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TMI Blog2023 (6) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent / 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el in Pioneer Urban Land and Infrastructure Limited Vs. Union of India reported in (2019) 8 SCC 416, no doubt held that claim can be made whether or not such right to payment is reduced to judgment and a debt is a liability or obligation in respect of a right to payment even it arises out of breach of contract, which is due from any person, notwithstanding that there is no adjudication of the said breach, followed by judgment or decree or order. But the duty of the RP so far as collecting and collating the claims is complete. However, the claim is not yet admitted and is kept in abeyance only for the purpose of admission not for the purpose of collation. Hence, the mandate so far as collection and collating the claim stands complied with by the RP. 13. The judgment of the NCLAT in EXIM Bank Vs. Resolution Professional JEKPL Private Limited reported in (2018) SCC Online NCLAT 465 was relied upon, wherein it was held that any person who has a right to claim payment as defined under Section 3 (6) is supposed to file the claim whether matured or unmatured. The question as to whether there is a default or not is not to be seen. As already observed there is no quarrel with the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided by the National Company Law Appellate Tribunal, New Delhi also it can be seen that the claims were kept in abeyance by the RP as the claims of the interest therein were not accepted by the RP. Hence, in view of the above this Tribunal is of the opinion that since, the claim of the Applicant is collected and collated by the RP and is also considered and kept in abeyance and in view of the arbitration proceedings pending with regard to the counter claim of the Corporate Debtor after which alone the claim amount of the Applicant can be decided with certainty, the reliefs claimed by the Applicant for admission of the claim cannot be granted. and dismissed the Application . Appellant s Submissions: 3. Questioning the validity , propriety and legality of impugned order , dated 02.12.2022 in IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, the Adjudicating Authority ( National Company Law Tribunal , Amaravati Bench), the Learned Counsel for the Appellant / Petitioner , submits that the Appellant , is a Financial Creditor of the Respondent / Corporate Debtor , and is owed a total Financial Debt of INR 33,98,16,438.35/-. 4. It is rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Authority / Tribunal , had failed to appreciate that the Appellant s Financial Claim , is an admitted and acknowledged liability . 9. It is projected on the side of the Appellant that the Appellant s Financial Claim , is a Sum i.e. presently Due and Payable , and further that the Resolution Professional, had failed to consider that a Claim , as per Section 3(6) of the I B Code, 2016, includes Disputed Claims , as well. 10. The Learned Counsel for the Appellant takes a stand that in view of the Resolution Professional s categorical admission that the Agreement and Default of the Corporate Debtor , are matters of record and that no further adjudication , was required. 11. The plea of the Appellant is that, the Adjudicating Authority / Tribunal , had failed to consider that the Advance , together with interest is Financial Debt , and the Corporate Debtor , is in Default , in repayment of the same. 12. The Learned Counsel for the Appellant, raises an argument that the Adjudicating Authority / Tribunal , had not taken into account of the fact that the existence of dispute or pendency of arbitration , are relevant factors, to be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty, and according to this principle, even if there is a stipulation by way of liquidated damages, a party complaining of breach of contract can recover only reasonable compensation for the injury sustained by him, the stipulated amount being merely the outside limit. It, therefore makes no difference in the present case that the claim of the appellant is for liquidated damages. It stands on the same footing as a claim for unliquidated damages. Now the law is well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a Court or other adjudicatory authority. When there is a breach of contract, the party who commits the breach does not eo instanti incur any pecuniary obligation, nor does the party complaining of the breach becomes entitled to a debt due from the other party. The only right which the party aggrieved by the breach of the contract has is the right to sue for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the defendant is liable and then it proceeds to assess what that liability is. But till that determination there is no liability at all upon the defendant. This statement in our view represents the correct legal position and has our full concurrence. A claim for damages for breach of contract is, therefore, not a claim for a sum presently due and payable and the purchaser is not entitled, in exercise of the right conferred upon it under Clause 18, to recover the amount of such claim by appropriating other sums due to the contractor. On this view, it is not necessary for us to consider the other contention raised on behalf of the respondent, namely, that on a proper construction of Clause 18, the purchaser is entitled to exercise the right conferred under that clause only where the claim for payment of a sum of money is either admitted by the contractor, or in case of dispute, adjudicated upon by a court or other adjudicatory authority. We must, therefore, hold that the appellant had no right or authority under Clause 18 to appropriate the amounts of other pending bills of the respondent in or towards satisfaction of its claim for damages against the respondent and the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / Corporate Debtor , had not denied the Debt , as well as Default , and prays for allowing of the instant Appeal , for meeting the ends of Justice . Appellant s Citations: 21. The Learned Counsel for the Appellant, cites the decision of the Hon ble Supreme Court of India, in Innoventive Industries Limited v. ICICI Bank Anr. 2018 1 SCC, at Page 407, Spl. Pg. 438, wherein, at Paragraphs 28 30, it is observed as under: 28. .. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority .. . 30. . It is of no matter that the debt is disputed so long as the debt is due i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date .. 22. The Learned Counsel for the Appellant, refers to the Judgment of the Hon ble Supreme Court dated 09.08.2019, in Pioneer Urban Land and Infrastructure Limited v. Union of India (vide Writ Petition (Civil) No. 43 of 2019, wherein, at Paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the committee of creditors; (e) file information collected with the information utility, if necessary; and (f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including (i) assets over which the corporate debtor has ownership rights which may be located in a foreign country; (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets subject to the determination of ownership by a court or authority; (g) to perform such other duties as may be specified by the Board. Explanation. For the purposes of this section, the term assets shall not include the following, namely (a) assets owned by a third party in possession of the corporate debtor held under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of amount of claim. (1) Where the amount claimed by a creditor is not precise due to any contingency or other reason, the interim resolution professional or the resolution professional, as the case may be, shall make the best estimate of the amount of the claim based on the information available with him. (2) The interim resolution professional or the resolution professional, as the case may be, shall revise the amounts of claims admitted, including the estimates of claims made under sub-regulation (1), as soon as may be practicable, when he comes across additional information warranting such revision. It is clear from a reading of these Regulations that the resolution professional is given administrative as opposed to quasi-judicial powers. In fact, even when the resolution professional is to make a determination under Regulation 35-A, he is only to apply to the adjudicating authority for appropriate relief based on the determination made as follows: 35-A. Preferential and other transactions. (1) On or before the seventy-fifth day of the insolvency commencement date, the resolution professional shall form an opinion whether the corporate debtor has been subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 27. The Learned Counsel for the Appellant, seeks in aid of the decision in Bank of India v. Shrenuj and Company Ltd., (2019) SCC Online NCLT 3264, to fortify his plea that a Claim for damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree / order of a Court / Adjudicating Authority . Assessment: 28. Before the Adjudicating Authority / Tribunal , the Appellant / Petitioner , had filed IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021 (under Section 60 (5) of the I B Code, 2016, r/w. Rule 11 of NCLT Rules, 2016, seeking for passing of an Order ; (a) in directing, the Resolution Professional (of the Corporate Debtor), to admit the amount claimed by the Applicant, i.e., an amount of INR 33,98,16,438.35 (Rupees Thirty-Three Crores Ninety-Eight Lacs Sixteen Thousand Four Hundred Thirty Eighty and Thirty-Five paise only) being the total outstanding amount payable till November 17, 2021, the date of commencement of the CIRP, or such other amount as this Hon ble Tribunal finds just and fair. (b) in directing, the Resolution Professional to revise and update the list of creditors and admit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 . 35. Added further, the Resolution Professional , had filed an Arbitration Application , informing the Arbitral Tribunal , about the Initiation of Corporate Insolvency Resolution Process and Moratorium , under Section 14 of the I B Code, 2016, and that the Arbitral Tribunal , had dismissed the Application , through an Order , dated 14.01.2022, and continued the Arbitration Proceedings . 36. 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 Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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