Case Note & Summary
The Supreme Court disposed of a civil appeal filed by NTPC Ltd. (Simhadri Project) against Rajiv Chakraborty, the Resolution Professional. The limited issue was whether NTPC's claim, pending adjudication before an arbitrator, should have been reflected under the heading 'Claims of Operational Creditors' in the Information Memorandum prepared by the Resolution Professional. The Adjudicating Authority and the Appellate Tribunal had held that the claim was already noted under the title 'List of Other Creditor Claims (excluding Related Party Claims and Employees and Workmen Claims) as on 17th July, 2019'. The Supreme Court agreed with this classification, noting that the claim was still pending adjudication and was therefore rightly described as other creditor claims (claims under adjudication). The Court emphasized that the purpose of the Information Memorandum is only to provide relevant information regarding the financial position of the company, not to decide or disregard claims. The Resolution Professional has no authority to accept or disallow claims. The Court clarified that NTPC's claim would not get extinguished unless adjudicated by a competent forum or by operation of law. Since the claim was part of the memorandum, the resolution applicant would take it into account while submitting a proposal, and the committee of creditors would deal with it appropriately in the final resolution plan. If NTPC had any grievance about the nature or manner of provision made in the final resolution plan, it could take recourse to appropriate remedy as per law. The Court disposed of the appeal, vacated the interim order, and directed the concerned authorities to expedite the resolution process.
Headnote
A) Insolvency and Bankruptcy Code - Information Memorandum - Classification of Claims - Claim pending adjudication before arbitrator is correctly described as 'other creditor claims (claims under adjudication)' and not under 'Claims of Operational Creditors' - The purpose of the Information Memorandum is to provide relevant information regarding the financial position of the company, not to decide or disregard claims - The Resolution Professional has no authority to accept or disallow claims - The claim does not get extinguished unless adjudicated by a competent forum or by operation of law (Paras 1-3).
Issue of Consideration
Whether a claim pending adjudication before an arbitrator should be reflected under 'Claims of Operational Creditors' or 'Other Creditor Claims' in the Information Memorandum under the Insolvency and Bankruptcy Code, 2016.
Final Decision
The Supreme Court dismissed the appeal, holding that the claim was correctly classified as other creditor claims (claims under adjudication) in the Information Memorandum. The Court clarified that the claim does not get extinguished and will be subject to adjudication by the arbitrator. The resolution applicant and committee of creditors must take note of it. The appellant may challenge the final resolution plan if aggrieved. The interim order was vacated, and authorities were directed to expedite the resolution process.
Law Points
- Classification of claims in Information Memorandum
- Role of Resolution Professional
- Treatment of disputed claims in CIRP
