State Bank of India vs. ARGL Limited - Claims on the basis of Books of Accounts of CD

NCLT (PB) New Delhi (12.03.2019) in State Bank of India vs. ARGL Limited [CA-1215(PB) /2018 in (IB)-531(PB)/2019.] while considering an application filed by the Central Board of Goods and Service Tax Department, indicated that it was irrelevant whether the claim is considered or not, and the RP/IPR would be required to take cognizance of the dues as per the books of accounts. Therefore, the application was allowed.

Excerpts of the order;

“ ……………..It is a strange situation which is adopted by the RP because in the books of accounts (of the Corporate Debtor) the government dues are always reflected. It is nowhere stated as to how the claims which are to be filed alone are to be collated in terms of Section 21. First of all, as a matter of fact, as a first step the IRP / RP has to prepare the list in accordance with the books of accounts and then invite the claims, otherwise the dues reflected in the books of accounts would be rendered completely meaningless. It is only in case there is any discrepancy in the books of accounts that the claim needs to be modified or additions are required to be made. Therefore, we allow the application and direct the IRP/RP to collate the claim of the Central Board of Goods and Service Tax, the needful shall be done within three days.”

 

Disclaimer: The sole purpose of this blog is to create awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog.

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Author’s comments - Does this judgement read with Section 21(1) means that a financial creditor will find a place in the list of creditors, on the basis of books of accounts of the CD only? The only exception, in the Code & Regulations, has been provided for the claims of workmen & employees, in Regulation 19(4) of IBBI (Liquidation Process) Regulations reading as under;

• # Regulation 19(4) The liquidator may admit the claims of a workman or an employee on the basis of the books of account of the corporate debtor if such workman or employee has not made a claim.

 

Further, Hon’ble SCI (15.11.2019) in CoC of Essar Steel India Limited vs. Satish Kumar Gupta & Ors.(Civil Appeal No. 8766-67 OF 2019) held as under;

 

# 67. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority / Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with “undecided” claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, the NCLAT judgment must also be set aside on this count.

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