2026 (3) TMI 256 - AT - IBC

Claim updation under Regulation 12A permits withdrawal of satisfied claims but final withdrawal requires adjudicatory determination.

The Tribunal addressed whether a creditor with an admitted claim in CIRP may update or withdraw that claim under Regulation 12A when it is partly or fully ... Interim Resolution Professional (IRP)/Resolution Professional (RP) - Updation of claim under Regulation 12A - withdrawal of claim as a form of updation - duty to update claim when satisfied - verification of claims - administrative role of IRP and absence of adjudicatory power. Updation of claim under Regulation 12A - withdrawal of claim as a form of updation - Whether a creditor who has its claim satisfied partly or fully can 'update' and thereby withdraw its claim during CIRP under Regulation 12A of the CIRP Regulations, 2016. - HELD THAT: - The Tribunal held that Regulation 12A expressly requires a creditor to update its claim as and when the claim is satisfied, partly or fully, after the insolvency commencement date. The literal meaning of Regulation 12A - that a creditor shall update its claim when it is satisfied partly or fully - encompasses a situation where the claim is fully satisfied leaving no claim to continue; consequently 'updation' in such circumstances would include withdrawal of the claim. The Tribunal observed that a creditor whose claim is fully satisfied would have no remaining voting interest and thus there is no principle requiring such creditor to continue as a member of the CoC. The Court also noted the IRP/RP's ongoing obligation under the Code and Regulations to verify, collate and update claims, but recognised that the IRP/RP do not possess adjudicatory power to finally allow or disallow withdrawal; that function lies with the Adjudicating Authority. [Paras 39, 40, 41, 42] Regulation 12A permits updation of claims when satisfied and such updation includes withdrawal of the claim; the NCLT's conclusion that no provision permits withdrawal was incorrect. Administrative role of IRP and absence of adjudicatory power - need for adjudicatory decision by Adjudicating Authority - HELD THAT: - The Tribunal accepted that the IRP/RP is an administrative facilitator and lacks adjudicatory powers to decide on withdrawal of an admitted claim. Given that limitation, the IRP was justified in approaching the Adjudicating Authority for directions. The Tribunal set aside the impugned NCLT order which had dismissed the IRP's application as not maintainable, and observed that the Adjudicating Authority alone is competent to adjudicate on the withdrawal/updation of the claim and related consequences. The Tribunal expressly did not decide the applicability of Section 14 or the question of CIRP costs, leaving those issues open for the Adjudicating Authority to consider afresh. [Paras 42, 43, 44] The IRP was justified in approaching the Adjudicating Authority; the matter is to be adjudicated afresh by the Adjudicating Authority which alone can decide on the request to withdraw/update the claim and attendant issues. Final Conclusion: The impugned order dismissing the IRP's application was set aside: Regulation 12A permits updation of claims when satisfied and such updation includes withdrawal; the IRP was justified in seeking directions from the Adjudicating Authority. IA No. 3965 of 2023 is revived and remitted to the Adjudicating Authority for fresh disposal after hearing the parties; issues relating to Section 14 and CIRP costs were left open for determination by that Authority. Issues: (i) Whether a creditor who has an admitted claim in a CIRP can update that claim by withdrawing it (including where it is satisfied partly or fully) under Regulation 12A of the CIRP Regulations, 2016; and (ii) Whether the Interim Resolution Professional (IRP)/Resolution Professional (RP) had authority to refuse withdrawal and whether the IRP could move the Adjudicating Authority seeking directions on withdrawal.Analysis: The Code and CIRP Regulations require the IRP/RP to receive, collate, verify and maintain an updated list of claims and to constitute the Committee of Creditors (CoC) on that basis. Regulation 12A expressly mandates that a creditor shall update its claim as and when the claim is satisfied partly or fully after the insolvency commencement date. The IRP/RP has administrative duties but not adjudicatory power to conclusively decide a change in the status of a claim; where adjudication is required, the IRP/RP may approach the Adjudicating Authority. The Tribunal examined prior precedents and the effect of the post amendment Regulation 12A and concluded that updation under Regulation 12A includes the situation where a claim is fully satisfied and effectively withdrawn, but any final determination on withdrawal requires decision by the Adjudicating Authority since the IRP/RP lacks adjudicatory power.Conclusion: The appeal is allowed; the impugned order dismissing the IRP's application is set aside. The matter is remanded to the Adjudicating Authority to decide IA No. 3965 of 2023 afresh after affording parties an opportunity of hearing. The IRP was justified in approaching the Adjudicating Authority for directions.