Payment Of TDS Towards Interest Payable Does Not Amount To Acknowledgment Of Debt: NCLAT Directs IBBI To Investigate Into Conduct Of RP

Factual Background

An appeal was filed by the Appellant, P.M. Cold Storage Pvt. Ltd. against the order of the Adjudicating Authority which considered the claim of New Hind Silk House Pvt. Ltd. (NHSH) as admissible in the CIRP of the Corporate Debtor, Goouksheer Farm Fresh Pvt. Ltd.

The Appellant was the sole financial creditor of the Corporate Debtor, Goouksheer Farm Fresh Pvt. Ltd. and had 100% voting rights in the CoC.

In the first meeting of the CoC, the IRP found that the only claim received was that of the Appellant. In this meeting, certain decisions were taken regarding the fee of the RP. The Appellant requested an urgent meeting of the CoC via email on 23.1.2020 regarding expenses and appointment of RP done in the previous meeting. He filed an IA in the Adjudicating Authority for replacement of the RP.

The Appellant was later informed that meanwhile, in the 4^th meeting of the CoC, the CoC had been reconstituted and the claim of NHSH has been admitted, reducing the voting share of the Appellant to 25.07% from 100% in the CoC. The Appellant, aggrieved by this, filed an application before the AA, which was dismissed. Challenging the impugned order of the AA which admitted the claim of NHSH, the Appellant filed an appeal before the NCLAT.

In the appeal, the Appellant contended that the claim filed by NHSH was suspicious because of discrepancies in the documents filed with Form C. It was further contended that the IRP, being aggrieved by the application for replacement of the IRP, went on to admit the doubtful claim of NHSH to the detriment of the Appellant.

Contents Of The Appellant

In the appeal, the Appellant contended that the claim filed by NHSH was suspicious because of discrepancies in the documents filed with Form C. It was further contended that the IRP, being aggrieved by the application for replacement of the IRP, went on to admit the doubtful claim of NHSH to the detriment of the Appellant.

It submitted that the IRP has failed to perform his duty under Regulation 13(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 in verifying the genuineness and authenticity of the documents submitted by NHSH as the claim of NHSH was barred by limitation. The signatures on the Ledger account Statement acknowledging the debt of NHSH by the Corporate Debtor are false and they do not match the signatures of the Directors of the Corporate Debtor company on the website of the Ministry of Corporate Affairs.

It was further contended that the RP admitted the time-barred claim of NHSH in response to the application filed by the Appellant for replacement of IRP.

Contents Of The Respondent

The Respondent contended that the debt of NHSH was acknowledged by the Corporate Debtor in 2016 and 2017, as shown in the ledger account statement and the bank statement of NHSH showed initial payment to the Corporate Debtor. Further, Form 26AS showed TDS deposited by the Corporate Debtor in support of its claim.

Issue

Whether the claim submitted by NHSH is under limitation based on the documents submitted alongwith the claim in Form C, and whether the RP has looked into the veracity and genuineness of the said claim in the light of provisions of IBC and regulations 13 and 14 of CIRP Regulations.

Decision of the NCLAT

On perusal of the documents available on record, the NCLAT held that the RP has wrongly relied on the ledger accounts of the Corporate Debtor with respect to NHSH in 2016 as well as 2017, as the signatures of the Directors, available on the website of the MCA, on the date when the acknowledgement was given do not match the signatures on the ledger account statement.

The NCLAT also refused to rely on the balance sheets for the FY 2016-17, FY 2017-18 and FY 2018-29 regarding acknowledgement of debt, as they were prepared in 2020.

Since the last payment made by the Corporate Debtor was to NHSH on 5.8.2016 and the claim was filed on 26.2.2019, the claim was held to be barred by limitation.

It further held that payment of TDS on interest payable cannot be considered as an acknowledgement in writing of the liability of the Corporate Debtor.

The NCLAT held-

"We also find that rule 13 of CIRP Regulations, which is regarding verification of claims by the IRP/RP, enjoins on the IRP/RP the responsibility of verifying every claim submitted and maintain a list of creditors for inspection by members and other stakeholders in the CIRP. We are, therefore, of the view that since the voting share in the CoC is extremely relevant and important element in the CIRP insofar as the insolvency resolution of the CD is concerned. It was the duty of the RP to exercise necessary care and diligence in verifying the claims and scrutinise the documents submitted with Form C for genuineness and authenticity. Such exercise does not appear to have been done by the RP in the present case. We would, therefore, urge the Insolvency and Bankruptcy Board of India to investigate this matter further regarding the conduct of RP and take necessary action under the regulation."

The Appellate Tribunal set aside the order of the AA admitting the claim on NHSH and directed that NHSH shall not be a member of the CoC in the CIRP of the Corporate Debtor, Goouksheer Farm Fresh Pvt. Ltd.

P.M. Cold Store Pvt. Ltd. v. Goouksheer Farm Fresh Pvt. Ltd. & Ors.

Counsel for Appellant: Mr. Vijay Singh and Mr. Prabhat Ranjan, Advocates. Mr. Pyanshu Upadhyay, Advocate for Ex-Directors.

Counsel for Respondents: Mr. Soumya Dutta, Advocate for Respondent No. 2

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