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2023 (10) TMI 293 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHILiquidation proceedings - waterfall mechanism - rejection of claim of appellant - appellant is Financial Creditor or not - claim reflected in the Balance Sheet. It is submitted that even though the claim of the Appellant was rejected in the liquidation proceeding but since it was reflected in the balance sheet, Appellant is a Financial Creditor. HELD THAT:- The claims of all creditors are to be considered in the liquidation proceedings and examined by the Liquidator and in event of any dispute, matter is required to be adjudicated by the Adjudicating Authority. There is no dispute to the fact that the claim was filed by the Appellant as Financial Creditor which stood rejected by the Liquidator as well as the Adjudicating Authority. The rejection of the claim of the Appellant clearly lead to the conclusion that the claim cannot be accepted in the liquidation proceedings nor Appellant is entitled for any claim in the water fall mechanism. Present is a case where a scheme was submitted in the liquidation proceeding in which scheme also the payment to the Appellant has been shown as a ‘nil’ and the scheme was approved by SIDBI who according to the Liquidator was a 100% Financial Creditor. When the Appellant’s claim was rejected, he cannot claim that he is a Financial Creditor whose consent was required for approval of the scheme - It is after the reflection in the balance sheet that in the liquidation proceeding, the claim was filed by the Appellant and adjudicated rejecting the claim of the Appellant. The proceeding which undertook in the liquidation proceedings cannot be ignored nor can be washed out only on the ground that in the balance sheet of the Corporate Debtor the name of the Appellant was reflected. Proceeding in the adjudication which culminated in the rejection of the claim has to be given effect to in the liquidation proceeding. The scheme was also a part of the liquidation proceeding, hence no error has been committed by the Adjudicating Authority rejecting the application of the Appellant - Appeal dismissed.
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