Tribunal upholds RP's decision to reject claims for non-compliance and lack of evidence. Cash transactions deemed fraudulent.

The Tribunal upheld the Resolution Professional's decision to reject the claims due to non-compliance with statutory requirements and lack of credible evidence supporting alleged cash transactions. The court deemed the cash transactions fraudulent, emphasizing adherence to procedural requirements under the Insolvency and Bankruptcy Code and CIRP Regulations. The Applicant's claims were dismissed, affirming the RP's stance on the inadmissibility of the claims.

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Issues Involved:
1. Rejection of claims by the Resolution Professional (RP).
2. Compliance with Insolvency and Bankruptcy Code (IBC) and CIRP Regulations.
3. Allegations of fraudulent transactions.
4. Admissibility of cash transactions without entries in the Corporate Debtor’s books.
5. Legal validity of submitted documents and agreements.

Detailed Analysis:

1. Rejection of Claims by the Resolution Professional (RP):
The primary issue revolves around the rejection of claims by the RP, Mr. Vasudevan, submitted by the Applicant, Ms. Sujathaa Mehta. The claims were filed as a Financial Creditor and later revised from an Operational Creditor to a Financial Creditor. The Applicant contended that the RP did not admit her claims despite the submission of various supporting documents, including loan agreements, promissory notes, and cash vouchers. The RP rejected the claims citing several reasons, such as non-compliance with electronic submission requirements, undated demand notes, lack of witness attestation, and non-reflection of cash transactions in the Corporate Debtor's books.

2. Compliance with Insolvency and Bankruptcy Code (IBC) and CIRP Regulations:
The RP argued that the claims were not submitted in compliance with the IBC and CIRP Regulations, specifically Regulation 8, which requires the submission of proof of claims in electronic form. The Applicant's submission of Form 'C' and affidavit electronically, while other documents were submitted in hard copy, was deemed non-compliant. The Tribunal upheld this view, emphasizing the necessity of adhering to the prescribed manner of submission as per the statute.

3. Allegations of Fraudulent Transactions:
The RP alleged that the cash transactions claimed by the Applicant were fraudulent, involving the Corporate Debtor’s Internal Auditor, Mr. Golakh Parida. The RP contended that these transactions were not recorded in the Corporate Debtor’s books and appeared to be orchestrated to defraud creditors. The Tribunal found merit in these allegations, noting the lack of corroborative evidence in the Corporate Debtor’s financial records and the suspicious nature of the transactions.

4. Admissibility of Cash Transactions Without Entries in the Corporate Debtor’s Books:
The Tribunal scrutinized the cash transactions claimed by the Applicant, which were not reflected in the Corporate Debtor’s books. The Applicant provided agreements and cash vouchers as proof, but the Tribunal found these documents insufficient to establish the existence of a debt. The lack of entries in the Corporate Debtor’s financial records and the absence of any formal demand for repayment prior to the initiation of CIRP cast doubt on the genuineness of these transactions.

5. Legal Validity of Submitted Documents and Agreements:
The Tribunal examined the legal validity of the documents submitted by the Applicant, including loan agreements and an MoU. It was noted that the agreements were mere promises to advance loans and lacked essential corroborative evidence. The Tribunal also highlighted discrepancies in the documents, such as undated promissory notes and unverified cash vouchers. The agreements did not meet the criteria for financial contracts as per Regulation 8 of the CIRP Regulations.

Conclusion:
The Tribunal concluded that the claims submitted by the Applicant were not admissible due to non-compliance with the statutory requirements and the lack of credible evidence to support the alleged cash transactions. The Tribunal declared the cash transactions as sham and fraudulent, thereby rejecting the Applicant's claims. The RP's decision to reject the claims was upheld, and the Tribunal emphasized the importance of strict adherence to the procedural requirements under the IBC and CIRP Regulations. The order was pronounced in open court, affirming the RP's stance and dismissing the Applicant's claims.

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