2020 (11) TMI 973 - SC - Insolvency and Bankruptcy

Appellant's Claim Categorization Upheld, Information Memorandum Importance Emphasized

The appellant's claim categorization in the Information Memorandum was upheld by the courts under 'List of Other Creditor Claims.' The courts clarified ... Claim of the appellant not being reflected under the heading ‘Claims of Operational Creditors’ in the Information Memorandum prepared by the Resolution Professional - HELD THAT:- It is not in dispute that the claim of the appellant is still pending adjudication before the Arbitrator and it has been, therefore, rightly described in the memorandum as other creditor claims (claims under adjudication) - The purpose of memorandum is only to provide relevant information regarding the financial position of the company in question. It is not about deciding the claim or disregarding the claim amount, if it exists in law. Suffice it to observe that the claim of the appellant has been taken note of in the information memorandum and does not get extinguished as such; but it will be subject to adjudication by the Arbitrator. Since it is part of the memorandum, it is obvious that the resolution applicant would take the same into account while submitting his proposal, due notice whereof will be taken by the committee of creditors as well, and dealt with appropriately in the final resolution plan - In the event, the appellant has any grievance about the nature or manner of provision made in the final resolution plan qua its claim; and if aggrieved with the final resolution plan, may take recourse to appropriate remedy as per law. Appeal disposed off. Issues:Claim categorization in Information MemorandumAnalysis:The primary issue in this appeal pertains to the categorization of the appellant's claim in the Information Memorandum prepared by the Resolution Professional. The appellant contends that their claim should have been reflected under the heading 'Claims of Operational Creditors' instead of 'List of Other Creditor Claims.' However, both the Adjudicating Authority and the Appellate Tribunal have determined that the appellant's claim is appropriately noted in the Information Memorandum under the latter category, specifically as 'claims under adjudication.' The courts have noted that the figure of the appellant's claim has not been disputed for its accuracy.The courts have emphasized that the purpose of the Information Memorandum is to provide a comprehensive overview of the financial status of the company under consideration. It does not serve the function of deciding the validity or acceptance of claims. The Resolution Professional does not possess the authority to approve or reject claims; hence, the appellant's claim remains pending until it is adjudicated by the Arbitrator or through legal processes. It is crucial to recognize that the inclusion of the appellant's claim in the Information Memorandum ensures its consideration by the resolution applicant and the committee of creditors during the formulation of the final resolution plan.The judgment clarifies that the appellant's claim has not been treated as extinguished but is subject to the Arbitrator's adjudication. The appellant retains the right to challenge the nature or provision made in the final resolution plan concerning their claim. If dissatisfied with the final resolution plan, the appellant is advised to seek appropriate legal remedies. The courts have explicitly stated that all available contentions related to the appellant's claim remain open for future proceedings, reiterating that the claim has not been disregarded or eliminated.In conclusion, the civil appeal has been disposed of, and the interim order has been vacated. The authorities involved are directed to expedite the resolution process, and any pending applications have been resolved accordingly. The judgment emphasizes the importance of due process and legal recourse for the appellant in addressing any grievances related to the treatment of their claim in the resolution proceedings.