Creditors Cannot Question RP's Information Requests During Claim Verification: NCLAT New Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 30 June held that a creditor cannot question the information or clarifications sought by a Resolution Professional (RP) during verification of claims in the Corporate Insolvency Resolution Process (CIRP), as the RP is statutorily empowered to seek evidence necessary for substantiation of claims.

Judicial Member Justice N. Seshasayee and Technical Member Arun Baroka dismissed the appeal filed by the New Okhla Industrial Development Authority (NOIDA), challenging the order of the Delhi bench of the National Company Law Tribunal (NCLT). The Bench held:

“We find that a Resolution Professional is empowered to seek evidence or clarifications as he deems fit from a creditor for substantiating the whole or part of its claim as per Regulation 10 of the CIRP regulations governing the insolvency of corporate persons. Therefore, the Appellant cannot question the information being sought by the Resolution Professional and cannot claim that the Resolution Professional has not done its duty.”

The appeal arose from NOIDA's challenge to partial admission of its claim in the CIRP of Logix City Developers Pvt. Ltd. NOIDA had filed a claim of Rs 607.74 crore, but the Resolution Professional admitted Rs 600.92 crore, rejecting the component relating to farmers' compensation and recalculating time-extension charges.

NOIDA executed a lease deed in favour of Logix City Developers on 8 June 2011 for a plot allotted under its development scheme. In 2011, the Allahabad High Court in Gajraj v. State of U.P. directed payment of 64.7% additional compensation to farmers, a decision later affirmed by the Supreme Court in Savitri Devi v. State of U.P.. Pursuant to this, NOIDA became entitled to recover the enhanced compensation from allottees.

In 2017, NOIDA raised a demand of Rs 2.93 crore towards its share of the enhanced compensation. CIRP proceedings against the corporate debtor commenced on 17 August 2022, following which NOIDA submitted its claim along with supporting documents and time-extension charges. The RP, however, admitted the claim only in part, excluding the farmers' compensation component and adjusting the computation of time-extension charges.

NOIDA contended that the RP had exceeded his mandate by effectively adjudicating the claim instead of merely verifying it, and that the refusal to admit Rs 6.81 crore of its claim undermined its rights as a secured creditor. It further argued that the RP's insistence on additional documents was unwarranted since sufficient material had already been submitted.

The Resolution Professional opposed the claim, stating that NOIDA failed to substantiate the basis of the farmers' compensation demand and did not provide adequate supporting material for the Rs 2.93 crore figure. It also submitted that time-extension charges had been correctly recalculated in accordance with the applicable allotment rate and period.

The Tribunal held that the RP acted within his statutory authority in seeking additional information to verify the claims and that NOIDA failed to substantiate the farmers' compensation component. It held the creditor did not adequately explain the computation basis for the claimed amount or furnish supporting documents. The Bench further held:

“The argument canvassed by the NOIDA that the resolution professional's duty is only extended to the admission and verification of the claims but does not encompass adjudication of the claims. In the facts and circumstances of the case, we do not find that the resolution professional was adjudicating the claims. It was only seeking additional information to verify the claims, and such an argument of the applicant is therefore unsustainable and rejected.”

On time-extension charges, the Tribunal noted that NOIDA had initially miscalculated the relevant period beyond the CIRP commencement date. It upheld the RP's recalculation, holding that the revised computation was correct and that NOIDA's higher claim was unsustainable.

Accordingly, the NCLAT upheld the NCLT's order and dismissed the appeal.