Status as on- 21/02/2023
In ruling on an appeal filed in Vijay Kumar Gupta v. Canara Bank, the National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprised of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member), held that the Liquidator lacks the authority to reject or modify already admitted claims if he receives any new information. Only the Adjudicating Authority may be contacted by the Liquidator to request adjustment of the admitted claims.
In compliance with Regulation 31 of the Liquidation Process Rules, 2016, the Liquidator of the Corporate Debtor created a list of stakeholders based on their submitted claims. As a stakeholder, Canara Bank presented a claim for Rs. 55,90,10,316, which was accepted. However, the Liquidator learned further information about Canara Bank’s total claim, which amounts to Rs. 12,14,00,229 throughout the transaction audit process.
Thus, in accordance with Regulation 31(3) of the Liquidation Process Rules, 2016, the Liquidator submitted an application to the Adjudicating Authority asking for a reduction in the claim made by Canara Bank and to change the entry in the list of stakeholders. In an order dated September 28, 2021, the adjudicating authority dismissed the application and declared that Regulation 31(3) did not apply.
The Liquidator appealed the 28.09.2021 Order before NCLAT on the grounds that he followed Regulation 31(3) after receiving more information. The application could not have been turned down as a result. It was contended that the method outlined in Sections 38 to 42 of the IBC must be followed in typical circumstances. However, Regulation 31(3) may be used and an application may be made to the Adjudicating Authority for revision of entry in the list of stakeholders if any information escapes the notice of the Liquidator and comes to his knowledge after claims have been accepted.
According to the Bench, Sections 38 to 42 of the IBC allow for claim consolidation, verification, denial, and an appeal against the liquidator’s judgment. The Liquidator will not have the authority to reject or change claims if he gets new information after the claims have already been acknowledged and presented to the adjudicating authority. For the purpose of having the claims changed, the Liquidator may only contact the Adjudicating Authority.
As a result, it is clear that the Tribunal erred by rejecting the application merely on the grounds that the aforementioned rule is not relevant and instead holding that the liquidator has the authority to accept or reject the claims. The Bench set aside the order of Adjudicating Authority and remanded the matter to be decided in light of Regulation 31(3).
It was held that the Liquidator lacks the authority to reject or modify already admitted claims if he receives any new information. Only the Adjudicating Authority may be contacted by the Liquidator to request adjustment of the admitted claims.