National Company Law Appellate Tribunal (NCLAT) of Delhi composed of Justice Ashok Bhushan and Justice Barun Mitra upheld the subsequent reduction of the claim by Insolvency Resolution Professional (IRP).
The Appellant actually filed the Section 7 application, which was granted. The Appellant submitted a claim for Rs. 6,52,42,330 in response to the IRP’s publication, and the IRP provisionally admitted the claim. Also, the appellant himself initiated the arbitration proceedings.
Further, the RP has subsequently reduced the Appellant’s claim amount to Rs. 3,16,90,306 after verification.
Aggravated by the claim’s reduction, the appellant filed an application with the adjudicating authority, which was denied by the impugned ruling.
The counsel for the appellant, Srinivasan contended that Resolution Professional has no jurisdiction to change/reduce the claim amount after he has once admitted the claim.
He further argued that the RP erred in relying on the award since it would only have been relevant if the appellant had started legal action to recover the money; nevertheless, when the appellant presents a claim to the IRP, the award is irrelevant.
The bench noted that under the Corporate Insolvency Resolution Process Rules, 2016, the Resolution Professional has the authority to alter the claim amount if new knowledge or additional materials become known.
Further noted that Resolution Professional has calculated the claim of the Appellant as per the arbitral award. Also opined that appellant who has himself initiated the Arbitration Proceeding cannot deny that he is bound by the award which was delivered in his favour.
As a result, the bench determined that the Adjudicating Authority had the right to believe that the Resolution Professional had acted correctly in reducing the Appellant’s claim.
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