Liquidator's rejection of Rs.31.71 crore claim upheld for lack of supporting documents and disputed nature

NCLAT Chennai dismissed appellant's appeal challenging liquidator's rejection of claim worth Rs.31.71 crore against corporate debtor. Appellant alleged CD failed to honor purchase and work orders, establish letters of credit, and perform contractual obligations. Liquidator rejected claim citing lack of supporting documents like invoices and dispatch records, stating disputed claims involving non-performance require adjudication by civil court or arbitrator before being recognized as dues under IBC. NCLT Hyderabad upheld liquidator's decision, noting liquidator cannot decide claims and counter-claims. NCLAT found appeal meritless, confirming liquidator acted within statutory framework and provided sufficient reasons for rejection.

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Issues involved:
The judgment involves issues related to the rejection of claims by the Liquidator, non-performance of contractual obligations, determination of dues, and the authority of the Adjudicating Authority to adjudicate on claims under the Insolvency and Bankruptcy Code, 2016.

Brief Facts:
The case involves an appeal filed challenging an order of the Adjudicating Authority under sections 60(5) and 61 of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor failed to honor its contractual obligations, leading to disputes over dues and claims by the Appellant, who was an Operational Creditor. The Resolution Professional initially admitted a sum of Rs. 13.47 crore payable to the Appellant, but later rejected the claim. The Liquidator, acting in accordance with the Code and Regulations, rejected the claim based on lack of documentation and the need for adjudication by a Civil Court or Arbitrator.

Submissions by the Appellant:
The Appellant argued that the Corporate Debtor did not fulfill its contractual obligations, leading to the cancellation of the contract. The Appellant claimed to be owed Rs. 31.71 crore by the Corporate Debtor, emphasizing the initial admission of Rs. 13.47 crore by the Resolution Professional. The Appellant contended that the Liquidator erred in rejecting the claim without proper adjudication and that the Adjudicating Authority should have considered the Appellant's performance under the contract.

Submissions by the Respondent:
The Respondent, acting as the Liquidator, rejected the Appellant's claim based on lack of documentation and the need for adjudication by a Civil Court or Arbitrator. The Respondent cited legal principles and regulations guiding the rejection of claims and emphasized the need for a proper determination of damages before a debt can be considered due and payable. The Respondent also highlighted the sale of the Corporate Debtor as a Going Concern and the limitations on entertaining claims at that stage.

Analysis & Findings:
The Tribunal analyzed the arguments presented by both parties and concluded that the Liquidator's rejection of the claim was justified based on the lack of documentation and the need for adjudication of disputes. The Adjudicating Authority's decision to uphold the Liquidator's rejection was deemed appropriate, considering the complexities of the claims and counterclaims involved. The Tribunal dismissed the appeal, granting the Appellant the liberty to pursue remedies in other forums.

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