NCLAT directs NCLT to reassess Canara Bank claims case
The matter is likely to be taken up by mid-March
NCLAT directs NCLT to reassess Canara Bank claims case
The matter is likely to be taken up by mid-March
In a case pertaining to the dues owed to Canara Bank, the Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has referred the matter concerning the modification of claims by the liquidator, back to the National Company Law Tribunal (NCLT).
The appellate tribunal added that NCLT would decide on the application of the liquidator regarding the modification of the claim by providing Canara Bank an opportunity for a hearing.
The matter relates to Canara Bank, one of the financial creditors, submitting claims of over Rs.55 crore, which were admitted. But later, the liquidator found the claim to be for only Rs.12.14 crore.
The bench led by Justice Rakesh Kumar Jain held that the liquidator had no jurisdiction to modify the claims that were already admitted. In instances where the liquidator received any additional information, it should then approach the adjudicating authority for modification of the claims.
Ashish Pyasi, an associate at Dhir and Dhir Associates stated, "While setting aside an order by NCLT, the NCLAT held that after claims being admitted, the liquidator has no power to modify the claims or the list of stakeholders, thereby making it mandatory for the liquidator to approach the tribunal for any modification."
NCLAT further ruled, "It is apparent that the tribunal has committed an error in not appreciating Regulation 31(3) in its right perspective. It rejected the application solely on the issue that the provision is not applicable and held that the liquidator is empowered to accept or reject the claims. No other issue has been raised. Therefore, we are of the view that the impugned order is bad in law and it is set aside."
The liquidator of the corporate debtor had prepared a list of stakeholders according to the claims that were submitted as per Regulation 31 of the Liquidation Process Regulations. In his plea before the NCLT, he sought a reduction of the claims submitted by Canara Bank. He also sought to modify its entry in the list of stakeholders that was prepared earlier in accordance with the regulation.
However, the bench rejected the application and held that the regulation was not applicable.
Dissatisfied by the NCLT order, the liquidator approached the NCLAT.
He argued that on receiving additional information he proceeded in accordance with the law before the tribunal. Therefore, the application should not have been rejected.
The liquidator added that the regulation was a special provision, which came into operation if any information escaped the notice of the liquidator or if it came to his knowledge after accepting the claim. He could then apply to the adjudicating authority for its direction on what to do in such a situation for the purpose of modification of an entry in the list of stakeholders.