2025 (8) TMI 1229 - AT - IBC

Appeal against RP dismissed; adverse observations deleted, IBBI referral set aside; RP must verify/reconsider claim under CIRP regulations

Hemant Sharma, Resolution Professional Today Homes and Infrastructure Pvt. Ltd. Versus Indian Renewable Energy Development Agency Ltd.

Hemant Sharma, Resolution Professional Today Homes and Infrastructure Pvt. Ltd. Versus Indian Renewable Energy Development Agency Ltd. - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether a claim based on a corporate guarantee that was not invoked prior to the insolvency commencement date is a 'claim' under the Code requiring collation and verification by the Resolution Professional (RP). 2. Whether a Resolution Professional, in the course of collating and verifying claims under the CIRP Regulations, exercises impermissible adjudicatory powers by communicating reasons for non-verification/rejection (via email) and thereby exceeds or abuses statutory functions. 3. Whether the Resolution Professional is entitled to prefer an appeal against an Adjudicating Authority order that makes adverse observations against the RP and directs transmission of the order to the insolvency regulator. 4. Scope and effect of prior judicial pronouncements distinguishing 'claim', 'debt' and 'default' on admission/collation of claims in CIRP where enforceability (e.g., invocation of guarantee or moratorium) is in issue. ISSUE-WISE DETAILED ANALYSIS Issue 1: Admissibility of a claim based on an uninvoked corporate guarantee Legal framework: The Code defines 'claim' broadly as a right to payment whether matured or unmatured, disputed or undisputed; 'debt' is a liability in respect of a claim that is due; 'default' denotes non-payment of a debt when due. CIRP Regulations require the RP to collate and verify claims as on the insolvency commencement date. Precedent treatment (followed/distinguished): The Court relies on the Supreme Court authority that a right to payment remains a 'claim' even if enforcement is barred by moratorium; causes of action not yet enforceable do not negate the existence of a claim. Tribunal precedents that held maturity or invocation are not requisite for filing/collation of claims were noted and followed. An intervening Tribunal decision holding the contrary (that an uninvoked guarantee does not give rise to a matured claim) was distinguished because it did not consider the Supreme Court precedent cited above. Interpretation and reasoning: A claim grounded on a guarantee exists as a 'claim' under the statutory definition even if the guarantee has not been invoked or the right to enforce it is subject to moratorium or other restraints. The RP's duty under Regulations is to collate and verify the nature and basis of claims; non-invocation of guarantee does not, per se, render the claim non-existent for collation/verification purposes. Ratio vs. Obiter: Ratio - A guarantee-based demand that is uninvoked still constitutes a 'claim' requiring collation/verification by the RP. Obiter - Observations on the sufficiency of underlying repayment by the principal obligor (i.e., whether the principal has satisfied facilities) were noted as factual/contentions to be addressed during verification and not decided. Conclusion: The claim based on an uninvoked corporate guarantee is a claim under the Code and must be collated and verified by the RP; it cannot be rejected outright merely because the guarantee was not invoked prior to the insolvency commencement date. Issue 2: Whether verification communications by RP amount to impermissible adjudication Legal framework: Sections of the Code assign the RP administrative functions of collating, verifying and maintaining an updated list of creditors; the RP is not vested with adjudicatory power to finally decide disputed claims-adjudication is within the Adjudicating Authority/Court. Precedent treatment (followed/distinguished): The Court accepts the settled position that the RP has administrative (not adjudicatory) functions. However, it distinguishes administrative verification from adjudication: verification (including expressing reasons for non-verification) is an exercise of statutory duty under CIRP Regulations and, even if erroneous, does not automatically convert into impermissible adjudication. Interpretation and reasoning: The RP's emails explaining non-verification (citing absence of disbursement to the corporate debtor and non-invocation of guarantee) were treated as communication of verification findings. Such verification exercises are mandated by Regulation 13 and Sections dealing with the RP's duties. Only when the RP proceeds to conclusively decide the substantive rights without placing facts before the Committee of Creditors or without enabling adjudication would the line into adjudication be crossed. In the present facts the communications were part of verification and thus not an excess or abuse. Ratio vs. Obiter: Ratio - Verification of claims by RP, and communicating reasons for non-verification, is within RP's statutory remit and is not necessarily adjudication. Obiter - The exact line-drawing circumstances where verification would become adjudication were noted but not exhaustively delineated. Conclusion: The RP did not exceed or abuse statutory powers merely by refusing to verify the claim and communicating reasons by email; adverse judicial findings in the impugned order that characterized those acts as adjudication were deleted. Issue 3: Maintainability of Appeal by the Resolution Professional Legal framework: The Code and general appellate principles permit aggrieved parties to appeal; prior Supreme Court observations in other facts suggested that RPs should ordinarily remain neutral and that appeals by an RP may be inappropriate in some circumstances. Precedent treatment (distinguished): A Supreme Court decision declining to entertain an appeal filed by an RP in particular facts was considered fact-specific and not a categorical bar on appeals by RPs. Interpretation and reasoning: Where the impugned order contains adverse observations against the RP (including a finding of excess/abuse of power) and a direction to forward the order to the insolvency regulator, the RP is an aggrieved party entitled to challenge those findings. The prior authority declining appeals by an RP was confined to its facts and did not preclude an RP from filing an appeal where personal adverse findings are made. Ratio vs. Obiter: Ratio - An RP may maintain an appeal against adverse observations directed personally at the RP; previous judicial moderation on RP appeals is fact-contingent. Obiter - Guidance that RPs should generally adopt a neutral stance remains persuasive but not determinative. Conclusion: The Appeal by the RP against adverse findings and directions to forward the order to the regulator was maintainable in the facts of the case. Issue 4: Effect of precedents distinguishing claim, debt and default on CIRP claim processing Legal framework: Statutory definitions differentiate 'claim', 'debt' and 'default'; the Code and regulations impose duties on RP to collate and verify claims irrespective of maturity; adjudicatory resolution of disputed claims is for the Adjudicating Authority or CoC where applicable. Precedent treatment (followed/distinguished): The Court followed Supreme Court pronouncements that a claim exists even if enforcement is stayed or moratorium applies, and that maturity/enforcement are not preconditions to filing/verification. Tribunal decisions that held maturity/invocation irrelevant for collation were applied; a Tribunal decision to the contrary was overruled to the extent inconsistent with Supreme Court authority. Interpretation and reasoning: The statutory architecture contemplates broad collation of claims to capture liabilities as of the commencement date; differentiation between claim/debt/default affects who may trigger CIRP and the framing of defaults, but does not negate the RP's duty to record and verify claims that are unmatured or contingent (such as uninvoked guarantees). Ratio vs. Obiter: Ratio - The statutory scheme and binding precedent require collation/verification of broad categories of claims notwithstanding non-maturity or non-invocation; maturity/invocation of guarantees is a factual and legal issue for verification/adjudication but not a bar to collation. Obiter - Practical implications for valuation and categorisation at Committee of Creditors stage were observed but not finalised. Conclusion: The RP must collate and verify claims pursuant to the Code and Regulations, and the presence of unmatured or uninvoked contractual rights (including guarantees) does not exclude such claims from verification; distinctions between claim, debt and default govern enforcement and triggering of proceedings but do not excuse non-collation. Final Disposition (Court's operative conclusions) The Appeal was dismissed on merits while deleting adverse observations against the RP characterising the verification emails as adjudication and deleting the direction to forward the impugned order to the insolvency regulator; the Adjudicating Authority's direction to reconsider the claim and place it before the Committee of Creditors was upheld, and parties were left to bear their own costs.