TMI Blog2022 (7) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... announcement made by Appellant/Resolution Professional on 13.04.2019. The last date of submission of claims, as provided in the public announcement was 26.04.2019 and the Financial Creditor had submitted on 26.04.2019 his claim details along with supporting documents as also found in the Appeal Paper Book. Invoking CIRP Regulation 10, the Appellant/Resolution Professional sent an email on 01.05.2019 seeking additional information with respect to account statements spanning over a period of 12 years from 2007 to 2019 from the Financial Creditor - What, however, merits consideration is the reasonability on the part of the Appellant/Resolution Professional to have allowed only just twenty-four hours to the Financial Creditor to submit additional information spanning order a period of 12 years (2007-2019) and the propriety of his action of rejecting the claim of the Financial Creditor soon thereafter on 02.05.2019 after having allowed only one day s time to furnish such additional information which entailed voluminous documentation. Section 18 of the IBC lays down the various duties of the IRP in respect of handling claim proposals. Section 18(1)(b) lays down that IRP shall rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected the Appellant/Resolution Professional to reconsider and evaluate the claims of the Financial Creditor afresh; reconstitute the Committee of Creditors ( CoC in short) for fresh Corporate Insolvency Resolution Process ( CIRP in short) and, inter-alia, made certain observations against the Appellant/Resolution Professional on the manner in which he conducted the CIRP proceedings. The instant Appeal has been filed by the Appellant/Resolution Professional, in his personal capacity, with a prayer to expunge the said observations on the ground, that being adverse, it has the effect of damaging the reputation and dignity of the Appellant as Insolvency Professional. 2. The brief facts of the case, as stated and argued by the Appellant, is that he was appointed initially as Interim Resolution Professional ( IRP in short) and later confirmed as Resolution Professional of the Corporate Debtor, M/s Vallabh Textiles Company Limited which was admitted for CIRP. It is further stated that the Appellant/Resolution Professional made public announcement inviting claims on 13.04.2019 with the last date of filing claims fixed as 26.04.2019. Following the public announcement, M/s Vardhman In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharge of his duties. Aggrieved by the Impugned Order, the Learned Counsel for the Appellant/Resolution Professional, however, submits that he is challenging the Impugned Order only in respect of certain adverse remarks made against him by the Adjudicating Authority which deserve to be expunged. 5. The two paragraphs of the Impugned Order to which the Appellant/Resolution Professional has drawn the attention to, is reproduced below and the relevant portion prayed for being expunged is as emboldened hereunder :- 10. In the present case, the issue that falls for our consideration is whether the claims of the applicant have been properly verified before the rejection of the same by the Resolution Professional. To reiterate, the applicant has submitted the relevant copies of the audited accounts of Vardhman Industries Limited (Applicant) in respect of Vallabh Textiles Company Limited (Respondent). We have closely perused the financial statement annexed as Annexure A-8 and A-9 with the application. From the correspondence between the parties, it is clear that no serious effort was made by the Resolution Professional to classify the debts into financial and operational debts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made by the Financial Creditor reflected in the books of Corporate Debtor and presenting the complete facts before the CoC on the admissibility of the claims of the Financial Creditor. 8. The tenability of the above observations made by the Adjudicating authority about the Appellant/Resolution Professional can be best appreciated if we put in perspective the objectives of the IBC and the role and responsibilities of Interim Resolution Professional/Resolution Professional in furthering these objectives. The objective of the IBC is, inter-alia, to promote entrepreneurship, maximize value of assets, make available credit, and balance the interest of all stakeholders, in a time bound manner. As a natural corollary thereto, the statutory framework governing CIRP seeks to put in place an arrangement which can resolve insolvency in a timely, efficient, transparent, predictable manner. 9. The Bankruptcy Law Reforms Committee Volume I (November 2015) in Chapter 4 under the title Institutional Infrastructure has focused on the role and responsibilities of Resolution Professional and the relevant excerpts are as under: - Insolvency professionals form a crucial pillar upon w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nability on the part of the Appellant/Resolution Professional to have allowed only just twenty-four hours to the Financial Creditor to submit additional information spanning order a period of 12 years (2007-2019) and the propriety of his action of rejecting the claim of the Financial Creditor soon thereafter on 02.05.2019 after having allowed only one day s time to furnish such additional information which entailed voluminous documentation. 12. The Learned Counsel for Appellant/Resolution Professional while making his arguments pointed out that the Financial Creditor while filing the claims on 26.04.2019 should have filed separate claims for financial and operational debt and that it was incumbent on the part of Financial Creditor to have separated and bifurcated the transactions on account of supply of goods and services from the loan related transactions. He also argued that there was a difference between the closing balance as on 31.03.2009 and the opening balance as on 01.04.2009 of nearly Rs.6 crores and that the transactions were not properly verified. 13. As to whether serious efforts were made by the Appellant/Resolution Professional to verify the claims submitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted claim again. The Appellant/Resolution Professional took the stand that Regulation 12(2) of CIRP Regulations can be availed for submission of claims only by such creditors who fail to submit claim with proof within the time stipulated in the public announcement. This brings before us the question whether the Appellant/Resolution Professional was correct in holding that Regulation 12(2) of CIRP Regulations places an embargo on resubmission of claims by such Financial Creditors who have earlier submitted their claims under CIRP Regulation 12(1) before last date mentioned in the public announcement but their claim was rejected for want of authentication or substantiation. 17. For better understanding, it would be desirable to examine CIRP Regulation 12 which is as reproduced below: 12. Submission of proof of claims- (1) Subject to sub-regulation (2), (emphasis added) a creditor shall submit claim with proof on or before the last date mentioned in the public announcement. (2) A creditor, who fails to submit claim with proof within the time stipulated in the public announcement may submit the claim with proof to the interim resolution professional or the resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated claim. This narrow and pedantic interpretation of the CIRP Regulations 12 by the Appellant/Resolution Professional has stymied the bona-fide efforts on the part of the Financial Creditor to substantiate his claims. 20. Section 18 of the IBC lays down the various duties of the IRP in respect of handling claim proposals. Section 18(1)(b) lays down that IRP shall receive and collate all the claims submitted by creditors to him, pursuant to the public announcement made under Sections 13 and 15. As regards the role of the Resolution Professional in this regard, Section 25(e) of the IBC lays down that he shall maintain an updated list of claims. The Resolution Professional while examining claims is therefore expected to act in a manner which inspires confidence in the Financial Creditor so as to ensure the credibility of the insolvency process. In the present matter, therefore, the question before us is therefore whether a Resolution Professional is competent to decide or reject the claims of the Financial Creditor by himself without presenting the complete facts before the CoC on the admissibility of the claims. This aspect has already been settled by the Hon ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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