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2023 (6) TMI 547 - AT - Insolvency and BankruptcyInitiation of CIRP - the claim of the applicant kept in abeyance - existence of dispute - pendency of arbitration - entitlement to participate in the CoC as per Section 21 - HELD THAT - It transpires that on 17.11.2021 the Adjudicating Authority / Tribunal had initiated the Corporate Insolvency Resolution Process against the Respondent / Corporate Debtor appointed an Interim Resolution Professional and declared Moratorium as per Section 14 of the I B Code 2016. It is represented on behalf of the Appellant that despite the baseless Claim of the Interim Resolution Professional that no proof was attached in regard to the Existence of Debt the Appellant / Petitioner had resubmitted the relevant documents and submit further clarification and information in their Reply to the letter of the IRP dated 8th December 2021 so as to facilitate the process of collation of claims as undertaken by the Resolution Professional - Before the Adjudicating Authority the Respondent / Resolution Professional of the Corporate Debtor in the Counter to IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021 had mentioned that only after the Respondent came to know that there is an Arbitration Proceedings initiated by the Appellant / Applicant which is pending the Respondent / Resolution Professional had kept the Financial Claim of the Appellant in abeyance. The clear cut stand of the Respondent is that he took all measures to collate verify determine all the Valid Claims which were submitted for the Payment in the Corporate Insolvency Resolution Process of the Corporate Debtor and complied with the Provisions of the Code in a meticulous manner. Because of the Appellant s Claim is pending before the Arbitral Tribunal and the outcome of the said Proceedings will determine whether the Claim is to be admitted or rejected and if it is to be admitted what is the quantum of Money Claimed and Interest? As such the Respondent / Resolution Professional was not in a position to admit / reject the Claim and hence kept in abeyance. In the instant case the very fact that the Appellant s Claim cannot be admitted till the counterclaim of the Corporate Debtor is determined which may end in set off of the Sum payable to the Appellant / Petitioner the plea of the Respondent / Resolution Professional cannot be brushed aside and in an emergency and also when a situation arises the Resolution Professional is within his power and limit to keep the Claims in abeyance for plurality of reasons. The action of the Resolution Professional in keeping the Claims in abeyance because of the pending Arbitration Proceedings in regard to the counterclaim of the Corporate Debtor only after which the Claim Sum of the Appellant can be determined with certainty - Appeal dismissed.
Issues Involved:
1. Whether the Resolution Professional (RP) was justified in keeping the Appellant's financial claim in abeyance due to pending arbitration proceedings and counterclaims of the Corporate Debtor. 2. Whether the Appellant's financial claim should be admitted and the Appellant included in the Committee of Creditors (CoC). Summary: Issue 1: Justification for Keeping Claim in Abeyance The Adjudicating Authority (National Company Law Tribunal, Amaravati Bench) observed that the Insolvency and Bankruptcy Code (IBC) mandates the Resolution Professional (RP) to collect and collate claims. However, when a dispute regarding the amount due and interest is pending, the RP cannot admit the claim to avoid conflicting judgments. The RP complied with the mandate of collecting and collating the claim but kept it in abeyance due to the pending arbitration proceedings and counterclaims of the Corporate Debtor. The Authority cited judgments, including EXIM Bank Vs. Resolution Professional JEKPL Private Limited and Reliance Commercial Finance Limited Vs. Ved Cellulose Limited, to support that claims can be kept in abeyance under certain circumstances. Issue 2: Admission of Appellant's Financial Claim The Appellant, a Financial Creditor, argued that its claim is an admitted and acknowledged liability, and the RP's failure to admit the claim due to pending arbitration and counterclaims is unlawful. The Appellant cited various judgments, including Innoventive Industries Limited v. ICICI Bank & Anr. and Pioneer Urban Land and Infrastructure Limited v. Union of India, to support that a claim can be made whether or not it is reduced to judgment and that the existence of a dispute does not impede the admission of a claim. Assessment: The Tribunal noted that the RP kept the claim in abeyance due to pending arbitration proceedings and counterclaims, which could result in a set-off of amounts payable to the Appellant. The RP's action was within his power and limit to keep claims in abeyance under such circumstances. The Tribunal concluded that the RP's action was justified and the reliefs prayed for by the Appellant could not be granted. The impugned order dated 02.12.2022, dismissing the Appellant's application, was upheld. Result: The appeal was dismissed, and the IA No. 26 of 2023 (For Stay) was closed.
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