Tribunal Rejects Applicant's Claim Update Request, Upholds RP Decision

The Tribunal rejected the Applicant's request to admit its full claim and update the CoC voting share ratio. The Tribunal upheld the RP's decision to partially admit the claim based on available information and the lack of necessary consents and documentation. The application was disposed of as rejected, and another related application was also disposed of accordingly.

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Issues Involved:
1. Admission of claim by the Resolution Professional (RP).
2. Update of Committee of Creditors (CoC) voting share ratio.
3. Validity of the Corporate Guarantee.
4. Requirement of consent from existing lenders.
5. Timeliness and completeness of claim submission by the Applicant.
6. Role and duties of the Resolution Professional in claim verification.

Detailed Analysis:

1. Admission of Claim by the Resolution Professional (RP):
The Applicant, IDBI Bank Limited, filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking the admission of its claim as per FORM C dated 12th September 2019. The Applicant claimed a total sum of Rs. 61,41,79,589.59 as on 26th February 2019. The Resolution Professional (RP) provisionally admitted a claim of Rs. 47.33 Crore and rejected part of the claim on the grounds that the consent of existing lenders was not obtained and there was no board resolution provided when the Applicant extended loans to Deegee Orchads Ltd.

2. Update of Committee of Creditors (CoC) Voting Share Ratio:
The Applicant requested the RP to update the CoC voting share ratio after admitting its claim. The RP included the Applicant as part of the CoC in the 7th CoC meeting held on 17th October 2019, where the Applicant was allotted the highest voting share of 32.46% based on the admitted claim of Rs. 47.33 Crore.

3. Validity of the Corporate Guarantee:
The Applicant argued that the Corporate Guarantee provided by the Corporate Debtor to secure loan facilities was valid and covered under the definition of Financial Creditor under the Insolvency and Bankruptcy Code, 2016. However, the RP rejected part of the claim, citing that the Corporate Guarantee could not have been entered and executed without the consent of existing lenders.

4. Requirement of Consent from Existing Lenders:
The RP and other Financial Creditors, including Union Bank, Canara Bank, and Oriental Bank of Commerce, raised concerns over the invocation of the Corporate Guarantee in the absence of permission from existing consortium lenders. The RP argued that the Corporate Debtor was restricted from undertaking guarantee obligations on behalf of any other company, firm, or person, as per the sanction letter dated 24th August 2007.

5. Timeliness and Completeness of Claim Submission by the Applicant:
The RP noted that the Applicant filed its proof of claim only after 155 days of the initiation of Corporate Insolvency and Resolution Process (CIRP) and a revised claim on the 191st day. Despite the delayed filing, the RP treated the Applicant as a CoC member and allotted it the highest voting share. The RP also highlighted that the Applicant did not provide crucial documents, such as objections raised by other Financial Creditors against the invocation of the Corporate Guarantee.

6. Role and Duties of the Resolution Professional in Claim Verification:
The RP emphasized that it is the duty of the RP to apply his mind while collating and verifying the information to justify the claim. The RP is not a mere rubber stamp to admit claims without verification. The RP conscientiously reached the conclusion not to admit part of the Applicant's claim due to the lack of supporting documents. The Tribunal supported this stance, stating that the RP's duty is to verify claims with documentary evidence.

Conclusion:
The Tribunal rejected the Applicant's request to admit its full claim and update the CoC voting share ratio. The Tribunal upheld the RP's decision to partially admit the claim based on available information and the lack of necessary consents and documentation. The application MA 3545 of 2019 was disposed of as rejected, and IA 518 of 2021, filed by the Original Petitioner, was also disposed of in light of the above observations.

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