When Claimant Fails To Substantiate Its Claim, No Error Committed By RP In Admitting Claim As Per Balance Sheet Of Corporate Debtor: NCLAT Delhi

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), while adjudicating an appeal filed in Engineering Mazdoor Parishad Devas Through Its General Secretary v Teena Saraswat Pandey, has held that a Claimant is obliged to substantiate its claim, failing which, the Resolution Professional’s decision to admit the claim based on the balance sheet of the Corporate Debtor cannot be faulted. “It is the responsibility of the Claimant to bring all relevant record to substantiate the claim. The Resolution Professional having admitted the claim of Rs.96 lakhs and odd on the basis of balance sheet of the Corporate Debtor, no error can be said to have been committed by the Resolution Professional for accepting the claim of Rs. 96 lakhs and odd. The Adjudicating Authority also held that there are no documents filed to support the claim of the workmen.” Background Facts S & H Gears Pvt. Ltd. (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) by the NCLT. Engineering Mazdoor Parishad Devas (“Appellant”) represents the workmen of the Corporate Debtor. The Appellant had filed a claim of Rs. 26 Crores. However, the Resolution Professional admitted the claim upto Rs. 96,83,497/- only. A resolution plan was also approved by the Committee of Creditors (CoC) for the Corporate Debtor which proposed to pay the entire workmen dues of Rs. 96,83,497/-. The Appellant filed an application before the NCLT, seeking direction to the Resolution Professional to consider and settle the workmen’s claim of Rs. 26 Crores. A chart was placed on record by the Appellant stating the claim for salary and other dues. The NCLT vide an order dated 10.07.2023 dismissed the Appellant’s application and approved the resolution plan. It was observed that the workmen’s claim was unsubstantiated with any document. To the contrary, Resolution Professional had verified the claim of Rs. 96,83,497/- from the balance sheet of the Corporate Debtor. The Appellant filed an appeal before the NCLAT against the order dated 10.07.2023. The Resolution Professional contended that the Appellant’s claims were unsubstantiated. Whereas, the Resolution Professional had verified the claims which reflected the amount of Rs. 96,83,497/- as dues of the workmen in the balance sheet of the Corporate Debtor. NCLAT Verdict The Bench opined that the Claimant is obligated to produce records to substantiate its claim. No error has been committed by the Resolution Professional in admitting the amount of Rs.96,83,497/- based on the balance sheet of the Corporate Debtor. “It is the responsibility of the Claimant to bring all relevant record to substantiate the claim. The Resolution Professional having admitted the claim of Rs.96 lakhs and odd on the basis of balance sheet of the Corporate Debtor, no error can be said to have been committed by the Resolution Professional for accepting the claim of Rs. 96 lakhs and odd. The Adjudicating Authority also held that there are no documents filed to support the claim of the workmen. We, thus, are of the view that there is no error in the order of the Adjudicating Authority rejecting IA No.1300 of 2022.” Further, since the approved resolution plan proposes to pay the workmen dues of Rs.96,83,497/- in full, the approval of such plan is not to be interfered with. “Now coming to the second order by which Resolution Plan has been approved. The entire claim which was admitted of the workmen has been proposed to be paid i.e. Rs.96,83,497/-. We do not find any ground to interfere with the order of the Adjudicating Authority approving the Resolution Plan.” The appeal has been dismissed. Case Title: Engineering Mazdoor Parishad Devas Through Its General Secretary v Teena Saraswat Pandey Case No.: Comp. App. (AT) (Ins.) No. 1200 of 2023 Counsel For Respondent: Mr. Sumesh Dhawan, Ms. Vatsala Kak, Mr. Shaurya Shyam, Mr. Raghav Dembla, Advocates for RP. Click Here To Read/Download Order

When Claimant Fails To Substantiate Its Claim, No Error Committed By RP In Admitting Claim As Per Balance Sheet Of Corporate Debtor: NCLAT Delhi

Pallavi Mishra

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