Information memorandum should reflect creditors’ claim, if it finds place in balance sheet, says NCLT Indore

The Indore bench National Company Law Tribunal (“NCLT”), in the case Bank of Baroda v Divya Jyoti Industries Ltd observed, the bench comprising of Shri Madan B. Gosavi (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member), observed while adjudicating an application filed in Bank of Baroda v Divya Jyoti Industries Ltd and has held it is the duty of the Resolution Professional to include such claims in the Information Memorandum, if a claim appears in the audited balance sheet of the Corporate Debtor.

Facts of the Case:

An application was filled under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) by the Bank of Baroda before the NCLT Indore Bench (“Adjudicating Authority”), the application seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, Divya Jyoti Limited. The Adjudicating Authority admitted the application vide an order dated 04.12.2020 and accordingly CIRP was initiated. Mr. Sajjan Kumar Dokania was appointed as Interim Resolution Professional and thereafter, he was appointed the Resolution Professional.

The Applicant, The Commercial Tax Department being one of the creditors of the Corporate Debtor, had filed its claim before the Resolution Professional and these claims were a part of the audited balance sheet of the Corporate Debtor. Vide an email the resolution professional had rejected the claim of the Applicant. Further, the Applicant filed an application seeking direction to the Resolution Professional to consider the claim. It was submitting by the Resolution Professional before the Adjudicating Authority that the claim was included in the Information Memorandum despite being rejected over email.

Adjudicating Authority Decision:

It was observed by the bench that since the claims appear in audited balance sheet of the Corporate Debtor, it is a duty of the Resolution Professional to consider it for inclusion in Information Memorandum.

The bench noted that the bench heard the RP in person he submitted that it is included in information memorandum however, the learned counsel appearing for the Applicant brought to our notice that E-mail was received by her client whereby, the claim was rejected by RP. The bench deprecates such practice on behalf of the RP.

It was held by the bench that if claims are reflected in Information Memorandum, then the Resolution Professional should have in all fairness informed the Applicant accordingly and ought not by way of such e-mail, to have rejected the claims.

Accordingly, the bench dismissed the application as the claim reflected in the Information Memorandum under contingent liabilities.