NCLT Cautions RPs To Look Out For Excess Claims Made By Financial Creditors Against Corporate Debtor

The petitioner (Operational Creditor) in the matter [S.A. Consultants and Forwarders Private Ltd. vs. Cargo Planners Ltd.] had rendered freight forwarding services to Cargo Planners Ltd. (Corporate Debtor) and had not been paid for it. Cargo Planners had defaulted on payment of over Rs. 1.21 crores to S.A. Consultants.

Cargo Planners challenged the petition on the ground that a complaint under the Negotiable Instruments Act against it was pending consideration, which qualifies as 'dispute'.

The petitioner countered this view by placing reliance on an NCLAT judgment to show that a pending NI Act proceedings actually amounts to admission of debt and not a dispute. The NCLT Bench accepted this view and established the absence of any dispute. Accordingly, insolvency proceedings were initiated.

While admitting the insolvency plea, the Bench observed that a general complaint had been received that financial creditors, banks, NBFCs and Asset Reconstruction Companies often claimed an amount in excess of what was actually owed to them by the Corporate Debtor, and many a times at unreasonably exorbitant rates of interest.

The Tribunal directed the RPs to be cautious of these claims by creditors and settle them keeping in mind that no injustice should be caused, as the Tribunal lacks a mechanism to rectify such claims.

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