Tribunal orders liquidator to include idle charges in admitted claim

The tribunal found the liquidator's rejection of the claim for idle charges improper and directed the liquidator to include the claimed amounts in the admitted claim of the appellant. The application was allowed, and the liquidator was instructed to admit the claim in its entirety.

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Issues Involved:
1. Legitimacy of the liquidator's rejection of the claim for idle charges.
2. Applicability of contractual provisions regarding termination and idle charges.
3. Verification process and obligations of the liquidator under the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Legitimacy of the Liquidator’s Rejection of the Claim for Idle Charges:
The appellant, M/s. Navayuga Engineering Private Limited, filed an Interlocutory Application under section 42 read with 60(5)(a) & (b) of the Insolvency and Bankruptcy Code, 2016, against the liquidator, seeking to set aside the liquidator's decision communicated via email dated 28.06.2019. The liquidator had rejected a part of the claim amounting to Rs. 24,01,63,511/- towards idle charges, which the appellant argued was part of the termination payment due under the contract with the Corporate Debtor, M/s. East Coast Energy Pvt. Ltd. The appellant contended that the rejection was illegal and arbitrary.

2. Applicability of Contractual Provisions Regarding Termination and Idle Charges:
The contract and its amendment between the appellant and the Corporate Debtor included provisions for termination and associated payments. The appellant argued that the termination of the contract was proper under Article 15.2 due to non-payment by the Corporate Debtor. The appellant claimed that upon termination, they were entitled to payments including idle charges as per Article 15.7. The respondent/liquidator countered that the termination was not proper and that the idle charges were consequential damages excluded under Article 9. The tribunal found that the claim was not for damages but for costs incurred due to the sudden stoppage of work and non-payment of dues, thus falling under Article 15.7 and not Article 9.

3. Verification Process and Obligations of the Liquidator under the Insolvency and Bankruptcy Code, 2016:
The tribunal noted that the liquidator did not offer the appellant a chance to substantiate the claim for idle charges. Under Section 39 of the IB Code, the liquidator is mandated to verify claims and may request additional documents or evidence. The tribunal found that the liquidator failed to provide this opportunity and instead interpreted the claim as consequential damages. The tribunal emphasized that the Corporate Debtor had not disputed the claims during the relevant period, and thus, the liquidator should not have rejected the claim based on his interpretation.

Conclusion:
The tribunal concluded that the liquidator's rejection of the claim for idle charges was improper. The tribunal directed the liquidator to include the amounts claimed under the head 'idle charges' to the admitted claim of the appellant. Consequently, the application was allowed, and the liquidator was instructed to admit the claim in its entirety. The application bearing IA No. 696 of 2019 was disposed of accordingly.

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