Regulation 14 of the Regulations, 2016. Whether such decision of revising a claim can be challenged before NCLT? - HELD THAT - The answer of this question is that considering the various provisions of the Insolvency Code to be read with Regulations, the NCLT has inherent power to supervise the decision of IRP/ Resolution Professional. Although Resolution Professional is authorised to determine an amount of Claim by making certain adjustments but the correctness of the adjustments can be examined by NCLT. In view of this interpretation it is hereby held that the NCLT has inherent power to go into the details of the claim made and thereafter examine the correctness of adjustment, if any, made by the Resolution Professional and finally pronounce its decision - Under the present circumstances it was implied that the delay in payment shall bear the Interest burden. It was logically argued that in the absence of any express condition agreed upon between the parties that no Interest would be charged even if payment is defaulted, the claim along with Interest is legally permissible. Disallowance of Inventory Cost - HELD THAT - Prima facie this Bench is not convinced with the reasoning given by Ld. Resolution Professional to disallow this substantial claim in its entirety. At best, a decision could have been taken only after a reasonable investigation/ enquiry. This Bench is of the view that the Ld. Resolution Professional shall re-examine this claim on the basis of the Accounts and evidences of BHEL and if the evidences corroborate the claim, the same should also be taken into account while finalising the total claim of BHEL. Rest of the decisions of the Ld. Resolution Professional need no interference at this stage. Application allowed in part.

Summary

Issues:
1. Admittance of claim by the Resolution Professional
2. Rejection of certain components of the claim by the Resolution Professional
3. Authority of the National Company Law Tribunal to review decisions of the Resolution Professional

Analysis:

Issue 1: Admittance of claim by the Resolution Professional
The Operational Creditor, BHEL, filed an application seeking direction for the Resolution Professional to admit its claim of ?977,49,97,545 along with interest. The Resolution Professional had initially rejected part of the claim submitted by BHEL. The claim included outstanding dues, compensation claim, prolongation charges, inventory carrying cost, insurance charges, and bank guarantee extension charges. The Resolution Professional communicated that only a portion of the claim was admissible, based on the minutes of the Committee of Creditors meeting. BHEL argued that the rejection of certain components of the claim was incorrect and referred to relevant provisions of the Indian Contract Act, Sales of Goods Act, and Interest Act to support its claim.

Issue 2: Rejection of certain components of the claim by the Resolution Professional
The Resolution Professional rejected the claim for interest and inventory carrying cost, citing the absence of provisions in the contract. However, BHEL contended that interest should be payable as per the Indian Contract Act and the Invoices contained clauses for interest on delayed payments. The Resolution Professional's decision to reject the inventory carrying cost was challenged by BHEL, arguing that there was no express bar for such a claim and should be payable under Section 73 of the Indian Contract Act. The Resolution Professional defended its decision based on settlement agreements and communications between the parties.

Issue 3: Authority of the National Company Law Tribunal to review decisions of the Resolution Professional
The National Company Law Tribunal (NCLT) analyzed the authority of the Resolution Professional to determine the amount of claims under the Insolvency and Bankruptcy Code. The NCLT held that while the Resolution Professional has the power to make adjustments to the claim amount, the correctness of these adjustments can be examined by the NCLT. The NCLT asserted its inherent power to supervise the decisions of the Resolution Professional and review the adjustments made to the claim. In this case, the NCLT found the rejection of interest arbitrary and directed the Resolution Professional to re-examine the disallowed inventory carrying cost claim based on BHEL's accounts and evidence.

In conclusion, the NCLT partially allowed the Miscellaneous Application filed by BHEL, highlighting the need for a re-examination of the rejected components of the claim by the Resolution Professional. The judgment emphasized the NCLT's authority to review and supervise the decisions made by the Resolution Professional in determining the amount of claims during insolvency proceedings.