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2022 (7) TMI 1252 - AT - Insolvency and BankruptcyConduct of the Resolution Professional (RP) - prayer to expunge the said observations on the ground, that being adverse, it has the effect of damaging the reputation and dignity of the Appellant as Insolvency Professional. - Whether serious efforts were made by the Appellant/Resolution Professional in properly verifying the claim submitted before him by the Financial Creditor including classifying the debts into financial and operational debts? - Whether the Appellant/Resolution Professional had failed in his duty to analyse the evidence placed before him regarding the nature of transactions made by the Financial Creditor reflected in the books of Corporate Debtor and presenting the complete facts before the CoC on the admissibility of the claims of the Financial Creditor? HELD THAT - It is an undisputed fact that the Financial Creditor submitted his claims under Rule 8 of CIRP Regulations in Form C well within the prescribed time limit in terms of the public announcement made by Appellant/Resolution Professional on 13.04.2019. The last date of submission of claims, as provided in the public announcement was 26.04.2019 and the Financial Creditor had submitted on 26.04.2019 his claim details along with supporting documents as also found in the Appeal Paper Book. Invoking CIRP Regulation 10, the Appellant/Resolution Professional sent an email on 01.05.2019 seeking additional information with respect to account statements spanning over a period of 12 years from 2007 to 2019 from the Financial Creditor - What, however, merits consideration is the reasonability on the part of the Appellant/Resolution Professional to have allowed only just twenty-four hours to the Financial Creditor to submit additional information spanning order a period of 12 years (2007-2019) and the propriety of his action of rejecting the claim of the Financial Creditor soon thereafter on 02.05.2019 after having allowed only one day s time to furnish such additional information which entailed voluminous documentation. Section 18 of the IBC lays down the various duties of the IRP in respect of handling claim proposals. Section 18(1)(b) lays down that IRP shall receive and collate all the claims submitted by creditors to him, pursuant to the public announcement made under Sections 13 and 15. As regards the role of the Resolution Professional in this regard, Section 25(e) of the IBC lays down that he shall maintain an updated list of claims. The Resolution Professional while examining claims is therefore expected to act in a manner which inspires confidence in the Financial Creditor so as to ensure the credibility of the insolvency process. In the present matter, therefore, the question before us is therefore whether a Resolution Professional is competent to decide or reject the claims of the Financial Creditor by himself without presenting the complete facts before the CoC on the admissibility of the claims. The Resolution Professional is an important instrumentality in the insolvency resolution process and his role is crucial and critical to fulfill the objective of the IBC. It is therefore incumbent upon him to discharge his responsibilities with the highest standards of professional excellence, dexterity, integrity, rectitude, and good faith. The Adjudicating Authority based on the facts and documents presented before it, found lack of professionalism on part of the Appellant/Resolution Professional in analyzing the admissibility of claims before him. There are no reasons to disagree with the Adjudicating Authority and affirm the findings that there has been failure of duties on the part of the Appellant/Resolution Professional. There are no convincing reasons to interfere with the Impugned Order - Appeal dismissed.
Issues Involved:
1. Verification of claims by the Resolution Professional. 2. Duty of the Resolution Professional to analyze evidence and present facts to the Committee of Creditors (CoC). 3. Interpretation of Regulation 12 of CIRP Regulations regarding the submission of claims. 4. Role and responsibilities of the Resolution Professional under the Insolvency and Bankruptcy Code (IBC). Detailed Analysis: 1. Verification of Claims by the Resolution Professional: The primary issue was whether the Resolution Professional (RP) made serious efforts to verify the claims submitted by the Financial Creditor. The Financial Creditor had submitted claims within the stipulated time, but the RP rejected these claims on grounds of insufficient documentation and lack of proper authorization. The RP sought additional information via email but allowed only 24 hours for submission, which was deemed unreasonable given the 12-year span of the requested documents. The Adjudicating Authority found that the RP did not make adequate efforts to verify the claims, merely sending a brief email and rejecting the claims summarily. 2. Duty of the Resolution Professional to Analyze Evidence and Present Facts to the CoC: The RP failed to analyze the evidence regarding the nature of transactions and did not present complete facts to the CoC. The Adjudicating Authority noted that the RP should have verified the transactions and put the complete factual and legal position before the CoC rather than rejecting the claims summarily. The Supreme Court in 'Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors.' clarified that the RP does not have adjudicatory power and acts as a facilitator. The RP's role is administrative, and he should have presented the claims to the CoC for consideration. 3. Interpretation of Regulation 12 of CIRP Regulations Regarding the Submission of Claims: The RP rejected the refiled claims of the Financial Creditor on the grounds that once a claim is rejected, it cannot be resubmitted. However, Regulation 12(2) allows creditors to submit claims with proof within 90 days of the insolvency commencement date if they fail to do so within the time stipulated in the public announcement. The Adjudicating Authority found that the RP's interpretation was narrow and pedantic, as Regulation 12 does not explicitly prohibit resubmission of claims within the extended period. The RP should have allowed the Financial Creditor to substantiate his claims within the extended time frame. 4. Role and Responsibilities of the Resolution Professional Under the IBC: The IBC aims to promote entrepreneurship, maximize asset value, and balance stakeholders' interests. The RP's role is crucial in achieving these objectives. The RP is expected to act with professionalism, integrity, and good faith. The Adjudicating Authority found a lack of professionalism on the part of the RP in handling the claims, which undermined the credibility of the insolvency process. The RP's failure to properly verify and present the claims to the CoC was a dereliction of duty. Conclusion: The appeal was dismissed, and the adverse remarks against the RP in the Impugned Order were upheld. The RP failed to make serious efforts to verify the claims, did not present complete facts to the CoC, misinterpreted Regulation 12 regarding claim submission, and did not fulfill his role and responsibilities under the IBC. The Adjudicating Authority's findings of lack of professionalism and failure of duties on the part of the RP were affirmed.
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