The Supreme Court held that the claims under the Insolvency and Bankruptcy Code must be considered regardless of their form if they are verifiable.
The Supreme Court bench of Justices Dr. Dhananjaya Y. Chandrachud, CJI, J. B. Pardiwala and ManojMisra was hearing an appeal and observed that the claims under the Insolvency and Bankruptcy Code must be considered regardless of their form if they are verifiable. The Bench noted that it is the duty of the Resolution Professional to classify creditors accurately. The Court emphasized the limited scope of judicial review over resolution plans, barring interference with commercial decisions by the Committee of Creditors (COC). However, it stated that courts can intervene if plans fail to meet statutory requirements or address creditors' claims adequately.
In a Supreme Court judgment, appeals under Section 62 of the Insolvency and Bankruptcy Code, 2016 were heard, challenging the decisions of the National Company Law Appellate Tribunal (NCLAT), which upheld the dismissal of the appellant's applications by the National Company Law Tribunal (NCLT). The appellant, a statutory authority, had leased land to M/s. JNC Construction (P) Ltd, the Corporate Debtor (CD), who defaulted on payments. Despite filing claims as a financial creditor, the Resolution Professional (RP) classified the appellant as an operational creditor. The appellant contested this classification, alleging procedural irregularities in the approval of the resolution plan.
Initially, the NCLT rejected the appellant's applications, citing delay and lack of diligence in pursuing claims. The NCLAT upheld this decision, emphasizing the RP's communication regarding the appellant's status and the timely filing of recall applications. It also concluded that the appellant's claim did not qualify as a financial debt under the IBC. Arguments from both parties centered on the appellant's status, the validity of the resolution plan, and the RP's obligations.
The Supreme Court analyzed the IBC and relevant regulations, focusing on the RP's duties in verifying claims and preparing the list of creditors. It emphasized that even if a claim was submitted in a non-standard form, it must be considered if verifiable. The Court reiterated the IBC's objective to revive the corporate debtor and stressed the importance of thorough scrutiny of resolution plans.
Upon scrutiny of the case, the Court found merit in the appellant's objections to the resolution plan. It noted several shortcomings, including the failure to acknowledge the appellant's claim, disregard for its status as a secured creditor, and lack of clarity on the feasibility of utilizing the appellant's land. The Court concluded that the NCLT and NCLAT had not adequately addressed the appellant's concerns.
As a result, the Supreme Court allowed the appeals, and set aside the previous decisions. The Court directed the resolution plan to be resubmitted to the Committee of Creditors (COC) after addressing the specified parameters of the IBC. No costs were awarded in the judgment.