2022 (6) TMI 383 - Tri - Insolvency and Bankruptcy

Acceptance of the claim of Respondent - Whether the acceptance of claims of Respondent Nos.2 to 5 by the Liquidator is not in accordance with the provisions of the Code and the Rules made there in? - whether the Liquidator should wait for the final adjudication of the claims of the Respondents pending before the learned DRT and other Judicial Authorities, before admitting the claims and disbursing the amounts? HELD THAT - It is an undisputed proposition that the Liquidator is mandated to discharge his duties strictly as per the provisions quoted above while verifying/admitting the claims. On a careful perusal of these provisions, it is clear that the Liquidator is required to verify the claims with reference to the date of liquidation and if there is no crystallization of a debt through a decree on that date, the Code does not direct the Liquidator to wait for the same - As regards the admission of the claims, on going through the voluminous evidence including correspondences etc. produced in the course of proceedings and also the grounds on which the claims have been admitted in the cases of Respondent Nos.2 to 5 by the Liquidator with reference to. Prima facie, the Liquidator has verified the claims on the basis of Form-D submitted by the Financial Creditors along with documents, records and financial statements filed with the same. It is also noted that the Liquidator has accepted only partial amounts of the total claims made by the financial creditors and have sought legal opinion upon some of the issues before reaching a conclusion. No particular procedural mistake on the part of the Liquidator has been pointed out by the applicant during the current proceedings. It may be noted that word adjudication has been used by the Liquidator in more than one place while verifying the claim of the respondents but it seems to be a typographical or mistake through inadvertence, and the same is ignored. The allegation of the applicant that the Liquidator has adjudicated the claims filed by the respondent-financial creditors and has wrongly accepted their claims is misconceived - It is trite law that timelines are sacrosanct in a liquidation proceedings as is apparent from the Regulation 47 laying down Model TimeLine for liquidation process. The general principle of construction in a circumstance where two special Acts are in conflict with each other is that, the Act made later should prevail vide the maxim leges posteriores priores abrogant . The DRT was constituted under Recovery of Debts Due to Banks Financial Institutions Act, 1993, much prior to the I B Code, 2016. In view of Section 238 of the I B Code, 2016 steps taken under the Code by the authority would have precedence over other authorities in parallel proceedings. Thus, the provisions of I B Code, 2016 should prevail in case of any conflict. This Authority, therefore, finds no reason to keep the liquidation proceeding in abeyance, and thus, rejects the Applicant s prayer that the Liquidator should await the final adjudication of the claims before the Hon ble DRT before accepting the claims of the Respondents and subsequently disbursal of the amounts - Application dismissed.

Summary

Issues Involved:
1. Acceptance of claims by the Liquidator.
2. Whether the Liquidator should await the final adjudication of claims pending before other judicial authorities.
3. Allegations of non-cooperation by the applicant.

Detailed Analysis:

Acceptance of Claims by the Liquidator:
The applicant contested the acceptance of claims by Respondent Nos. 2 to 5 (various banks and financial institutions) by the Liquidator, alleging the claims were without legal basis and not reflected in the corporate debtor's books. The Liquidator justified the claims based on records, meetings of the Stakeholders Consultation Committee (SCC), and legal opinions sought. The Liquidator verified claims under Section 38 and 39 of the Insolvency and Bankruptcy Code (IBC), 2016, and related regulations, admitting only partial amounts of the total claims. The Tribunal found no procedural mistakes by the Liquidator and held that the Liquidator's actions were in compliance with the IBC, 2016 and related regulations.

Awaiting Final Adjudication of Claims:
The applicant argued that the Liquidator should await the final adjudication of claims pending before the Debt Recovery Tribunal (DRT) and other judicial authorities before disbursing funds. The Tribunal emphasized that the IBC, 2016 is a complete code with overriding provisions under Section 238, which take precedence over other laws. The Tribunal cited several judgments affirming that proceedings under IBC should not be stalled due to pending cases in other forums. The Tribunal concluded that the liquidation process should not be kept in abeyance and rejected the applicant's prayer to await the final adjudication of claims.

Allegations of Non-Cooperation:
The Liquidator mentioned issues of non-cooperation by the applicant, including pending applications under Section 19(2) of the IBC for non-cooperation in providing necessary documents. The Tribunal directed the Liquidator to expeditiously complete the liquidation proceedings and actively pursue pending cases before the DRT and other judicial authorities.

Conclusion:
The Tribunal dismissed the application, upholding the Liquidator's acceptance of claims and rejecting the request to await final adjudication of claims by other judicial authorities. The Tribunal also directed the Liquidator to complete the liquidation process promptly and pursue pending cases diligently.