2024 (1) TMI 342 - AT - Insolvency and Bankruptcy

Petition filed by the Appellant challenging the decision of the Resolution Professional rejecting the claim of the Appellant as Financial Creditor, dismissed - HELD THAT - From the materials brought on the record, it is clearly prove that there is no disbursement by the Appellant to the Corporate Debtor. When there is no disbursement for time value of money essential ingredients to prove a financial debt is missing. As noted, in Form C which was filed by the Appellant, financial debt was claim on the basis of inter corporate loan given from time to time. It is not the case of the Appellant that any inter corporate loan was given to the Corporate Debtor at any point of time. According to the own case of the Appellant what was claimed in Form C was neither proved nor substantiated. In the application which was filed by the Appellant before the Adjudicating Authority there was no mention of any loan at any point of time given to the Corporate Debtor by the Appellant. Whether there was any financial debt owed to the Appellant by the Corporate Debtor for which the claim was filed? - HELD THAT - The Balance Sheet even if it is taken on its face value does not in any manner prove that there is any financial debt. The financial debt ought to have reflected under the heading of borrowings and there being no reflection of the claim which is filed in Form C under the heading borrowings . The Submission of the Appellant that the balance sheet supports the claim of the Appellant cannot be accepted. The balance sheet as on 31.03.2022 does not prove that there was any financial debt owed by the Corporate Debtor to the Appellant. The Adjudicating Authority in exercise of its jurisdiction under subsection (5) of Section 60 having adjudicated the claim as submitted by the Appellant, the question to be answered in this Appeal is as to whether the order of the Adjudicating Authority adjudicating the claim of the Appellant is sustainable or not. Adjudicating Authority after noticing the judgment of the Hon ble Supreme Court in PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VERSUS AXIS BANK LIMITED ETC. ETC. 2020 (2) TMI 1259 - SUPREME COURT has held that the applicant has failed to prove the transaction as a deposit of money or a loan from the applicant s account to the Corporate Debtor s account. The Adjudicating Authority did not commit any error in rejecting application filed by the Appellant. There is no merit in the Appeal - appeal dismissed.

Summary

Issues Involved:
1. Whether the Resolution Professional had the authority to re-verify an already admitted claim.
2. Whether the Appellant's claim qualifies as a "financial debt" under Section 5(8) of the Insolvency and Bankruptcy Code (IBC).

Summary:

1. Authority of the Resolution Professional to Re-verify Admitted Claims:
The Appellant argued that once a claim is admitted by an Interim Resolution Professional (IRP) or Resolution Professional (RP), the RP cannot re-verify the claim under Regulations 8, 10, and 13 of the CIRP Regulations, 2016. The Appellant contended that the RP's powers are limited to revising the admitted claim based on additional information and not re-verifying it. The Resolution Professional, however, maintained that it is his duty under Section 25 of the IBC to verify claims to protect the assets of the corporate debtor. The Tribunal upheld the RP's authority to seek additional documents for substantiating claims, emphasizing that the RP can recheck claims not supported by adequate documentation.

2. Qualification of the Appellant's Claim as a Financial Debt:
The Appellant's claim was based on an "Inter Company Loan given from time to time along with accrued interest thereon" and was supported by a balance confirmation and a statement of balance outstanding. The RP rejected the claim due to the absence of sufficient documentation proving the financial debt. The Tribunal noted that the balance confirmation dated 02.05.2022, issued three days before the initiation of CIRP, did not substantiate a financial debt. The Tribunal referred to the definition of "financial debt" under Section 5(8) of the IBC and the Supreme Court's ruling in "Anuj Jain vs. Axis Bank Limited," which emphasized that a financial debt must involve disbursement against the consideration for the time value of money. The Appellant admitted that there was no loan agreement or disbursement, which is essential to prove a financial debt. The Tribunal concluded that the Appellant failed to prove any disbursement for the time value of money, and thus, the claim did not qualify as a financial debt.

Conclusion:
The Tribunal dismissed the appeal, affirming the RP's decision to reject the Appellant's claim as a financial creditor. The Tribunal ruled that the Appellant failed to substantiate the claim as a financial debt due to the lack of disbursement and supporting documentation.