Independent Director's challenge to financial creditor's claim admission fails as 2008 settlement was revoked under Section 7 IBC

The NCLAT dismissed an appeal filed by an Independent Director of a Corporate Debtor challenging the admission of a financial creditor's claim. The appellant argued that a One Time Settlement (OTS) from 2008 barred the claim, but the tribunal found the OTS had been revoked. The financial creditor's claim was properly admitted under Section 7 of IBC, 2016, supported by correspondence and corporate records. The appellant had knowledge of the claim and Committee of Creditors constitution from the beginning, and no fault was found in the Resolution Professional's decision to admit the claim.

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Issues Involved:
1. Verification of SUUTI's claim by the Resolution Professional (RP).
2. Legal standing (locus) of the appellant to file the appeal.
3. Validity and revocation of the One Time Settlement (OTS) agreement.
4. Admission of financial claims and constitution of the Committee of Creditors (CoC).

Summary:

1. Verification of SUUTI's claim by the Resolution Professional (RP):
The appellant contended that the RP did not verify SUUTI's claim from the Corporate Debtor's books and ignored the OTS dated 23.10.2008. SUUTI's claim was admitted for Rs. 4874.97 Crores, and UTI Trust Private Limited's claim was admitted for Rs. 916.19 Crores, totaling Rs. 5791.17 Crores. The appellant argued that only Rs. 34.80 Crores should have been admitted based on the OTS.

2. Legal standing (locus) of the appellant to file the appeal:
The tribunal questioned the appellant's legal standing as an Independent Director to file the appeal. The appellant cited several judgments to support his contention, but none related to the issue of the financial creditor's claim. The tribunal opined that the appellant had no locus as he was not financially affected by the claim's admission.

3. Validity and revocation of the One Time Settlement (OTS) agreement:
SUUTI argued that the OTS was revoked in August 2009, restoring all original liabilities. This revocation was acknowledged in the Corporate Debtor's balance sheets from 2010-11 to 2020-21. The tribunal noted that the OTS letter included a clause allowing SUUTI to revoke the OTS in case of default, restoring original liabilities. The tribunal found that the OTS was indeed revoked, and the claim was correctly admitted by the RP.

4. Admission of financial claims and constitution of the Committee of Creditors (CoC):
The tribunal reviewed the documents and correspondence between the financial creditor and the corporate debtor, concluding that the RP's admission of SUUTI's claim was in accordance with the application and order of admission u/s 7 of IBC, 2016. The tribunal found no fault in the RP's actions and dismissed the appeal.

Conclusion:
The tribunal dismissed the appeal, finding it frivolous and a proxy litigation by the ex-Management to delay the resolution process. A cost of Rs. 50,000/- was levied on the appellant, to be paid to the Prime Minister's National Relief Fund within 15 days, with a compliance affidavit to be filed within a week thereafter. All pending connected Interlocutory Applications were closed.

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