NCLT Hyderabad Sets Aside Rejection of BEML's ₹2.57 Crore Claim in BEML Midwest CIRP, Orders Reverification

The National Company Law Tribunal (NCLT), Hyderabad, has recently set aside the rejection of a Rs.2.57 crore claim filed by BEML Limited against BEML Midwest Limited, finding that the liquidator's decision was not based on a complete and proper examination of the material on record and that the claim needed verification.

The bench of Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri said that incomplete documentation by itself could not end the matter and that the claim had to be properly verified. It observed:

“Therefore, in the absence of complete documentation, the claim requires proper verification. Accordingly, the Respondent is directed to reverify the claim of the Applicant, and the Applicant is directed to file the claim afresh in the proper form along with all relevant documents substantiating its claim.”

The case traces back to the CIRP initiated against BEML Midwest on September 26, 2022, with liquidation following on October 20, 2023. BEML filed its claim on October 27, 2022, but it was rejected within days, on October 31, 2022, on the ground of delay. The company made another attempt during liquidation, filing its claim again on November 28 and December 5, 2023, for Rs. 2.57 crore.

That, too, did not succeed. On December 19, 2023, the liquidator, Padma Priyanka Vangala, rejected the claim, pointing to missing documents, the use of an incorrect form, and alleging that the transactions themselves were fraudulent.

Looking at the material placed before it, the tribunal noted that key documents were in fact available. These included the guarantee deed dated February 6, 2008 and SBI's no-dues certificate dated November 23, 2020, which pointed to the existence of the guarantee and payments made under it.

At the same time, the tribunal was not prepared to accept the claim in full. Parts of it, particularly the rent component, were not backed by sufficient material, making a proper verification exercise necessary.

The tribunal also took issue with the liquidator's reliance on an investigation report to label the transactions as fraudulent. It held:

“In such circumstances, reliance placed by the Respondent solely on the said investigation report to conclude that the transactions are fraudulent and collusive, without any independent verification or adjudication, cannot be sustained. The Respondent is, however, at liberty to initiate appropriate proceedings seeking necessary reliefs with respect to the alleged fraudulent transactions. However, the claim of the Applicant cannot be rejected solely on this basis without proper adjudication.”

With this, the tribunal set aside the rejection order dated December 19, 2023, allowed the application, and gave BEML 10 days to file a fresh claim in the proper form along with supporting documents. The liquidator has been directed to verify the claim in accordance with law.