Mr. Anil Kumar Ojha, Vs. Ms.Revathi S Raghunathan. & Anr. - We are of the view that this Tribunal has no jurisdiction to direct the Liquidator / Respondent No.1 to keep the claim of SFC abeyance pending decision of DRT on the counter claim.

 NCLT Chennai-1(2025.02.19) in Mr. Anil Kumar Ojha, Vs. Ms.Revathi S Raghunathan. & Anr. [IA/725/CHE/2024 in CP/IB/1264/2018], held that; 

• We are of the view that this Tribunal has no jurisdiction to direct the Liquidator / Respondent No.1 to keep the claim of SFC abeyance pending decision of DRT on the counter claim. 

• As regards other prayers, the moratorium under Section 14 does not bar the SFC to initiate wilful defaulter proceedings. 

• The Liquidator has been appearing in the proceedings before the DRT as evident from the report filed. There is no bar to initiate proceedings under IBC pending DRT proceedings. These proceedings are parallel and the independent proceedings.

Excerpts of the order; 

This application has been filed under Section 60(5), 35(1)(A), 65 & 74 of the Insolvency and Bankruptcy Code, 2016 r/w Regulations 16 to 30A of IBBI Liquidation Process) Regulations, 2016 by Shri. Anil Kumar Ojha, the Promoter and the Managing Director (Suspended) of the Corporate Debtor, SLO Industries Limited seeking the following reliefs:

• i. To direct the 1st Respondent/Liquidator to keep the claim of the 2nd Respondent Bank, in abeyance pending decision of DRT in counter claim of CD in TA/1/2017 of Union Bank of India and accordingly update the details of stakeholders on the website of IBBI.

• ii. To take cognisance of the fact that the 2nd Respondent, Union Bank of India, Secured Financial Creditor (SFC), filed Insolvency Application under Section 7 for the purpose other than resolution of the insolvency of the CD and in consequence to impose suitable penalty on the 2nd Respondent Union Bank of India, Secured Financial Creditor, under section 65 and compensate the CD for the depletion of the value of assets of the CD after 04.11.2019.

• iii. To take cognisance of the fact that the 2nd Respondent Union Bank of India, Secured Financial Creditor, violated the provisions of Moratorium under section 14 and refer the matter to IBBI (Insolvency & Bankruptcy Board of India) for initiating prosecution of SFC under section 236 r/w section 74 of IBC.

• iv. To direct the 1st Respondent to periodically apprise this Hon’ble Tribunal regarding steps taken by the 1st Respondent in the proceedings in IA/1/2017 pending before DRT, Chennai.

• v. Pass any other order or orders as this Hon’ble Tribunal may deem fit under that circumstances of this case and thus render justice. 

# 2. The case of the Applicant in brief is that the Corporate Debtor was admitted into CIRP on an application filed under Section 7 of IBC, 2016 by the Corporation Bank nowUnion Bank of India vide order dated 04.11.2019. Shri. C. Ramasubramaniam was appointed as the RP. He invited the claims and constituted the CoC in which the Financial Creditor was the sole member. Since no viable Resolution Plan came, the CoC resolved to liquidate the Corporate Debtor.This Tribunal ordered for the liquidation of the Corporate Debtor vide dated 21.01.2022 and appointed Shri. S. Palaniappan as the Liquidator. A Resolution was passed in the 2nd SCC held on 16.10.2023 where the Secured Financial Creditor / Union Bank of India having voting share of 89.175% approved for the change of the Liquidator. The Tribunal thereafter vide its order dated 28.11.2023, appointed Ms. Revathi S Raghunathan as the new Liquidator.

# 3. It is stated that Union Bank of India prior to initiating CIRP against the Corporate Debtor, filed a recovery petition in O.A. No.105 of 2017 for recovery of Rs.236,35,93,324.86/- before the DRT, Chennai against the Corporate Debtor and its suspended directors. On 19.09.2017, the Applicant along with others, filed the written statement before the DRT which also included a counterclaim for Rs.342.04 Crores. However, the DRT ordered that the counterclaim be numbered separately as C.C. No. 1 of 2017 as a separate action and not as a part of the written statement. The Applicant preferred W.P. No. 325 & 326 of 2018 before the Hon'ble High Court of Judicature at Madras where the Hon'ble High Court recognizing the counterclaim of the Applicant and others as part of the written statement in O.A. No. 105 of 2017 vide dated 07.08.2018 ordered as under:  

•  “42. Bare reading of the Rule 12 of the Rules, which has come into force on 04.11.2016, is also indicative that suffice for the defendant to file set off, including claim or counter claim, if any, along with documents in a paper book form.

• 43. For all the reasons, proceedings dated 02.01.2018, passed in T.A.No.01 of 2017, on the file of the DRT-I, Chennai, directing the defendants to file separate counter claim/proof affidavit, are set aside. Tribunal is directed to take on record, the pleadings and proof affidavit submitted by the petitioners, without insisting for filing separate paper book, one for defence of the claim and another for counter claim, and separate affidavit and proceed with the merits of the case.” 

# 4. It is stated that subsequently, the counter claim was entertained by the DRT and OA was re-numbered as TA 1 of 2017. It is alleged that feeling frustrated with the orders of the Hon'ble High Court, the SFC/Union Bank of India filed an insolvency application in CP/1264/2018 under Section 7 of IBC on 10.10.2018. 

# 5. It is stated that post-initiation of CIRP, the Applicant informed the RP several times about the counter claim of the Corporate Debtor against the SFC and requested him to pursue the same before the DRT in the interest of the Corporate Debtor, however, the RP did not bother to pursue the counter claim. It is stated that this was against the objects of the CIRP. It is stated that after the liquidation order, he again requested the erstwhile Liquidator to pursue the counter claim of the Corporate Debtor before the DRT but he also did not pay any heed. It is stated that on 14.06.2023, he requested the erstwhile Liquidator to keep the claim of SFC in abeyance till the counter claim of the Corporate Debtor against the SFC is adjudicated. Since the erstwhile Liquidator was not showing any inclination to pursue the counter claim, he filed an application IA/1009/CHE/2023 before the Tribunal. It is stated that on 01.02.2024, the Counsel for the new Liquidator informed the Tribunal that the Liquidator has been impleaded in the matter and participating in the proceedings. The Application was

accordingly disposed of by the Tribunal. 

# 6. It is stated that it is a well settled law that the claim of the Claimant cannot be determined till the decision is taken on the counter claim by the Appropriate Authority. It is stated that if the counter claim of the Corporate Debtor is adjudicated in its favour, the Corporate Debtor would be eligible to receive much higher amount from the SFC than the amount claimed by the SFC.

# 7. Reference is made of the cases where :

19.3 The Hon’ble NCLAT (12.06.2023) in Anheuser Busch Inbev India Ltd. Vs. Mr. Pradeep KumarSravanam RP, [Comp.App (AT) (CH) (INS.) No. 12 / 2023] held:

• # 40. As far as the present case is concerned, this `Tribunal’, on a careful consideration of the contentions advanced on behalf of the `Appellant / Petitioner’, and also this `Tribunal’, keeping in mind of the stand taken by the `Respondent / Resolution Professional’, before the `Adjudicating Authority’, vide its `Counter’ to the IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, comes to a consequent conclusion that the action of the `Resolution Professional’, in keeping the `Claims’, in `abeyance’, because of the pending `Arbitration Proceedings’, in regard to the `counterclaim’ of the `Corporate Debtor’, only after which, the `Claim Sum’ of the `Appellant’, can be determined with certainty, the `Reliefs’, prayed for, by the `Appellant / Petitioner’, pertaining to `admission’ of the `Claim’, cannot be `acceded to’, in the `eye of Law’. Viewed in that perspective, the `impugned order’, dated 02.12.2022 in IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, passed by the `Adjudicating Authority’ (`National Company Law Tribunal’, Amaravati Bench), in `dismissing’, the `Interlocutory Application’, is free from any flaw. Accordingly, the instant `Appeal’, fails.  

19.2.The Hon’ble High Court of Delhi (18.07.2019) in SSMP Industries Ltd. vs. Perkan Food Processors Pvt. [CS (COMM] 470/2016 & CC[COMM] 73/2017] recovery suit filed by the CD, held as under:

• # 9. The nature of a counter claim is such that it requires proper pleadings to be filed, defences and stands of both parties to be considered, evidence to be recorded and then issues have to be adjudicated. The proceedings before NCLT are summary in nature and the RP does not conduct a trial. The RP merely determines what payment can be made towards the claims raised, subject to availability of funds. The NCLT/RP cannot be burdened with the task of entertaining claims of the Defendant which are completely uncertain, undetermined and unknown. Moreover, the question as to whether the Defendant is in fact entitled to any amounts, if determined by the NCLT, prior to the adjudication of the plaintiff’s claim for recovery, would result in the possibility of conflicting views in respect of the same transaction. Under these circumstances, this court is of the opinion that the Plaintiff’s and the defendant’s claim ought to be adjudicated comprehensively by the same forum. At this point, till the defence is adjudicated, there is no threat to the assets of the corporate debtor and the continuation of the counter claim would not adversely impact the assets of the corporate debtor. Once the counter claims are adjudicated and the amount to be paid/recovered is determined, at that stage, or in execution proceedings, depending upon the situation prevalent, Section 14 could be triggered. At this stage, due to the reasons set out above, the counter claim does not deserve to be stayed under Section 14 of the Code. The suit and the counter claim would proceed to trial before this Court.

# 8. Reference is also made of the case where

19.3 The Hon’ble NCLAT (03.08.2018) in Jharkhand Bijli Vitran Nigam Ltd. vs. IVRCL Ltd. [Corporate Debtor] &Anr. [Company Appeal (AT) (Insolvency) No. 285 of 2018] held :

• # 3. As the claim of the Corporate Debtor can be determined only after determination of counter claim made by the Appellant in the same very arbitral proceeding and if counter claim or part of it is set off with the claim made by the Corporate Debtor, we are of the view that both the claim and the counter claim of parties should be heard together by the Arbitral Tribunal in absence of any bar under Insolvency and Bankruptcy Code, 2016.

• # 4. However, on determination, if it is found that the Corporate Debtor is liable to pay certain amount, in such case, no recovery can be made during the period of moratorium.

# 9. It is stated that in view of the above legal position and the fact that counter claim is pending adjudication against the SFC, the claim of the SFC be kept in abeyance and the status of the claim be changed to “Kept in Abeyance” from “Admitted”.

# 10. It is stated that SFC in order to prevent the resolution of insolvency of the Corporate Debtor continued with the willful defaulter proceedings and declared the Corporate Debtor and its Promoters Directors as wilful defaulter on 30.03.2020 while there was a moratorium qua the Corporate Debtor. It is alleged that the procedure followed by SFC in wilful defaulter proceedings is in violation of law laid down by the Hon'ble Supreme Court in the case of “State Bank of India Vs. M/s. Jah Developers Pvt Ltd & Ors (Civil Appeal No. 4776 of 2019).

# 11. It is stated that the Corporate Debtor was not provided any opportunity to represent before the Review Committee.It is stated that the motive of SFC in declaring the Corporate Debtor and Suspended Directors as wilful defaulters was to prevent them from taking part in the resolution of the insolvency of the Corporate Debtor though they were eligible to do so as the Corporate Debtor was MSME unit. It is stated that the said act was in contravention of the moratorium which is punishable under Section 74 of the IBC.It is stated that the SFC did not keep a check on the RP who defrauded the Corporate Debtor during his tenure. The Applicant then made a complaint to CBI on which a case was registered. It is stated that at the time of initiation of CIRP when the RP took the charge, there was a liquidity of Rs.24.92 Crores but while handing over the charge to the 1stLiquidator, the Corporate Debtor had a liability of Rs.53.13 Crores.It is stated that during the CIRP period, the plants were shut down. It is alleged that both RP and the 1st Liquidator acted in a manner which was detrimental to the interest of the Corporate Debtor. It is stated that it is a case of fraudulent and malicious initiation of CIRP proceedings against the Corporate Debtor and the SFC is liable for penalty. It is stated that the 1st Liquidator in his reply dated 08.09.2023 in IA/1009/CHE/2023, had stated that he is not interested in pursuing the counter claim against the SFC. It is alleged that the 1st Liquidator had been working in an arbitrary manner conniving with the SFC, which had been regularly paying his fee in violation of Regulation 4(2) of IBBI (Liquidation Process) Regulations, 2016. It is stated that he did not include the supplies of goods and services during the CIRP period as the CIRP cost and categorize them as Operational Creditors.

# 12. On getting notice of the application, only Respondent No.1 filed the reply. R1/Liquidator denied the averments made in the application and stated that she has been contesting the proceedings before the DRT in TA/1/2017.Respondent No.1 has nothing to do with the averments made against the SFC/Union Bank of India. It is stated that the erstwhile Liquidator had admitted the claim of the SFC for a sum of Rs. 441,39,22,366/- and she is not in a position to revise/or keep it in abeyance.It is stated that the Liquidator had entered appearance before the DRT, Chennai on 21.04.2024 and has been getting along with the matter.

 

# 13. We have heard the Applicant in person and Ld. Counsel for the Respondent No.1.

# 14. In the instant case, the recovery proceedings against the Corporate Debtor and its Directors were initiated before the DRT, Chennai in TA/1/2017. In the said proceedings, the Corporate Debtor and its Directors had filed the counter claim.The counter claim in that petition is more than the claim of the SFC. In terms of the order of the Hon'ble High Court, the DRT took up the claim and the counter claim together. Thereafter, the SFC filed the application under Section 7 of IBC for initiating CIR Process against the Corporate Debtor. This Tribunal allowed the application and initiated the CIRP vide order dated 04.11.2019. Since no viable Resolution Plan came, liquidation was ordered vide order dated 21.01.2022.

# 15. In the instant case, the Applicant during the adjudication of Application CP/1264/IB/2018 for initiating CIRP against the Corporate Debtor in his reply had highlighted that a counter claim has been filed by the Corporate Debtor by virtue of Writ Petition No.325 and 326/2018 before the Hon'ble High Court of Judicature at Madras and the order passed thereunder dated 07.08.2018 and the counter claim has been taken on file to be considered by the DRT and taking into consideration the above counter claim by the Corporate Debtor, the application as filed is likely to be rejected.

# 16. The Tribunal on considering the submissions vide order dated 04.11.2019, held that they are not convinced by the above ground, namely, that a counter claim of the Corporate Debtor as against the Financial Creditor is pending adjudication. As rightly pointed out by the Financial Creditor, nowhere, has the Corporate Debtor denied the existence of debt and its default.

# 17. The above order initiating the CIRP has not been challenged by the Corporate Debtor and has attained finality.

# 18. It is true that during the CIRP, the moratorium was in force but the said moratorium does not restrict the SFC to initiate the proceedings of wilful defaulter against the Corporate Debtor and its Directors. In Gouri Prasad Goenka Vs. State Bank of India (2021) ibclaw.in 13 HC, the Hon'ble Court held that the moratorium envisaged in section 14 of IBC, 2016 creates no hindrance to a wilful defaulter declaration proceeding. The Hon’ble Supreme Court in the case of “P. Mohanraj and Others v. Shah Brothers Ispat Pvt Ltd (2021) ibc law.in 24SC, held that willful defaulter proceedings is excluded from section 14 moratorium. In the case of “Atibir Industries Company Ltd. and others v. Indian Bank (2024) ibc law.in 245 HC”, it was held that the yardsticks for declaration of wilful defaulter under the Master Circular are different from a recovery proceeding or a relatable proceeding; such declaration is merely to disseminate credit information pertaining to wilful defaulters for cautioning banks and financial institutions so as to ensure that further bank finance is not made available to them.

# 19. A wilful defaulter proceeding is thus not for recovery of debt. It does not directly make a claim for a particular asset or for recovery of any debt. The object and purpose of the Master Circular for wilful default is to inform the other creditors and lenders about the credit information of the wilful defaulter so that other creditors are cautioned and do not lend any further money. The aim of the declaration of wilful defaulter is to prevent fraud and loss of public money.

# 20. It is seen from the reply of the Respondent No.1/Liquidator that Respondent No.1 has been appearing before the DRT, Chennai for the Corporate Debtor in respect of the claim / counter claim before the DRT. Till date, the TA/1/2017 has not been adjudicated. Section 33(5) of the Code provides that the bar/moratorium is only in respect of fresh suits or legal proceedings. The words “continuation of pending suits or proceedings” have been consciously omitted from Section 33(5) of the Code. However, Section 14 explicitly provides for the application of moratorium to the institution of lawsuits or the continuation of pending lawsuits or proceedings against the CD in contrast to Section 14 of the Code, where it is explicitly stated that the  moratorium applies to the institution of lawsuits or the continuation of pending lawsuits or proceedings against the CD. To summarize the position, it can be said that the moratorium during liquidation is partial in nature. In the present case, the DRT proceedings were initiated prior to initiation of CIRP where parties had filed the claims and counter claims. Since no viable Resolution Plan came, the Corporate Debtor was liquidated.

# 21. The Hon'ble High Court in the case of “SSMP Industries Ltd.”supra has held that the proceedings before the NCLT are summary in nature and the RP does not conduct a trial. The RP merely determines what payment can be made towards the claim raised, subject to availability of funds. The NCLT/RP cannot be burdened with the task of entertaining claims of the defendant which are completely uncertain, undetermined and unknown. The question as to whether the defendant is in fact is entitled to any amounts, if determined by the NCLT, prior to the adjudication of the Plaintiff’s claim for recovery, would result in the possibility of conflicting views in respect of the same transaction. The nature of a counter claim is such that it requires proper pleadings to be filed, defences and stands of both parties to be considered, evidence to be recorded and then issues have to be adjudicated. It was held that under these circumstances, the Plaintiff and the Defendant’s claim ought to be adjudicated comprehensively by the same forum and the counter claim does not deserve to be stayed under Section 14 of the Code. 

# 22. In the case of “Jharkhand Bijli Vitran Nigam Ltd. vs. IVRCL Ltd. (Corporate Debtor) &Anr. supra, it was held that both the claim and the counter claim of the parties should be heard together by the Arbitral Tribunal in the absence any bar under IBC. In the present case, the Liquidator has been appearing before the DRT in respect of the counter claims filed by the Corporate Debtor/Suspended Directors which are being heard together by the DRT. In the case of “Anheuser Busch Inbev India Ltd. Vs. Mr. Pradeep Kumar Sravanam RP” supra, it was held by the Tribunal that the action of the RP in keeping the claims in abeyance because of the pending arbitration proceedings in regard to the counterclaim of the Corporate Debtor, only after which, the claim sum of the Appellant can be determined with certainty, the reliefs prayed for, by the Appellant/Petitioner pertaining to admission of claim cannot be acceded to, in the eyes of law. The Hon'ble NCLAT also dismissed the appeal against the order of the Tribunal.

# 23. Further, this Tribunal has no jurisdiction to review its own order qua initiating CIRP / liquidation proceedings against the Corporate Debtor. No appeal was preferred by the Applicant against the order of the Tribunal initiating CIRP or the liquidation process against the Corporate Debtor. It is also to be noted that the CIRP in the present case was initiated on 04.11.2019. This application has been filed on 13.03.2024 i.e. after about four years of initiation of CIRP. The application also suffers from laches, acquiescence and delay.

# 24. We are of the view that this Tribunal has no jurisdiction to direct the Liquidator / Respondent No.1 to keep the claim of SFC abeyance pending decision of DRT on the counter claim. As regards other prayers, the moratorium under Section 14 does not bar the SFC to initiate wilful defaulter proceedings. The Liquidator has been appearing in the proceedings before the DRT as evident from the report filed. There is no bar to initiate proceedings under IBC pending DRT proceedings. These proceedings are parallel and the independent proceedings.

# 25. In the light of above discussions, we do not find any merits in the application. The application is dismissed with no orders as to Costs. 

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Anheuser Busch Inbev India Ltd. Vs. Mr. Pradeep Kumar Sravanam RP. - This `Tribunal’, on a careful consideration . . . . . .comes to a consequent conclusion that the action of the `Resolution Professional’, in keeping the `Claims’, in `abeyance’, because of the pending `Arbitration Proceedings’, in regard to the `counterclaim’ of the `Corporate Debtor’, only after which, the `Claim Sum’ of the `Appellant’, can be determined with certainty, the `Reliefs’, prayed for, by the `Appellant / Petitioner’, pertaining to `admission’ of the `Claim’, cannot be `acceded to’, in the `eye of Law’

NCLAT (12.06.2023) In Anheuser Busch Inbev India Ltd. Vs. Mr. Pradeep Kumar Sravanam RP. [Comp. App (AT) (CH) (INS.) No. 12 / 2023] held that;

• This `Tribunal’, on a careful consideration . . . . . .comes to a consequent conclusion that the action of the `Resolution Professional’, in keeping the `Claims’, in `abeyance’, because of the pending `Arbitration Proceedings’, in regard to the `counterclaim’ of the `Corporate Debtor’, only after which, the `Claim Sum’ of the `Appellant’, can be determined with certainty, the `Reliefs’, prayed for, by the `Appellant / Petitioner’, pertaining to `admission’ of the `Claim’, cannot be `acceded to’, in the `eye of Law’

Excerpts of the order; 

The `Appellant’ / `Anheuser Busch InBev India Limited’, has preferred the instant Comp. App (AT) (CH) (INS.) No. 12 of 2023, as an `Aggrieved Person’, in respect of the `impugned order’, dated 02.12.2022 in IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, passed by the `Adjudicating Authority’ (`National Company Law Tribunal’, Amaravati Bench).

# 2. The `Adjudicating Authority’ (`National Company Law Tribunal’, Amaravati Bench), while passing the `impugned order’ dated 02.12.2022 in IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021 (Filed by the `Petitioner’), under Section 60 (5) of the Insolvency and Bankruptcy Code, 2016, r/w. Rule 11 of the NCLT Rules, 2016, wherein, at Paragraphs 12 to 15, had observed the following:

• 12. “Even viewed from the logical point of view when the IBC only mandates that the RP shall collect and collate the claims and when a dispute is pending with regard to the amount due and the interest, the RP cannot admit the claim. If the RP admits the claim for a particular amount and later on if the Arbitral Tribunal decides otherwise it would result in conflicting judgments. No doubt the IBC under Section 3(6) of the Code defines claim as a right to payment whether or not such right is reduced to judgment fixed, disputed, undisputed etc. A Judgment of the Hon’ble Supreme Court which is relied upon by the Applicant’s Counsel in Pioneer Urban Land and Infrastructure Limited Vs. Union of India reported in (2019) 8 SCC 416, no doubt held that claim can be made whether or not such right to payment is reduced to judgment and a debt is a liability or obligation in respect of a right to payment even it arises out of breach of contract, which is due from any person, notwithstanding that there is no adjudication of the said breach, followed by judgment or decree or order. But the duty of the RP so far as collecting and collating the claims is complete. However, the claim is not yet admitted and is kept in abeyance only for the purpose of admission not for the purpose of collation. Hence, the mandate so far as collection and collating the claim stands complied with by the RP.

• 13. The judgment of the NCLAT in EXIM Bank Vs. Resolution Professional JEKPL Private Limited reported in (2018) SCC Online NCLAT 465 was relied upon, wherein it was held that any person who has a right to claim payment as defined under Section 3 (6) is supposed to file the claim whether matured or unmatured. The question as to whether there is a default or not is not to be seen. As already observed there is no quarrel with the said preposition. The judgment also held that as per Section 25 (2) (e) the Resolution Professional is required to maintain an updated list of all the claims. It was observed that the aforesaid fact suggests that the maturity of a claim or default of debt are not the guiding factors to be noticed for collating or updating the claims. It is observed that a person whose debt has not been matured also can file claim, which is very much done in this case. After extending the argument that as per Section 3(6), the claim includes disputed debt and that the RP is mandated according to Section 18(1)(v) to collate the claims, the Respondent seeks for a direction to the RP to admit his claim, which for valid reasons is kept in abeyance.

• 14. The judgment in Reliance Commercial Finance Limited Vs. Ved Cellulose Limited reported in 2017 SCC Online NCLT 185, no doubt held that the pendency of arbitration proceedings is not a hinderance under Section 7 of the Code for initiating the CIRP. But the same is not relevant in this case as the prayer is not for initiation of CIRP but for admission of claim. The contention of the Counsel for the RP that the claim of the Applicant cannot be admitted until the counter claim of the Corporate Debtor is decided, as the same may result in set off of the amounts payable to the Applicant though is sought to be rejected cannot be rejected, as a set off is very much possible while deciding the counter claim. The contention is that no set of is pleaded by the Respondent in its counter. Though a set off is not pleaded, when counter claim is admitted, the amount due from the claimant would get set off.

• 15. As regards the contention that there is no concept of keeping the claims in abeyance, this court is not in agreement as there need not be a specific provision for keeping the claims in abeyance. In the given circumstances if such exigency is necessary it can be invoked. There are instances where the RP has kept the claims in abeyance for various reasons. One such instance can be seen in the judgment of the National Company Law Appellate Tribunal, New Delhi in Company Appeal (AT) (INS) No.871-872/2019 between Santosh Wasantrao Waloker Vs. Vijay Kumar V Iyer and others, wherein the RP kept the claim filed by the Appellant in abeyance pending verification of the documents. In the case of Anamika Singh and others Vs. Shinhan Bank and others decided by the National Company Law Appellate Tribunal, New Delhi also it can be seen that the claims were kept in abeyance by the RP as the claims of the interest therein were not accepted by the RP. Hence, in view of the above this Tribunal is of the opinion that since, the claim of the Applicant is collected and collated by the RP and is also considered and kept in abeyance and in view of the arbitration proceedings pending with regard to the counter claim of the Corporate Debtor after which alone the claim amount of the Applicant can be decided with certainty, the reliefs claimed by the Applicant for admission of the claim cannot be granted.’’

and `dismissed’ the `Application’.

Appellant’s Submissions:

# 3. Questioning the `validity’, `propriety’ and `legality’ of `impugned order’, dated 02.12.2022 in IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, the `Adjudicating Authority’ (`National Company Law Tribunal’, Amaravati Bench), the Learned Counsel for the `Appellant / Petitioner’, submits that the `Appellant’, is a `Financial Creditor’ of the `Respondent’ / `Corporate Debtor’, and is owed a total `Financial Debt’ of INR 33,98,16,438.35/-.

# 4. It is represented by the Learned Counsel for the Appellant submits that the `Appellant / Petitioner’ and `Respondent / Corporate Debtor’, had entered into a `Brewing Agreement’, dated 06.02.2015 and that the `Appellant’, gave an advance of INR 17.50 Crores to the `Corporate Debtor’, a receipt of which is recorded at `Clause 6.12’ of the `Brewing Agreement’. Moreover, in terms of Clause 6.14, the `Respondent / Corporate Debtor’, is liable to `repay the advance’, with interest, on `Termination’ of the `Brewing Agreement’, for any reason.

# 5. It is the version of the Appellant that the `Brewing Agreement’, was `terminated’, as per `Termination Notice’, dated 03.08.2018, following which, the `Corporate Debtor’, became liable, to `repay the Advance with interest’. Also that, the `Appellant’, had initiated `Arbitration Proceedings’, against the `Respondent / Corporate Debtor’, to recover the aforesaid `Financial Debt’ and `Compensation’, for damages, in respect of the `Violation’, of the `Brewing Agreement’.

# 6. According to the Appellant, as a `Financial Creditor’, it submitted its `Claim’, on 01.12.2021, in Form-C, when the `Corporate Insolvency Resolution Process’, had commenced, to `resolve’ the `Insolvency’ of the `Corporate Debtor’. Indeed, in the `List of Creditors’, made by the `Respondent / Resolution Professional’ of the `Corporate Debtor’, he had not admitted the `Financial Claim’ of the `Appellant’, and instead kept it in `abeyance’.

# 7. The Learned Counsel for the Appellant points out that the `Appellant / Petitioner’, filed the IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, before the `Adjudicating Authority’ / `Tribunal’, among other things, seeking directions, being issued to the `Resolution Professional’, to admit the `Appellant’ / `Petitioner’s Financial Claim’, to revise and update the `List of Creditors’ and to admit the `Appellant’, to the `Committee of Creditors’ (`CoC’), with voting right proportionate to its `Claim’. In fact, the `Adjudicating Authority’ / `Tribunal’, had `dismissed’, the IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, inter alia, on the ground that the `Resolution Professional’, was justified, in keeping the `Claim’, in `abeyance’, because of the pending `Arbitration Proceedings’, and the `counterclaim’ of the `Corporate Debtor’.

# 8. The Learned Counsel for the Appellant contends that the `Adjudicating Authority’ / `Tribunal’, had failed to appreciate that the `Appellant’s Financial Claim’, is an `admitted’ and `acknowledged liability’.

# 9. It is projected on the side of the Appellant that the `Appellant’s Financial Claim’, is a Sum i.e. presently `Due and Payable’, and further that the Resolution Professional, had failed to consider that a `Claim’, as per Section 3(6) of the I & B Code, 2016, includes `Disputed Claims’, as well.

# 10. The Learned Counsel for the Appellant takes a stand that in view of the `Resolution Professional’s categorical admission that the `Agreement’ and `Default’ of the `Corporate Debtor’, are matters of record and that `no further adjudication’, was required.

# 11. The plea of the Appellant is that, the `Adjudicating Authority’ / `Tribunal’, had failed to consider that the `Advance’, together with interest is `Financial Debt’, and the `Corporate Debtor’, is in `Default’, in repayment of the same.

# 12. The Learned Counsel for the Appellant, raises an argument that the `Adjudicating Authority’ / `Tribunal’, had not taken into account of the fact that the `existence of dispute’ or `pendency of arbitration’, are relevant factors, to be considered for `Admission’ of `Claim’. In short, the pending `Arbitral Proceedings’, do not impede the `Admission’ of the `Appellant’s Financial Claim’ or its `participation’, in the `Committee of Creditors’, in any manner.

# 13. The other contention, advanced on behalf of the Appellant is that, it is the duty of the `Respondent / Resolution Professional’, to admit the `Appellant’s Financial Claim’, in terms of Section 18 of the I & B Code, 2016, and the `Appellant’, is entitled to participate in the CoC as per Section 21.

# 14. The Learned Counsel for the Appellant proceeds to point out that the `non-consideration’ of the `Appellant’s Financial Claim’, because the same is a `Disputed Claim’ or `Pending Adjudication’, is `unlawful’ one and `opposed’ to `Law’,

# 16. The Learned Counsel for the Appellant projects an argument, that the `impugned order’, is contrary to `Law’, that even if a `Financial Debt’, is `Disputed’, it must be recognised as such, if there is a `Default’, in its `Payment’.

# 17. The Learned Counsel for the Appellant, adverts to Regulation 14 of the `Corporate Insolvency Resolution Process Regulations’, the `Resolution Professional’, is mandated to determine the Sum `Claimed by a Creditor which is not precise due to any contingency or other reason’, based on `best estimate of the amount of the claim based on the information available with him’.

# 18. The Learned Counsel for the Appellant comes out with a plea that the Resolution Professional, under the I & B Code, 2016, has `no Adjudicatory Powers’, and instead is given only the `Administrative Powers’. Also that, the `Resolution Professional’, has no `Jurisdiction’, to `Decide’, the `Claim’, and he could only `Collate’, the `Claim’, based on `Evidence and Record’ of the `Corporate Debtor’.

# 19. The Learned Counsel for the Appellant, refers to the decision of this `Tribunal’, in S. Rajendran, Resolution Professional of PRC International Hotels Private Limited v. Jonathan Mouralidarane, reported in 2019, SCC Online NCLAT 758, wherein at Paragraph 3, it is observed as under:

• 3. “Having heard learned Counsel for the Appellant, we are of the opinion that the ‘Resolution Professional’ had no jurisdiction to “determine” the claim as pleaded in the Appeal. He could have only “collated” the claim, based on evidence and the record of the ‘Corporate Debtor’ or as filed by Jonathan Mouralidarane (‘Financial Creditor’). If an aggrieved person thereof moves before the Adjudicating Authority and the Adjudicating Authority after going through all the records, comes to a definite conclusion that certain claimed amount is payable, the ‘Resolution Professional’ should not have moved in Appeal, as in any manner, he will not be affected.’’

# 20. The Learned Counsel for the Appellant, while summing up, points out that there is no provision under I & B Code, 2016, or `Corporate Insolvency Resolution Process Regulations’, empowering the `Respondents’, to keep a `Claim’, under `abeyance’, and because of the fact that the `Respondent / Corporate Debtor’, had not denied the `Debt’, as well as `Default’, and prays for `allowing’ of the instant `Appeal’, for meeting the `ends of Justice’.

# Appellant’s Citations:

# 21. The Learned Counsel for the Appellant, cites the decision of the Hon’ble Supreme Court of India, in Innoventive Industries Limited v. ICICI Bank & Anr. 2018 1 SCC, at Page 407, Spl. Pg. 438, wherein, at Paragraphs 28 & 30, it is observed as under:

• 28. “ ….. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is  incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority…..’’

• 30. ……. It is of no matter that the debt is disputed so long as the debt is “due” i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date…..’’

# 22. The Learned Counsel for the Appellant, refers to the Judgment of the Hon’ble Supreme Court dated 09.08.2019, in Pioneer Urban Land and Infrastructure Limited v. Union of India (vide Writ Petition (Civil) No. 43 of 2019, wherein, at Paragraph 60, it is observed as under:

• 60. “Thus, in order to be a “debt”, there ought to be a liability or obligation in respect of a “claim” which is due from any person. “Claim” then means either a right to payment or a right to payment arising out of breach of contract, and this claim can be made whether or not such right to payment is reduced to judgment….’’

# 23. The Learned Counsel for the Appellant, relies on;

• (a) Judgments of this `Tribunal’, dated 14.08.2018 (vide Comp. App (AT) (INS.) No. 304 of 2017, in the matter of Export Import Bank of India v. Resolution Professional, JEKPL Private Limited;

• (b) Edelweiss Asset Reconstruction Company Limited v. V. Mahesh & Ors., (vide Comp. App (AT) (INS.) No. 226 of 2021 dated 13.12.2021), for the proposition, that a `Claim’, can be made, whether or not, it is reduced to `award’ / `judgment’, and further that the `Existence of Dispute’ or `Maturity of Claim’, is not a `relevant factor’, to be considered for `admission’ / `collation’ of `Claims’.

# 25. The Learned Counsel for the Appellant, adverts to the `Order’, dated 30.06.2017, in CP (IB) No. 156 (PB) / 2017 of the National Company Law Tribunal, Principal Bench, New Delhi, reported in (2017) SCC Online NCLT 185 and the `Order’, dated 19.01.2021 of the National Company Law Tribunal, in CP (IB) No. 33 /7 / HDB 2020, reported in 2021, SCC Online NCLT for the contention that Section 7 Petitions of the `Code’, were admitted, despite the pendency of `Arbitration’.

# 26. The Learned Counsel for the Appellant, refers to the decision in Tamil Nadu Generation and Distribution Corporation Limited v. Savan Godiawala, Liquidator – Lanco Infratech Limited, 2020 SCC Online NCLT 7674, wherein, at Paragraph 22, it is observed as under:

• 22. “In the reply the Liquidator stated that there must be a decree of civil court or an award passed by the Arbitrator determining the damages. It is the case of the Liquidator that a party which claims damages for non-performance of contract shall, at the first instance, get the damages determined either by civil court or by Arbitrator. Till then, it is a mere right to sue for damages. In this connection the Liquidator relied on decision of the Hon’ble Apex Court in the matter of Union of India v. Raman Iron Foundry, (1974) 2 SCC 231 : AIR 1974 SC 1265. It is true that damages for breach of contract is not a debt unless determined by civil court or Arbitrator. In this case, there is no decree in favour of the applicant determining the damages by civil court or award by Arbitrator determining damages. So this issue cannot be resolved by the Liquidator. The applicant has not so far obtained decree or award against the Corporate Debtor, with regard to damages suffered on account of failure to perform the contract.’’

# 27. The Learned Counsel for the Appellant, seeks in aid of the decision in Bank of India v. Shrenuj and Company Ltd., (2019) SCC Online NCLT 3264, to fortify his plea that ``a Claim for damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree / order of a `Court’ / `Adjudicating Authority’. ’’

Assessment:

# 28. Before the `Adjudicating Authority’ / `Tribunal’, the `Appellant / Petitioner’, had filed IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021 (under Section 60 (5) of the I & B Code, 2016, r/w. Rule 11 of NCLT Rules, 2016, seeking for passing of an `Order’;

“(a) in directing, the Resolution Professional (of the Corporate Debtor), to admit the amount claimed by the Applicant, i.e., an amount of INR 33,98,16,438.35 (Rupees Thirty-Three Crores Ninety-Eight Lacs Sixteen Thousand Four Hundred Thirty Eighty and Thirty-Five paise only) being the total outstanding amount payable till November 17, 2021, the date of commencement of the CIRP, or such other amount as this Hon’ble Tribunal finds just and fair.

(b) in directing, the Resolution Professional to revise and update the list of creditors and admit the Applicant to the CoC, with voting rights proportionate to its claims as determined under Regulations 16 of the CIRP Regulations, 2016;

(c) Pending grant of prayers (a) and (b) above, to stay further proceedings of the CoC and restrain it from holding any meeting.’’

# 29. It transpires that on 17.11.2021, the `Adjudicating Authority’ / `Tribunal’, had initiated the `Corporate Insolvency Resolution Process’, against the `Respondent / Corporate Debtor’, appointed an `Interim Resolution Professional’ and declared `Moratorium, as per Section 14 of the I & B Code, 2016.

# 30. Before the `Interim Resolution Professional’, the `Appellant / Financial Creditor / Petitioner’, submitted a `Proof of Claim’, to the `Interim Resolution Professional’, in Form-C of the `CIRP Regulations’ on 01.12.2021, and the details of the same, are as under:

Particulars	Amount (in INR)
Amount advanced on February 6, 2015	17,50,00,000/-
Interest @ 10% per annum till date of default (August 3, 2018)	6,10,82,191.78/-
Default Interest @ 18% per annum till commencement of Insolvency (November 17, 2021)	10,37,34,246.57/-
Total Claim	33,98,16,438.35/-

# 31. According to the Appellant, it was mentioned in the proof of `Claim’, that the `entirety’ of the `Debt’, is covered by the `Guarantee’, furnished by the `Promoters of the Corporate Debtor’, and its `Related Party’ (Viz. Scarpe Marketing Private Limited).

# 32. It is represented on behalf of the Appellant that despite the baseless `Claim’ of the `Interim Resolution Professional’, that `no proof’, was attached in regard to the `Existence of Debt’, the `Appellant / Petitioner’, had resubmitted the relevant documents, and submit further `clarification’ and `information’, in their `Reply’, to the letter of the `IRP’, dated 8th December 2021, so as to facilitate the process of collation of claims, as undertaken by the `Resolution Professional’.

# 33. Furthermore, the `Interim Resolution Professional’, by denying the `Appellant’s Claim’, deprived it of its place, in the `Committee of Creditors’, which, it is entitled to, as a `Financial Creditor’, and this has caused, an `irreparable harm’, to the `Appellant’.

# 34. Before the `Adjudicating Authority’, the `Respondent / Resolution Professional’ of the `Corporate Debtor’, in the `Counter’ to IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, had mentioned that only after the `Respondent’, came to know that there is an `Arbitration Proceedings’, initiated by the `Appellant’ / `Applicant’, which is pending, the `Respondent / Resolution Professional’, had kept the `Financial Claim’ of the `Appellant’, in `abeyance’.

# 35. Added further, the `Resolution Professional’, had filed an `Arbitration Application’, informing the `Arbitral Tribunal’, about the `Initiation’ of `Corporate Insolvency Resolution Process’ and `Moratorium’, under Section 14 of the I & B Code, 2016, and that the `Arbitral Tribunal’, had dismissed the `Application’, through an `Order’, dated 14.01.2022, and continued the `Arbitration Proceedings’.

# 36. The clear cut stand of the Respondent is that, he took all measures to collate, verify, determine all the `Valid Claims’, which were submitted for the `Payment’, in the `Corporate Insolvency Resolution Process’ of the `Corporate Debtor’, and complied with the Provisions of the `Code’, in a meticulous manner. Because of the Appellant’s `Claim’, is pending before the `Arbitral Tribunal’, and the outcome of the said Proceedings will determine, whether the `Claim’, is to be `admitted’ or `rejected’, and if it is to be `admitted’, what is the quantum of `Money Claimed’ and `Interest’? As such, the `Respondent / Resolution Professional’, was not in a position, to `admit’ / `reject’ the `Claim’, and hence, kept in `abeyance’.

# 37. The other stand of the Respondent / Resolution Professional is that, because of the pending `Arbitration Proceedings’, the IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021 (filed by the `Appellant / Petitioner’), became an `Infructuous’ one.

# 38. To be noted, that the `Appellant / Petitioner’, is a `Financial Creditor’, who furnished its `Claim’, before the `Resolution Professional’, and the same was kept in `abeyance’, by the said `Professional’, on the basis that `Arbitration Proceedings’, are pending, wherein, the `counterclaim’ of the `Corporate Debtor’, is pending `determination’.

# 39. In the instant case, the very fact that the `Appellant’s Claim’, cannot be admitted, till the `counterclaim’ of the `Corporate Debtor’, is determined, which may end in `set off’ of the `Sum’, payable to the `Appellant / Petitioner’, the plea of the `Respondent / Resolution Professional’, cannot be brushed aside and in an emergency and also when a situation arises, the `Resolution Professional’, is within his `power’ and `limit’, to keep the `Claims’, in `abeyance’, for plurality of reasons.

# 40. As far as the present case is concerned, this `Tribunal’, on a careful consideration of the contentions advanced on behalf of the `Appellant / Petitioner’, and also this `Tribunal’, keeping in mind of the stand taken by the `Respondent / Resolution Professional’, before the `Adjudicating Authority’, vide its `Counter’ to the IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, comes to a consequent conclusion that the action of the `Resolution Professional’, in keeping the `Claims’, in `abeyance’, because of the pending `Arbitration Proceedings’, in regard to the `counterclaim’ of the `Corporate Debtor’, only after which, the `Claim Sum’ of the `Appellant’, can be determined with certainty, the `Reliefs’, prayed for, by the `Appellant / Petitioner’, pertaining to `admission’ of the `Claim’, cannot be `acceded to’, in the `eye of Law’. Viewed in that perspective, the `impugned order’, dated 02.12.2022 in IA (IBC) No. 155 / 2022 in CP (IB) No. 58 / 9 / AMR / 2021, passed by the `Adjudicating Authority’ (`National Company Law Tribunal’, Amaravati Bench), in `dismissing’, the `Interlocutory Application’, is free from any flaw. Accordingly, the instant `Appeal’, fails.

Result:

In fine, the instant Comp. App (AT) (CH) (INS.) No. 12 of 2023, is `Dismissed’. No costs. The IA No. 26 of 2023 (For Stay) is `Closed’.

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