NCLT Cannot Decide Inter-Se Claims By Parties Over Assets Of Corporate Debtor : NCLAT [Read Judgment]
Corporate Insolvency Resolution Process is not a money claim nor a suit or a litigation.
The inter-se claims by parties over assets of the corporate debtor cannot be determined by the Adjudicating Authority under the Insolvency and Bankruptcy Code, held the National Company Law Appellate Tribunal.
The NCLAT was dealing with appeals by two companies, who contended that the Resolution Professional had wrongly treated the articles handed over by them to the corporate debtor as its assets. They filed applications under Section 60() IBC before the NCLT to establish their respective claims over the articles. According to them, the articles were given to the corporate debtor for contract work. The corporate debtor held them in the capacity of a bailee, and not as full owner. So, the articles cannot be regarded as the assets of the corporate debtor, argued the appellants.
The NCLT rejected the applications holding that the dispute was outside the purview of IBC. In appeal, the NCLAT affirmed the rejection. It was noted that there were claims and counter-claims over the disputed articles by several parties. The Resolution Professional reported that apart from the Appellants, other parties have also made claim that the same very material belongs to them.
"As the claim is not against the Corporate Debtor or its subsidiaries but includes inter-se claim for the same very material, such dispute cannot be decided by the Adjudicating Authority under Sub-section (5) of Section 60of the I&B Code", the Tribunal observed.
Referring to its judgment in Binani cements case, the NCLAT observed that Corporate Insolvency Resolution Process is not a money claim nor a suit or a litigation.
Since moratorium is in force during insolvency proceedings, the claimants have to wait till the completion of process for filing suit to establish their claims.
"It is only after completion of the period of moratorium and it is finally decided that the material belongs to the Corporate Debtor and order is accordingly passed, it is open to the persons to file a suit before appropriate forumclaiming right and title over the material in question and for filing such suit claiming right over the material the moratorium period has to be excluded for the purpose of counting the period of limitation", held the Tribunal bench headed by Justice S J Mukhopadhyay.
"we hold that the Adjudicating Authority has no jurisdiction to decide the claim or counter claim with regard to the parties and therefore the Adjudicating Authority has rightly not passed any order on the applications preferred under sub-section (5) of Section 60 22", the NCLAT concluded..