Rejection Of Legal Consultant's Claims By RP Over Absence Of Invoices In Corporate Debtor's Records Can't Be Set Aside: NCLAT

The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench of Justice Rakesh Kumar Jain, Justice Mohd Faiz Alam Khan and Mr. Naresh Salecha (Technical Member), has held that the rejection of the legal consultancy service provider's claim by the Resolution Professional, based on the absence of invoices for services in the Corporate Debtor's records, cannot be interfered with. Although the service provider was allotted flats/inventories in lieu of services, it is unclear whether this allotment was in discharge of services rendered to the Corporate Debtor or to its group companies, while the service provider claims it was for additional litigation services provided to the group companies but no evidence was presented for the same. The present appeal has been filed under section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against an order passed by the National Company Law Tribunal (NCLT) New Delhi by which it dismissed an Interlocutory Application. The Appellant submitted that apart from the record which may be available with an information utility or in financial books of accounts, the RP/IRP was also obliged to look into the contract and invoices raised in this regard and therefore the claim of the appellant has been illegally negated in violation of the provisions of CIRP Regulations, 2016. It was further argued that if the CD has not shown the invoices issued by the appellants in its account's books the same may be for the purpose of avoiding tax liability and only on this score the otherwise genuine claim of the appellant may not be negated. Per contra, the Respondent submitted that Adjudicating Authority has rejected the IA filed by the appellant as there was no corresponding entry found in the Corporate Account of the Corporate Debtor with regard to the claim of the appellant and the claim was also not with regard to the sole expenses of CD. It was further argued that even if the appellant had provided legal services to the Respondent or other companies of the group the amount which was allegedly due has already been adjusted by way of allotment of some units in the project of group companies of the CD. Thus, the claim of the appellant was vague, and not genuine. The Tribunal noted that a careful perusal of the relevant materials show that the Appellant was providing his legal consultancy services not only to the corporate debtor but to all group companies. The term for which he was engaged was not specified in the engagement letter. The Appellant argued that the NCLT wrongly noted an LLP seal on a copy of the letter which was clearly absent on the original. However, rejection of claims on this ground was found to be not that strong. It further observed that under Regulation 7 of the CIRP Regulations, financial accounts are not the only method by which a claim can be proved but they serve as a prima facie evidence of the claim. Other evidence may also be considered but cautiously. Since, the Appellant provided his services to the entire group, the monthly amount claimed by the Appellant could not solely be attributed to the corporate debtor. The RP could not verify the claim of the Appellant in absence of accepted bills, credit balance and invoices in the corporate debtor's records. The Tribunal further observed that there is no documentary evidence to show that the flats or inventories were provided to the Appellant by which entity in the group or in discharge of which bill or service. No specific details regarding the allotments have been provided. Therefore, there is no materials neither before the Appellate Tribunal nor the NCLT to show whether the allotments were made in lieu of services rendered other than those under the engagement letter executed on 01.06.2016. Considering this lack of clarity, the Appellant's claim that the allotments were done in exchange of additional litigation services rendered by the Appellant to the group companies remains unsubstantiated. It held that “when the retainer ship fee of the appellant was due on the CD of many months, the natural corollary is that he should have demanded the same either by writing any email or letter etc. Non demand of such dues also put the claim of the appellant in the category of doubtful claim, more so in absence of commensurate material in the books of accounts of CD.” Accordingly, the present appeal was dismissed. Case Title: Juristical Legal Services Versus Three C Universal Developers Private Limited Case Number: Company Appeal (AT) (Insolvency) No. 1451 of 2023 Judgment Date: 20/08/2025 Click Here To Read/Download The Order

Rejection Of Legal Consultant's Claims By RP Over Absence Of Invoices In Corporate Debtor's Records Can't Be Set Aside: NCLAT

Mohd Malik Chauhan

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Mohd Malik Chauhan

Rejection Of Legal Consultant's Claims By RP Over Absence Of Invoices In Corporate Debtor's Records Can't Be Set Aside: NCLAT

Mohd Malik Chauhan

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

Mohd Malik Chauhan

This is a premium content
Available exclusively to
Our subscribers