2021 (9) TMI 1209 - Tri - Insolvency and Bankruptcy

Seeking direction against admission of claim as per the FORM C - onus to prove claim - seeking to update the Committee of Creditors voting share ratio after admitting the claim of the Applicant - Section 60 (5) of Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is observed that the Applicant is conveniently trying to escape from the onus of proving its claim rather than expecting the Respondent / RP to the same without any application of mind, which is a clear mis-interpretation of the provisions of Section 18 of the Code. The RP is duty bound to apply his mind while collating and verifying the information to justify the claim and where the said claim is not supported with documentary evidences, the RP ought to refrain from admitting such claims. The Applicant fails to appreciate that an IRP/RP is not a mere rubber stamp to keep admitting claims without any verifications. Form the facts of the case it is clear that RP has conscientiously reached at conclusion not admitting partial claim of the Respondent which was not supported by documents - Application rejected.

Issues Involved:
1. Admission of claim by the Resolution Professional (RP).
2. Update of Committee of Creditors (CoC) voting share ratio.
3. Validity of the Corporate Guarantee.
4. Requirement of consent from existing lenders.
5. Timeliness and completeness of claim submission by the Applicant.
6. Role and duties of the Resolution Professional in claim verification.

Detailed Analysis:

1. Admission of Claim by the Resolution Professional (RP):
The Applicant, IDBI Bank Limited, filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking the admission of its claim as per FORM C dated 12th September 2019. The Applicant claimed a total sum of ?61,41,79,589.59 as on 26th February 2019. The Resolution Professional (RP) provisionally admitted a claim of ?47.33 Crore and rejected part of the claim on the grounds that the consent of existing lenders was not obtained and there was no board resolution provided when the Applicant extended loans to Deegee Orchads Ltd.

2. Update of Committee of Creditors (CoC) Voting Share Ratio:
The Applicant requested the RP to update the CoC voting share ratio after admitting its claim. The RP included the Applicant as part of the CoC in the 7th CoC meeting held on 17th October 2019, where the Applicant was allotted the highest voting share of 32.46% based on the admitted claim of ?47.33 Crore.

3. Validity of the Corporate Guarantee:
The Applicant argued that the Corporate Guarantee provided by the Corporate Debtor to secure loan facilities was valid and covered under the definition of Financial Creditor under the Insolvency and Bankruptcy Code, 2016. However, the RP rejected part of the claim, citing that the Corporate Guarantee could not have been entered and executed without the consent of existing lenders.

4. Requirement of Consent from Existing Lenders:
The RP and other Financial Creditors, including Union Bank, Canara Bank, and Oriental Bank of Commerce, raised concerns over the invocation of the Corporate Guarantee in the absence of permission from existing consortium lenders. The RP argued that the Corporate Debtor was restricted from undertaking guarantee obligations on behalf of any other company, firm, or person, as per the sanction letter dated 24th August 2007.

5. Timeliness and Completeness of Claim Submission by the Applicant:
The RP noted that the Applicant filed its proof of claim only after 155 days of the initiation of Corporate Insolvency and Resolution Process (CIRP) and a revised claim on the 191st day. Despite the delayed filing, the RP treated the Applicant as a CoC member and allotted it the highest voting share. The RP also highlighted that the Applicant did not provide crucial documents, such as objections raised by other Financial Creditors against the invocation of the Corporate Guarantee.

6. Role and Duties of the Resolution Professional in Claim Verification:
The RP emphasized that it is the duty of the RP to apply his mind while collating and verifying the information to justify the claim. The RP is not a mere rubber stamp to admit claims without verification. The RP conscientiously reached the conclusion not to admit part of the Applicant's claim due to the lack of supporting documents. The Tribunal supported this stance, stating that the RP's duty is to verify claims with documentary evidence.

Conclusion:
The Tribunal rejected the Applicant's request to admit its full claim and update the CoC voting share ratio. The Tribunal upheld the RP's decision to partially admit the claim based on available information and the lack of necessary consents and documentation. The application MA 3545 of 2019 was disposed of as rejected, and IA 518 of 2021, filed by the Original Petitioner, was also disposed of in light of the above observations.

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