NCLAT Imposes a Cost of Rs. 10 Lakhs and Directs IBBI to Investigate the Conduct of the Resolution Professional
- REEDLAW
- Sep 17, 2024
- 2 min read
The NCLAT imposed a cost of Rs. 10 Lakhs and directed the IBBI to investigate the conduct of the Resolution Professional.
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha and Mr. Indevar Pandey (Technical Members) reviewed a bunch of Appeals and upheld the rejection of the appeals by confirming that the Resolution Professional’s actions were inconsistent with prior judicial decisions, which had already adjudicated the claims and resolved the pre-existing disputes, thus maintaining the finality of the earlier orders. The NCLAT imposed a cost of Rs. 10 Lakhs on Comp. App. (AT) (Ins.) No. 545 of 2023 for being frivolous and directed the IBBI to investigate the conduct of the Resolution Professional.
In the case of Company Appeals (AT) (Ins.) Nos. 545, 598, and 600 of 2023, the appeals were filed challenging various aspects of the Impugned Order dated February 16, 2023. The disputes centred around the decision of the Resolution Professional, Mr. Manish Jaju, who had rejected the Operational Creditor’s claims while admitting a claim from Paton Construction Pvt. Ltd. and altering the Committee of Creditors. Paton Construction Pvt. Ltd. contested the order regarding its claim for Rs. 1,05,877/-, and the suspended directors of the Corporate Debtor sought to overturn the decision.
The NCLAT observed that despite prior judicial confirmations of the Section 9 application’s validity, including rulings from the Appellate Tribunal and the Supreme Court, the Resolution Professional’s rejection of the Operational Creditor’s claim was improper. The Tribunal noted that the issues of pre-existing disputes had been conclusively resolved in earlier judgments, rendering the RP’s actions unjustifiable and inconsistent with established legal precedents.
Significantly, the Tribunal highlighted errors in the RP’s approach, including the misapplication of limitation periods and failure to recognize the finality of prior adjudications. The Bench also found that the suspended board members lacked standing to challenge the merits of the claims, given the binding nature of earlier orders. The Tribunal deemed the claims by the Operational Creditor to have been improperly rejected, contrary to prior adjudications.
The Tribunal also noted that the claims could not be finalized pending the resolution of FIR Nos. 99/2023 and 949/2023. It was noted that the arguments presented in the appeal had already been addressed and resolved by previous judicial authorities, including the Supreme Court. As a result, the appeals were dismissed, with no grounds found to interfere with the Adjudicating Authority’s order.
Finally, the appeal bearing Comp. App. (AT) (Ins.) No. 600 of 2023 was dismissed along with the other appeals. The Tribunal imposed a cost of Rs. 10 Lakhs on Comp. App. (AT) (Ins.) No. 545 of 2023 for being frivolous and directed the IBBI to investigate the conduct of the Resolution Professional. The Registry was instructed to send copies of the order to the Chairman of IBBI and the Adjudicating Authority for necessary actions.
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