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TMI BlogRESOLUTION PROFESSIONAL IS EMPOWERED TO KEEP CLAIMS IN ABEYANCEX X X X Extracts X X X X X X X X Extracts X X X X ..... RESOLUTION PROFESSIONAL IS EMPOWERED TO KEEP CLAIMS IN ABEYANCE - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 24-7-2023 - - In ANHEUSER BUSCH INBEV INDIA LIMITED VERSUS MR. PRADEEP KUMAR SRAVANAM RESOLUTION PROFESSIONAL EAST GODAVARI BREWERIES PVT. LTD. - 2023 (6) TMI 547 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI , the appellant had entered into a brewing agreement on 06.02.2015 and the appellant gave an advance of Rs.17.50 crores to the corporate debtor, East Godavari Breweries Private Limited, Hyderabad. According to the clause 6.12 of the agreement the Corporate Debtor is liable to repay the advance amount with interest on the termination of the agreement for any reason. The appellant terminated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract on 03.08.2018 by which the Corporate Debtor is liable to refund the advance amount with interest. The appellant also initiated arbitration proceedings against the Corporate Debtor for the recovery of the outstanding advance amount with interest. The Corporate Insolvency Resolution Process was initiated against the Corporate Debtor 17.11.2021, by the Adjudicating Authority. The Adjudicating Authority appointed an Interim Resolution Professional and declared moratorium, as per Section 14 of the Insolvency and Bankruptcy Code, 2016 ( Code for short). In response to the advertisement the appellant filed a claim in Form C on 01.12.2021 to the tune of Rs.33.98 crores which includes the advance amount, interest @ 10% till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of default 03.08.2018 and default interest @ 18% per annum till 17.11,2021 the date of commencement of insolvency resolution process. According to the Appellant entirety of the Debt, is covered by the `Guarantee , furnished by the Promoters of the Corporate Debtor, and its `Related Party (Viz. Scarpe Marketing Private Limited). The Resolution Professional did not admit the claim of the appellant instead he kept in abeyance. The appellant filed an application before the Adjudicating Authority with the prayer to direct the Resolution Professional to admit its claim and update the claim by that the appellant may be a member of Committee of Creditors with proportionate voting rights. The Adjudicating Authority dismissed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e application filed by the appellants on the ground that the Resolution Professional was justified, in keeping the `Claim , in abeyance, because of the pending `Arbitration Proceedings , and the `counterclaim of the `Corporate Debtor on 02.12.2022. The appellant filed the present appeal before the National Company Law Appellate Tribunal ( NCLAT for short). The appellant submitted the following before NCLAT- The Appellant, is a Financial Creditor of the Corporate Debtor, and is owed a total Financial Debt of INR 33,98,16,438.35/-. The Adjudicating Authority had failed to appreciate that the Appellant s Financial Claim is an admitted and acknowledged liability. The Appellant s Financial Claim is a Sum i.e. present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly `Due and Payable , and further that the Resolution Professional, had failed to consider that a `Claim , as per Section 3(6) of the Code , includes `Disputed Claims , as well. 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. The Adjudicating Authority 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. The Adjudicating Authority had not taken into account of the fact that the existence of dispute or pendency of arbitration is relevant factors, to be considered for admission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of claim. It is the duty of the Resolution Professional to admit the appellant s financial claim in terms of Section 18 of the Code and the appellant is entitled to participate in the Committee of Creditors as per Section 21 . The non-consideration of the appellant s Financial Claim because the same is a `Disputed Claim or `Pending Adjudication , is `unlawful one and `opposed to `Law , The impugned order is contrary to Law that even if a `Financial Debt , is `Disputed , it must be recognized as such, if there is a `Default , in it s `Payment . According to Regulation 14 of the Corporate Insolvency Resolution Process Regulations the `Resolution Professional is mandated to determine the sum claimed by a creditor w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is not precise due to any contingency or other reason based on `best estimate of the amount of the claim based on the information available with him. The Resolution Professional, under the Code has no adjudicatory powers and instead is given only the administrative powers. The Resolution Professional has no jurisdiction to decide the claim and he could only collate the claim based on `Evidence and Record of the Corporate Debtor. There is no provision under the Code or Corporate Insolvency Resolution Process Regulations empowering the Respondents to keep a claim under abeyance and because of the fact that the Corporate Debtor had not denied the `Debt , as well as `Default , Despite the baseless claim of the Interim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Professional that no proof was attached in regard to existence of debt, the appellant had resubmitted the relevant documents, and submitted further clarification and information in their reply to the letter of the Interim Resolution Professional, dated 08.12. 2021, so as to facilitate the process of collation of claims, as undertaken by the Resolution Professional. The Interim Resolution Professional by denying the appellant s claim deprived it of its place, in the Committee of Creditors which, it is entitled to, as a Financial Creditor and this has caused an irreparable harm to the appellant. The Resolution Professional submitted the following before the High Court- Only after the Resolution Professional, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to know that there is an arbitration proceedings initiated by the appellant, which is pending, the Resolution Professional had kept the financial Claim of the appellant in `abeyance 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 Code and that the Arbitral Tribunal had dismissed the application through an order dated 14.01.2022, and continued the arbitration proceedings. The Resolution Professional 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Resolution Professional was not in a position, to admit/reject the claim and hence kept in `abeyance. Because of the pending arbitration proceedings the appeal filed by the Appellant became an infructuous one. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plea of the 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 NCLAT observed that the Adjudicating Authority on a careful consideration of the contentions advanced on behalf of the appellant , and also the Adjudicating Authority, keeping in mind of the stand taken by the Resolution Professional before the `Adjudicating Authority , vide its `Counter to the IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, comes to a consequent conclusion that the action of the Resolution Professional in keeping the claims in `abeyance , because of the pending arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion proceedings in regard to the counterclaim of the Corporate Debtor only after which, the claim sum of the appellant can be determined with certainty, the reliefs prayed for, by the appellant pertaining to admission of the claim, cannot be acceded to in the eye of Law. The NCLAT held that the order passed by the Adjudicating Authority in `dismissing the `Interlocutory Application , is free from any flaw. The NCLAT dismissed the appeal filed by the appellant. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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