Pranav B Prem

The National Company Law Tribunal (NCLT), New Delhi Bench comprising Shri Manni Sankariah Shanmuga Sundaram (Judicial Member) and Shri Atul Chaturvedi (Technical Member), has held that a Resolution Professional (RP) is duty-bound to consider all relevant entries in the financial records of the Corporate Debtor while verifying claims submitted by creditors. The Tribunal made it clear that the RP cannot selectively rely on certain entries while rejecting others that favour the creditor, as such conduct is arbitrary and contrary to the principles of fairness and objectivity enshrined under the Insolvency and Bankruptcy Code, 2016 (IBC).

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The order came in response to an application filed under Section 60(5) of the IBC by Bharat Heavy Electricals Limited (BHEL) seeking directions to the RP to admit its claims as submitted in Form B. Alternatively, BHEL prayed for recognition of its claim based on entries in the books of account of the Corporate Debtor and an Interim Arbitral Award dated 27.07.2017.

BHEL submitted that the claim was not contingent, as it was supported by the Interim Arbitral Award which arose out of admitted liability by the Corporate Debtor and had not been stayed under Section 34 of the Arbitration and Conciliation Act, 1996. It was further submitted that the RP initially acknowledged the claim via emails but later admitted it at a notional value of Re. 1 without any new material or justification. BHEL argued that such rejection violated Regulation 14 of the CIRP Regulations, 2016, which requires the RP to make a best estimate of the claim amount when the exact amount is not ascertainable.

The RP, on the other hand, contended that the claims relating to Phase I and Phase II of the Nashik Project were still under adjudication, and therefore only a notional admission of Re. 1 was made in accordance with law. It was also argued that BHEL had wrongly asserted secured creditor status on the basis of lien and charge under the Transfer of Property Act and Sale of Goods Act.

After considering the submissions, the Tribunal noted that the claim arising from Phase II of the Nashik Project was supported by an Interim Arbitral Award that remained unstayed. The Delhi High Court had also upheld the same award in a related matter, lending further credibility to its validity. Additionally, the Tribunal found that the RP had previously acknowledged the claims via emails but later denied them without citing any new information or basis.

The Bench emphasized that under Regulation 7 of the CIRP Regulations, arbitral awards and financial statements are recognized as valid proof of debt. The Tribunal also referred to the Supreme Court’s decision in Bishal Jaiswal v. Asset Reconstruction Company (India) Ltd., where it was held that entries in balance sheets and books of accounts amount to acknowledgment of liability under Section 18 of the Limitation Act. The Tribunal held that this principle, although pronounced in the context of limitation, is equally applicable to the claim verification process under IBC when supported by contractual and arbitral documents.

Further, the Tribunal observed that the RP’s selective reliance on an entry showing ₹2.04 crore as recoverable from BHEL, while ignoring other entries that clearly recorded admitted liability under Phase I and Phase II, amounted to “cherry-picking.” The Tribunal held this approach to be contrary to the RP's obligation of impartiality and fairness in the verification process.

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Quoting directly from the judgment, the Bench stated:  “Cherry-picking selective book entries while rejecting others that favour the creditor is not only arbitrary but also contrary to the RP's obligation of fairness and objectivity in claim verification.”   Accordingly, the Tribunal allowed the application filed by BHEL and directed the RP to admit the claims based on the Interim Arbitral Award and financial records of the Corporate Debtor.

Appearance

For the Applicant: Mr. Amish Tandon, Ms. Anushree Kulkarni, Mr. Swankit Nanda, Advocates.

For the RP: Mr. Somesh Srivastava, Ms. Drishti Kaushik, Mr. Karan Gandhi, Mr. Ramakant Rai, Advs. 

Cause Title: Shapoorji Pallonji & Co. Private Limited V. Sinnar Thermal Power Limited And In The Matter Of Bharat Heavy Electricals Limited V. Rahul Jindal, Resolution Professional of Sinnar Thermal Power Limited 

Case No: I.A. NO. 782 OF 2025 IN C.P. IB NO 2561 (ND) OF 2019

Coram: Shri Manni Sankariah Shanmuga Sundaram [Judicial Member], Shri Atul Chaturvedi [Technical Member]