Liquidator's Role Limited To Claim Verification, Not Dispute Resolution: NCLT Kochi

The National Company Law Tribunal (NCLT) at Kochi has clarified that a liquidator's role during liquidation is limited to verification and admission of claims, and that the liquidator cannot adjudicate or resolve disputes between a claimant and the corporate debtor, particularly when such disputes are pending before an arbitral tribunal.

A coram of Judicial Member Vinay Goel and Technical Member Madhu Sinha, in an order dated November 13, 2025, partly allowed an appeal filed by HLL Infra Tech Services Ltd in the liquidation proceedings of Saptha Zeal Pvt Ltd.

“The Liquidator, at the time of verification and admission of claims, is required to examine the genuineness, accuracy, and legality of such claims, including any necessary adjustments. For the purpose of the liquidation process, while making such assessments or applying his wisdom, it is not expected of the Liquidator to resolve inter se disputes between the claimant and the Corporate Debtor.”

The dispute arose from an operations and maintenance contract between HLL Infra Tech Services Ltd and Saptha Zeal Pvt Ltd for the Super Speciality Block of the Government Medical College at Thiruvananthapuram. HLL Infra, which issued the tender on March 9, 2016, awarded the contract to Saptha Zeal through a letter of acceptance dated April 26, 2016. Disputes later arose under the contract, leading Saptha Zeal to invoke arbitration against HLL Infra.

In the arbitration, HLL Infra raised counterclaims aggregating over Rs 6 crore, including interest. Before the arbitral proceedings could conclude, insolvency proceedings were initiated against Saptha Zeal on May 30, 2024, resulting in the arbitration being kept in abeyance.

HLL Infra submitted its claim of Rs 6.48 crore in the insolvency proceedings, which was admitted by the resolution professional during the CIRP. After the resolution plan failed, the tribunal ordered liquidation on June 12, 2025 and appointed Reuben George as the liquidator.

Upon issuance of the public announcement in liquidation, HLL Infra relied on its earlier admitted claim. However, by an order dated July 22, 2025, the liquidator treated the claim as operational debt but admitted it at a “zero” value on the ground that crystallisation of the claim was contingent upon the outcome of the pending arbitration.

HLL Infra challenged this, arguing that admitting a claim at zero value had no sanction under the Insolvency Code or the Liquidation Regulations and that pendency of arbitration could not justify nullifying a claim already admitted during CIRP.

While rejecting the HLL's contention that the liquidator had decided the pending dispute, the tribunal held that although the resolution professional had already admitted its claim, the liquidator could not admit it at a “zero” value merely because arbitration was pending. It observed that assigning a “zero” value was “not just and proper” and that a “notional positive value” was required to be assigned by adopting standard accounting protocols.

It observed that the creditor must pursue arbitration to crystallise its claim for final verification, but directed the liquidator to refix a notional value for the claim within seven days and communicate the same to the Stakeholders' Consultation Committee