NCLT Chennai - Resolution Professional Should Not Rely Solely On Corporate Debtor's Records For Verifying Claims

Background Fact

The homebuyer (Applicant) booked a 2 BHK apartment in the Corporate Debtor's project named Sai Peace & Prosperity. As per the booking form, the applicant paid an advance of Rs.20,00,000, with Rs.2,50,000 by cheque and the remaining Rs.17,50,000 in cash.

Concerned by the lack of progress in the construction, the applicant demanded a refund. Despite multiple requests, the Corporate Debtor refused.

Subsequently, the Corporate Debtor was admitted into CIRP. The applicant submitted a claim with the IRP for a sum of Rs.35,20,000. However, the applicant's claim was admitted only to the extent of Rs.3,77,178.

Thereafter, the Applicant explained the details of her total claim of Rs.20,00,000 to the Respondent and contended that the admission of claim only to the extent of Rs.3,77,178 is invalid. In response, the Resolution Professional (Respondent) stated that there was no record of cash payments from the applicant in the Corporate Debtor's books.

Aggrieved by the non-admission of the total claim, the Applicant filed an application before NCLT Chennai seeking the direction of the adjudicating Authority to admit her entire claim of Rs.35,20,000, including interest of Rs.15,20,000.

NCLT Verdict

NCLT allowed the application and directed to admit the claim of the Applicant with the applicable interest rate and include her in the respective class of creditors.

Furthermore, NCLT looked into the booking form of the flat, wherein it was mentioned that the Applicant had paid Rs.20 lakh to the corporate debtor as a booking advance. Additionally, NCLT referred to Page 12 of the Application, where it found that cheques for the amounts of Rs.1,00,000 and Rs.1,50,000 were drawn in the name of the Corporate Debtor. Moreover, the cash receipts for Rs.12,50,000 and Rs.5,00,000 dated 02.05.203 and 06.05.2013 respectively were in the name of the Applicant.

Additionally, NCLT referred Regulation 8A of the IBBI (Insolvency Process of Corporate Persons) Regulation 2016 reads as follows :

Regulation 8A: Claims by creditors in a class

(1) A person claiming to be a creditor in a class shall submit claim with proof to the interim resolution professional in electronic form in Form CA of the 37[Schedule-I].

(2) The existence of debt due to a creditor in a class may be proved on the basis of-

(a) the records available with an information utility, if any; or

(b) other relevant documents, including any-

(i) agreement for sale;

(ii) letter of allotment;

(iii) receipt of payment made; or

(iv) such other document, evidencing existence of debt.

NCLT observed that if Resolution Professional will solely rely on the Corporate Debtor's records for verifying claims, and if the Corporate Debtor fails to maintain its records properly, it could adversely affect creditors like the Applicant. The improper maintenance of the Corporate Debtor's records should not unfairly burden the Applicant. Therefore, Resolution Professional must authenticate the supporting documents submitted by the claimant through legal means beyond solely relying on the Corporate Debtor's records.

Therefore, NCLT Chennai directed respondent to admit the claim of the Applicant with the applicable interest rate.

Case: K. Amutha Versus Resolution Professional of M/s. Ambojini Property Developers Private Limited

Citation: IA(IBC)/1141(CHE)/2021 In CP/938/IB/2018

Counsel for Applicant: Mr.Amritha Sathyahith, Advocate

Counsel for Respondent: Mr.E.Omprakash, Sr. Advocate Priyanka Verma, Advocate

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