Insolvency and BankruptcyNCLATRulingsTribunal & Appellate

NCLAT directs Kotak Mahindra Bank to file claims before liquidator, states u/s 35(j) of I&B Code liquidator is required to collate & settle the claim

Kotak Mahindra Bank vs. Amtek Auto Ltd. & Ors.

NCLAT orders liquidator to collate and settle the claim(s) as empowered under Section 35 (j) of the I&B Code; says that unlike the liquidator, resolution professional cannot act in a number of matters without the approval of the committee of creditors.

Corporate Insolvency Resolution Process was initiated against Amtek Auto Limited (Corporate Debtor) on 25th July, 2018 pursuant to application filed by the Corporation Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“I&B Code”). The Resolution Professional filed application seeking extension of the period of completion of Insolvency Resolution Process and the period was extended by another 90 days. Applicant Banks – Corporation Bank, Kotak Mahindra Bank, ICICI Bank, IDBI Bank and Central Bank of India filed applications under sub-section (5) of Section 60 of the I&B Code against the rejection of their claims by the Resolution Professional. The present appeals have been preferred by the Appellant Banks as the Adjudicating Authority did not grant any relief.  Appellants relied on Section 21(1), Section 25(2) (e) and Section 29 (1) of the ‘I&B Code’ and submitted that the ‘Interim Resolution Professional’ is required to collate all claims received against the ‘Corporate Debtor’. 

Appellants further submit that the ‘Resolution Professional’ has no adjudicatory powers and placed reliance on “Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.─ 2019 SCC OnLine SC 73” wherein SC observed that

 “……Unlike the liquidator, the resolution professional cannot act in a number of matters without the approval of the committee of creditors under Section 28 of the Code, which can, by a two-thirds majority, replace one resolution professional with another, in case they are unhappy with his performance. Thus, the resolution professional is really a facilitator of the resolution process, whose administrative functions are overseen by the committee of creditors and by the Adjudicating Authority.

Appellants contend that the ‘Resolution Professional’ has wrongly decided the claims of the Appellant Banks by rejecting their claims, the application under Section 60(5) was preferred by the Appellants, which according to the Appellants have not been properly adjudicated by the Adjudicating Authority.

NCLAT observes that the impugned order was considered by it in “Committee of Creditors of Amtek Auto Ltd. through Corporation Bank Vs. Mr. Dinkar T.Venkatasubramanian & Ors. etc.─ Company Appeal (AT) (Insolvency) Nos. 219, 442 and 443 of 2019” wherein it was noticed that the plan which was approved in favour of ‘M/s. Liberty House Group Pte Ltd.’ (‘Successful Resolution Applicant’) was not acted upon. NCLAT further observes that when the question of implementation of the approved ‘Resolution Plan’ of ‘M/s. Liberty House Group Pte Ltd.’ was taken up by the ‘Resolution Professional’, it was stated that in spite of e-mails sent, no favourable response was received by ‘M/s. Liberty House Group Pte Ltd.’ whose plan has been approved by impugned order dated 25th July, 2018. 

NCLAT observes on 16th August, 2019 ordered liquidation of ‘Amtek Auto Limited’ and had set aside the impugned order on 25th July, 2018,. Further, NCLAT had held that the question of any decision on the claim of the Appellants is not required to be determined, which they may claim before the Liquidator.

Hence, NCLAT stated that, “the liquidator is required to collate and settle the claim(s) as empowered under Section 35 (j), after access of information under Section 37 thereafter required to consolidate the claim under Section 38 and after verification of claims under Section 39 may either admit or reject the claim or part thereof under Section 40. Thereafter, if any person aggrieved against the decision of the liquidator may prefer an appeal under Section 42 before the Adjudicating Authority”.

Thus, NCLAT orders the liquidator to adjudicate the matter and directs the Appellants to file their respective claim before the liquidator and the liquidator would decide the same in accordance with the provisions and in pursuance of the decision of the Hon’ble Supreme Court in “Swiss Ribbons Pvt. Ltd. & Anr.” (Supra).

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