NCLT Chennai: Resolution Professionals Should Not Rely On Corporate Debtor's Records for Verifying Claims

NCLT Chennai: Resolution Professionals Should Not Rely On Corporate Debtor's Records for Verifying Claims

In a recent ruling, the National Company Law Tribunal (NCLT) Chennai bench, presided over by Justice Jyoti Kumar Tripathi (Judicial Member) and Ravichandran Ramasamy (Technical Member), emphasized that the Resolution Professional (RP) must not solely depend on the corporate debtor's records for verifying claims. The tribunal highlighted that relying solely on these records could unfairly burden the creditors, especially considering the possibility of improper maintenance of the records.

The homebuyer, referred to as the applicant, reserved a 2 BHK apartment in the project named Sai Peace & Prosperity, developed by the corporate debtor. According to the booking form, the applicant made an advance payment of Rs. 20,00,000, consisting of Rs. 2,50,000 paid via cheque and the remaining Rs. 17,50,000 in cash.

Despite making several requests, the corporate debtor declined to refund the applicant, who was concerned about the lack of progress in the construction.

Following the admission of the corporate debtor into the Corporate Insolvency Resolution Process (CIRP), the applicant lodged a claim amounting to Rs. 35,20,000 with the Interim Resolution Professional (IRP). However, the IRP approved only a portion of the applicant's claim, specifically Rs. 3,77,178.

Subsequently, the applicant provided a comprehensive breakdown of the entire claim amounting to Rs. 20,00,000 to the respondent and argued that the partial admission of the claim, limited to Rs. 3,77,178, was unjustified. In reply, the resolution professional (respondent) asserted that there were no records of cash payments from the applicant in the corporate debtor's financial records.

Disappointed by the partial admission of the claim, the applicant lodged an application with the NCLT Chennai, urging the adjudicating authority to instruct the admission of a complete claim amounting to Rs. 35,20,000, which also includes an interest component of Rs. 15,20,000.

The NCLT granted the application and instructed the admission of the applicant's claim, along with the applicable interest rate and her inclusion in the relevant class of creditors.

The NCLT examined the booking form of the flat, which indicated that the applicant had provided Rs. 20 lakh to the corporate debtor as a booking advance. Additionally, the NCLT referred to Page 12 of the application, where it discovered that cheques for amounts of Rs. 1,00,000 and Rs. 1,50,000 were made out in the name of the corporate debtor. Moreover, cash receipts for Rs. 12,50,000 and Rs. 5,00,000 dated 02nd May 2013 and 06th May 2013, respectively, were issued in the name of the applicant.

Additionally, the NCLT referenced Regulation 8A of the IBBI (Insolvency Process of Corporate Persons) Regulation 2016, which states:

Regulation 8A: Claims by creditors in a class

1. A person claiming to be a creditor in a class shall submit a claim with proof to the interim resolution professional in electronic form in Form CA of Schedule-I.

2. The existence of debt due to a creditor in a class may be proved on the basis of:

a) the records available with an information utility, if any; or

b) other relevant documents, including:

i. agreement for sale;

ii. letter of allotment;

iii. receipt of payment made; or

iv. Such other document, evidencing existence of debt.

The NCLT noted that if the resolution professional were to exclusively depend on the corporate debtor's records to verify claims, and if the corporate debtor failed to maintain its records adequately, it could prejudice creditors such as the applicant. The inadequate maintenance of the corporate debtor's records should not unfairly disadvantage the applicant. Consequently, the resolution professional should verify the authenticity of the supporting documents submitted by the claimant through legal means rather than solely relying on the corporate debtor's records.

As a result, NCLT Chennai instructed the respondent to accept the applicant's claim along with the applicable interest rate.