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2019 (4) TMI 333 - Tri - Insolvency and BankruptcyCorporate insolvency process - total outstanding debts - claim adjudication by RP - RP not empowered by the I & B Code to adjudicate a claim - HELD THAT - RP himself left the column of reason blank for non-admission of the claim, which, in our view, is not in conformity with the provisions of the I 8b B Code. He was required to register the claim as put forth by the Operational Creditor after his verification from necessary vouchers and other documents to mention the same while preparing the Memorandum of Information, so as to apprise the Resolution Applicant. Our such view finds support from the decision in Arcelormittal India (P.) Ltd.2018 (10) TMI 312 - SUPREME COURT OF INDIA and Vijay Kumar Jain v. Standard Chartered Bank 2019 (2) TMI 97 - SUPREME COURT Therefore, by placing reliance on the above stated judgment, we are of the considered opinion that the RP has not been empowered by the I & B Code to adjudicate a claim. Hence, the present application succeeds on this limited legal ground alone, because it is found that the RP has rejected/non-admitted claim of the Applicant without showing any reason in the impugned communication. Hence, such communication dated 14.05.2018 is not legally sustainable and liable to be set aside. For the aforesaid reasons, the RP s communication dated 14.05.2018 is hereby set aside. RP is directed to update the total claim of the present Applicant, as being an Operational Creditor, submitted before him, in the relevant documents, i.e. List of Creditors and Memorandum of Information, as per the norms and criteria adopted for the purpose of consideration of a Resolution Plan for other related proceedings, so that proper apportionment of the payable amount can be made. It is pertinent to note here that the total claim of the Applicant seems to be less than 10% of the entire debts due by the Corporate Debtor company. Therefore, in such situation, in case a Resolution Plan is not approved, then the applicant would certainly get minimum payment as per the criteria adopted and norms fixed for liquidation value of the assets of the Corporate Debtor company, however, the present Applicant is having less than 10% of the claim of the entire debts payable by the Corporate Debtor, is having no locus to oppose the proposed Resolution Plan, which is now under consideration (IA 431 of 2018) by this Adjudicating Authority, under Section 31 of the I & B Code. In view of the above given the present application deserves to be partly allowed. The Resolution Professional is hereby directed to register the Applicant s total claim in the list of the Operational Creditors/claimants in other documents so as to apprise the CoC and also to communicate to the Applicant urgently.
Issues Involved:
1. Admission of the Applicant's claim as an Operational Creditor. 2. Rejection of the interest component of the claim by the Resolution Professional (RP). 3. Powers and duties of the RP under the Insolvency & Bankruptcy Code, 2016. 4. Legal validity of the RP's actions and communications. Issue-wise Detailed Analysis: 1. Admission of the Applicant's Claim as an Operational Creditor: The Applicant, M/s. Reliance Industries Limited, filed a claim as an Operational Creditor in the Corporate Insolvency Resolution Process (CIRP) of M/s. Essar Steel India Limited (Corporate Debtor), amounting to ?16,41,67,107/-. This claim was based on work done for the construction of the Singanpur Weir-cum-Causeway Project (SWP) under a Tripartite Agreement dated 09.11.1993. The Applicant contended that the Corporate Debtor and another participating industry, L&T, had defaulted on their pro rata contributions for additional water withdrawal. 2. Rejection of the Interest Component by the RP: The RP partially admitted the Applicant's claim, recognizing only ?99,07,972/- of the principal amount after adjusting interim payments, but rejected the interest component of ?15,42,59,135/-. The RP's rejection was based on the contention that the liability to pay interest was disputed and that the RP lacked adjudicatory powers to determine such disputes. The Applicant argued that the interest was due as per the terms of the Tripartite Agreement and MoU, which stipulated a 24% per annum interest on defaults. 3. Powers and Duties of the RP under the Insolvency & Bankruptcy Code, 2016: The Tribunal emphasized that the RP's role is to collate and verify claims and place them before the Committee of Creditors (CoC) for consideration. The RP is not vested with adjudicatory powers to resolve disputes regarding claims. The Tribunal referred to relevant sections of the Insolvency & Bankruptcy Code, 2016, including Sections 21, 25, and 29, which outline the RP's duties and responsibilities, such as preserving the corporate debtor's assets, maintaining an updated list of claims, and preparing the information memorandum. 4. Legal Validity of the RP's Actions and Communications: The Tribunal found that the RP's communication dated 14.05.2018, which rejected the interest component of the Applicant's claim, lacked reasons and was not in conformity with the provisions of the Insolvency & Bankruptcy Code. The Tribunal noted that the RP should have registered the claim as submitted by the Operational Creditor after verification and included it in the Memorandum of Information. The Tribunal cited precedents, including the Supreme Court's decisions in Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta and Swiss Ribbons (P.) Ltd. v. Union of India, which support the view that the RP does not have adjudicatory powers. Conclusion: The Tribunal concluded that the RP's rejection of the Applicant's claim without providing reasons was not legally sustainable. The Tribunal set aside the RP's communication dated 14.05.2018 and directed the RP to update the Applicant's total claim in the relevant documents, including the List of Creditors and Memorandum of Information. The Tribunal also noted that the Applicant's claim was less than 10% of the total debts due by the Corporate Debtor, which limited the Applicant's ability to oppose the proposed Resolution Plan. Order: The Tribunal partly allowed the application, directing the RP to register the Applicant's total claim and communicate the updated status to the Applicant. The application was disposed of with no order as to costs.
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