The National Company Law Appellate Tribunal (NCLAT) Delhi has referred a matter concerning the modification of claims by the liquidator regarding dues owed to Canara Bank back to the National Company Law Tribunal (NCLT).
“While setting aside an order by NCLT, the NCLAT held that after claims being admitted, the liquidator has no power to modify the claims or the list of stakeholders, thereby making it mandatory for the Liquidator to approach the tribunal for any modification,” said Ashish Pyasi, Associate Dhir and Dhir Associates. Adding that the matter has been remanded back to NCLT.
The matter is likely to be taken up by mid-March, said a counsel aware of the matter.
While deciding the matter, the bench led by Justice Rakesh Kumar Jain held that the liquidator does not have the jurisdiction to modify the claims that have already been admitted. In instances where the liquidator receives any additional information, it should then approach the adjudicating authority for modification of the claims.
Adding that the NCLT shall take a decision about the application of the liquidator in respect of the modification of the claim, admitted by it initially, by giving a hearing to the other party which is Canara Bank.
The matter relates to Canara Bank, one of the financial creditors, submitting claims of more than 55 crore which were admitted, and then the liquidator found the claim to be for only 12.14 crore.
The appellate tribunal said, “It is apparent that the Tribunal has committed an error in not appreciating Regulation 31(3) in its right perspective and rejected the application solely on the issue that the said provision is not applicable and rather held that Liquidator is empowered to accept or reject the claims. No other issue has been raised. In view thereof, we are of the considered opinion that the impugned order is bad in law and therefore, the same is hereby set aside.”
Essentially, the liquidator of the corporate debtor prepared a list of stakeholders according to the claims that were submitted as per Regulation 31 of the Liquidation Process Regulations.
In his plea before the NCLT, the liquidator sought a reduction of the claims submitted by the Canara Bank while also seeking to modify its entry in the list of stakeholders that was prepared earlier in accordance with regulation 31 (3) of the liquidation process.
However, the bench in its order passed against the liquidator rejected his application and held that Regulation 31 (3) was not applicable.
Following this, the liquidator challenged the NCLT order before the NCLAT.
The liquidator argued that on receiving additional information he proceeded in accordance with the law before the tribunal therefore the application could not have been rejected.
Adding that, Regulation 31(3) is a special provision which comes into operation if any information escapes the notice of the liquidator or comes to his knowledge after accepting the claim then he can apply to the Adjudicating Authority for its direction as to what has to be done in such situation for the purpose of modification of an entry in the list of stakeholders.
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