2022 (4) TMI 940 - Tri - Insolvency and Bankruptcy

Rejection of claim by the Liquidator/Respondent - rejection of claim of the Applicant on the ground that the claim amount is not reflected in the books of the corporate debtor and that the infusion is made to M/s. Nathella Sampath Chetty Co. which is a different entity - HELD THAT - In the light of the averments made by the applicant that the Order form reflects the name of the Corporate Debtor does not significantly satisfy this Adjudicating Authority while the ledger of the Corporate Debtor does not hold such entry as confirmed by the Respondent/Liquidator. Further, the allegation to prove the liability of the Corporate Debtor is bereft of sufficient documentary evidence. While on the other hand the copy of the scheme-passbook holds the name of M/s. Nathella Sampathu Shetty and Co. which in itself is self-explanatory that the Corporate Debtor has no nexus with the same. Therefore, it is evident that the amount paid by the Applicant on the gold scheme was not collected by the corporate debtor and that no sufficient evidence as to show the diversion of funds into the Corporate Debtor have been carried out. Under the said circumstances this Adjudicating Authority finds it deems fit to dismiss the instant application for bereft of evidence. Application dismissed.

Issues:
1. Rejection of claim by the Liquidator
2. Jurisdiction of the Adjudicating Authority
3. Allegations of diversion of funds
4. Maintainability of the application

Issue 1: Rejection of claim by the Liquidator
The applicant filed an application against the rejection of their claim by the Liquidator, seeking to set aside the rejection order and have their claim accepted. The applicant had participated in a gold scheme offered by the Corporate Debtor and made regular payments as per the scheme. The Liquidator rejected the claim citing that the claimed amount did not appear in the books of the Corporate Debtor and that the scheme pertained to a different entity, namely "Nathella Sampathu Chetty & Co." The Liquidator contended that the claim should have been raised with the partnership firm where the chit payments were made, not with the Corporate Debtor. The Respondent argued that the rejection was valid as the applicant failed to provide evidence of payments to the Corporate Debtor and that the claim was lodged incorrectly with the Liquidator instead of the partnership firm.

Issue 2: Jurisdiction of the Adjudicating Authority
The Respondent contended that the application was not maintainable as the claim was related to a different entity, the partnership firm, and not the Corporate Debtor. The Respondent highlighted that the Liquidator's decision was made in accordance with the provisions of the Insolvency and Bankruptcy Code, supported by regulations, and clearly communicated to the applicant. The Adjudicating Authority found that the rejection was justified based on the lack of evidence linking the payments made by the applicant to the Corporate Debtor, as the scheme-passbook indicated a different entity. The Authority dismissed the application, emphasizing the need for substantial documentary evidence to establish liability.

Issue 3: Allegations of diversion of funds
The Respondent presented evidence that the applicant's payments were directed to the partnership firm, not the Corporate Debtor, as indicated by the chit passbook instructions. The Respondent also highlighted that efforts were made to verify the existence of the partnership firm, which was distinct from the Corporate Debtor. The Adjudicating Authority noted the lack of proof of funds being diverted to the Corporate Debtor and concluded that the rejection of the claim was appropriate given the absence of sufficient documentation linking the applicant's payments to the Corporate Debtor.

Issue 4: Maintainability of the application
The Respondent argued that the application was not maintainable in law or in fact, as the claim pertained to the partnership firm and not the Corporate Debtor. The Respondent pointed out that a significant number of claims related to the partnership firm were uniformly rejected due to the lack of reflection in the Corporate Debtor's books. Additionally, the Respondent mentioned the formation of an association by depositors of the partnership firm to seek the return of their funds through legal action. The Adjudicating Authority found the rejection of the claim valid, considering the lack of evidence linking the applicant's payments to the Corporate Debtor and the existence of the partnership firm as a separate entity.

In conclusion, the Adjudicating Authority dismissed the application challenging the rejection of the claim by the Liquidator, citing insufficient evidence to establish the liability of the Corporate Debtor for the payments made by the applicant under the gold scheme. The Authority emphasized the need for clear documentation and proof of payment to the relevant entity, highlighting the distinction between the Corporate Debtor and the partnership firm involved in the scheme.

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