Mr. Umesh Kumar vs Mr. Narendra Kumar Sharma

Company Appeal (AT) (Insolvency) No. 100 of 2024

[Arising out of order dated 21.11.2023 passed by the Adjudicating Authority, National Company Law Tribunal, New Delhi Bench - II in IA No.3594/2022 of CP (IB) No. 1397(PB)/2019]

IN THE MATTER OF:

Mr. Umesh Kumar B-22, Sector-72, Noida, Uttar Pradesh ...Appellant

Versus

Mr. Narendra Kumar Sharma, Insolvency Resolution Professional of Indirapuram Habitat Centre Pvt. Ltd. At M/s NK Associates, 112A, Udyog Vihar, Phase-V, Gurgaon ...Respondent

Present:

Appellant: Ms. Nattasha Garg, Mr. Thakur Ankit Singh, Mr. Srikant Singh, Ms. Shristy Singh, Advocates.

Respondent: Mr. Sumesh Dhawan, Mr. Praful Jindal, Mr. Shaurya Shyam, Advocates along with Mr. N.K. Sharma, RP.

JUDGMENT

[Per: Barun Mitra, Member (Technical)]

The present appeal filed under Section 61 of Insolvency and Bankruptcy

Code, 2016 ("IBC" in short) by the Appellant arises out of the Order dated

Company Appeal (AT)(Ins.) No. 100 of 2024 1 21.11.2023 (hereinafter referred to as "Impugned Order") passed by the

Adjudicating Authority (National Company Law Tribunal, New Delhi Bench -

II) in IA No.3594/2022 of CP (IB) No.1397(PB)/2019. By the impugned order,

the Adjudicating Authority rejected the application filed by the Appellant, an

Operational Creditor, seeking acceptance of their claims which had been

rejected by the Respondent/Resolution Professional. Aggrieved by the

impugned order, the present appeal has been filed by the Appellant.

2. The Learned Counsel for the Appellant submitted that the Appellant

was hired as a media management consultant on a monthly retainership of

Rs.10 lakhs per month for which purpose the Appellant had entered into a

Consultancy Agreement ("Agreement" in short) with the Corporate Debtor on

01.06.2016. It was further submitted that in pursuance of the said

Agreement, monthly payments had also been received from the Corporate

Debtor from June 2016 to April 2018. After the Corporate Debtor was

admitted into insolvency, the Resolution Professional ("RP" in short) invited

claims. The Appellant filed claims vide email dated 28.03.2020 along with

documents and the invoices for the relevant period which was also

acknowledged by the RP on the same date. It has been contended by the

Learned Counsel for the Appellant that the RP on his own had never requested

the Appellant to provide further information or documents. Submitting that

though the Appellant had been corresponding with the RP in respect of his

claims, the RP did not convey any confirmation nor was any query raised until

in response to a letter sent on 01.09.2020 to the RP seeking status of his

claims, the RP replied on 14.09.2020 rejecting the claims of the Appellant

Company Appeal (AT)(Ins.) No. 100 of 2024 2 after arbitrarily questioning the legitimacy of the Agreement and the invoices

raised.

3. Submission was made that the Corporate Debtor had been availing

services of the Appellant and making payments for these services by routing

them through the banking channel to the Appellant. Payments by the

Corporate Debtor was interrupted only due to deterioration of their financial

condition. The bank statements and related invoices clearly evidence regular

payments made by the Corporate Debtor to the Appellant. It was submitted

that the RP failed to consider documents such as bank statements, GST

statements etc. which show that the Agreement was in operation between the

Appellant and the Corporate Debtor. The Appellant had been performing their

services to the satisfaction of the Corporate Debtor which never raised any

objection/dispute or made complaints regarding deficiency of services. Under

such circumstances, it was unwarranted on the part of the RP to seek proof

of services particularly when the Corporate Debtor had never raised any

concerns. It was submitted that Section 18 of the IBC which lays down the

duties of the IRP does not provide any scope for adjudication of claims by

calling for proofs of services. The RP was only authorized to vet and verify the

claims and determine the amount of each claim but did not enjoy powers to

adjudicate upon the claim of the Appellant.

4. It is also contended that the RP could not have questioned and

challenged the existence of the Agreement at a time when the Agreement had

been acted upon by the Corporate Debtor and the Appellant as borne out by

their previous transactions. Moreover, since there is no evidence on record to

show that the Agreement was terminated, the RP was not entitled to deny the

Company Appeal (AT)(Ins.) No. 100 of 2024 3 claim arising out of the services rendered in the light of the Agreement. The

RP by rejecting the claim filed by the Appellant at a time when there was no

dispute on the Agreement had not acted in accordance with the CIRP

Regulations. It was further asserted that though Regulation 13 of the

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for

Corporate Persons) Regulations, 2016 (hereinafter referred to as "CIRP

Regulations") entailed upon the RP to verify every claim as on the insolvency

commencement date, in the present matter, the RP had failed to properly

evaluate and verify the claims of the Appellant though these documents were

part of the records of the Corporate Debtor and hence available to the RP.

5. It was further submitted that though the Adjudicating Authority had

directed the RP on 11.05.2022 to again consider the claims filed by the

Appellant, the RP summarily rejected the claim on 27.06.2022 without

considering the documents and various proofs of service already submitted

by the Appellant. It was submitted that the RP had exceeded its powers by

seeking proof of services as it amounted to adjudication of the claim filed by

the Appellant.

6. The Learned Counsel for the Respondent refuting the contentions of the

Appellant submitted that the Appellant had failed to validate their claims by

failing to provide supporting documents to substantiate the imaginary

services as claimed to have been performed by the Appellant at exorbitant

costs. It was emphatically asserted that the documents provided by the

Appellant to establish their claims were not part of the records of the

Corporate Debtor. Hence, admission of such claims of the Appellant pursuant

to a sham agreement for performance of services without verification would

Company Appeal (AT)(Ins.) No. 100 of 2024 4 impact other legitimate claimants of the Corporate Debtor. It was therefore

justifiable on the part of the RP to put the Appellant to strict proof regarding

the documents supplied along with their claim form.

7. It was also strenuously contended that the Agreement dated

01.06.2016 could not be relied upon since it was in the name of one M/s

Victory Projects and hence the Corporate Debtor could not be bound by such

a fabricated Agreement. It was further pointed out that the representative of

the Corporate Debtor who had executed the Agreement was also not

authorized through a board resolution and hence the Agreement lacked legal

validity and its veracity was questionable.

8. We have duly considered the arguments advanced by the Learned

Counsel for the parties and perused the records carefully.

9. The moot point for consideration before us is whether the process and

manner of treatment of the claims by the RP in respect of the claims filed by

the Appellant is violative of the provisions of the IBC.

10. Before we proceed to dwell on the sustainability of the rival contentions,

it may be useful to look at the relevant statutory provisions of the IBC which

lays down the various duties of the IRP in respect of handling claim proposals.

Section 18(1)(b) lays down that IRP shall "receive and collate all the claims

submitted by creditors to him, pursuant to the public announcement made

under Sections 13 and 15." Amplifying further the role of the RP in this regard,

Section 25(1) of the IBC lays down that "it shall be the duty of the resolution

professional to preserve and protect the assets of the corporate debtor,

including the continued business operations of the corporate debtor." Further

Section 25(2) (e) and (g) provides that the RP shall undertake to "maintain an

Company Appeal (AT)(Ins.) No. 100 of 2024 5 updated list of claims" and "prepare the information memorandum in

accordance with Section 29".

11. Equally pertinent to note are the relevant CIRP Regulations in this

regard which are as extracted below:

"7. Claims by operational creditors. - (1) A person claiming to be an operational creditor, other than workman or employee of the corporate debtor than workman or employee of the corporate debtor, shall submit claim with proof to the interim resolution professional in person, by post or by electronic means in Form B of the Schedule I. Provided that such person may submit supplementary documents or clarifications in support of the claim before the constitution of the committee.

(2) The existence of debt due to the operational creditor under this Regulation may be proved on the basis of-

(a) the records available with an information utility, if any; or

(b) other relevant documents, including-

(i) a contract for the supply of goods and services with corporate debtor;

(ii) an invoice demanding payment for the goods and services supplied to the corporate debtor;

(iii) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any; or

(iv) financial accounts.

(v) copies of relevant extracts of Form GSTR-1 and Form GST-3-B filed under the provisions of the relevant laws relating to Goods and Services Tax and the copy of e-way bill wherever applicable:

Provided that provisions of this sub-clause shall not apply to those creditors who do not require registration and to those goods and services which are not covered under any law relating to Goods and Services Tax.

10. Substantiation of claims. - The interim resolution professional or the resolution professional, as the case may be, may call for such other evidence or clarification as he deems fit from a creditor for substantiating the whole or part of its claim.

Company Appeal (AT)(Ins.) No. 100 of 2024 6

12. Submission of proof of claims. - (1) A creditor shall submit claim with proof on or before the last date mentioned in the public announcement.

Provided that a creditor, who fails to submit claim with proof within the time stipulated in the public announcement, may submit his claim with proof to the interim resolution professional or the resolution professional, as the case may be, up to the date of issue of request for resolution plans under regulation 36-B or ninety days from the insolvency commencement date, whichever is later;

Provided further that the creditor shall provide reasons for delay in submitting the claim beyond the period of ninety days from the insolvency commencement date.

13. Verification of claims. - (1) The interim resolution professional or the resolution professional, as the case may be, shall verify every claim, as on the insolvency commencement date, within seven days from the last date of the receipt of the claims, and thereupon maintain a list of creditors containing names of creditors along with the amount claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims, and update it."

12. Now that we have noted the statutory provisions of IBC and the relevant

CIRP regulations, we proceed to analyze the rival contention of the two parties.

It is the contention of the Appellant that Regulation 7 of CIRP Regulation

requires the creditor to only submit proof of debt and not proof of service. The

proof of debt had already been met by way of submission of documents like

invoices, Bank & GST statements etc. The RP could not have asked for proof

of service as that would amount to adjudication of claims which is beyond the

scope of the RP's jurisdiction. Thus, by demanding proof of services, the RP

in the present case travelled beyond the statutory regulations. Emphasis was

also laid on the fact that the Hon'ble Supreme Court of India in Swiss

Ribbons Pvt. Ltd. & Anr. v. Union of India & Ors., AIR (2019) 4 SCC 17

('Swiss Ribbons' in short) has held that the RP has no adjudicatory powers.

Company Appeal (AT)(Ins.) No. 100 of 2024 7 Hence, the RP in arbitrarily rejecting the bona-fide claims of the Appellant

went beyond the statutory provisions and exercised adjudicatory powers at a

time when the RP only had administrative powers.

13. Submission was also pressed that the Adjudicating Authority also failed

to appreciate that the RP did not carry out the duty of examining the books

of accounts of the Corporate Debtor which shows continuous payment made

by the Corporate Debtor to the Appellant and deposit of GST for the period

2016-2019. The question of proof of services would have arisen only if the

services were ever disputed by the Corporate Debtor. The Learned Counsel for

the Appellant submitted that it is also aggrieved with the impugned order on

the ground that the Adjudicating Authority had held the Agreement to be a

nebulous document. When the validity of the Agreement was not challenged

either by the Corporate Debtor nor the RP, it was asserted that it was not

within the scope and jurisdiction of the Adjudicating Authority to hold the

Agreement to be nebulous and put question marks on its formatting etc.

Moreover, as the Corporate Debtor had executed the Agreement and was

adhering to the terms of the Agreement without any demur, on being admitted

into CIRP, the RP had merely stepped into the shoes of the Corporate Debtor

and therefore could not have questioned the Agreement.

14. Rebutting the contentions of the Appellant, it was submitted by the

Learned Counsel for the Respondent that towards enhancing the credibility of

the insolvency process, the RP has the duty to analyze the evidence placed

before him and to call for additional evidence, if required, before deciding on

the admissibility of the claims of the creditors. The RP is therefore duty bound

Company Appeal (AT)(Ins.) No. 100 of 2024 8 to verify the invoice and other supporting documents while collating claims

before placing the same before the CoC.

15. Advancing their arguments further, it was pointed out that in the

present case, the Appellant had only submitted a copy of the Agreement and

one composite invoice with the description of "Management Consulatancy"

dated 25.08.2020 as placed at pages 128-129 of the Appeal Paper Book

("APB" in short) to support their claim. However, since the invoice did not

form part of the record the Corporate Debtor, the claim could not be accepted

by the RP at face value and hence, further supporting documents were called

for. Submission was also pressed that the RP had consistently raised the issue

of deficiency of documentation and hence sought proof to verify the services

allegedly performed by the Appellant. It was contended that the Appellant did

not avail the opportunities provided to substantiate their claims as their

claims were bogus and fabricated.

16. If we look at the statutory construct and the regulatory framework of

the IBC, broadly speaking, we find that the mandate of the RP includes

receiving, collating, and verifying the claims received by him during CIRP. It

is also settled law that the RP is not vested with adjudicatory powers as

decided in the Swiss Ribbons judgement of the Hon'ble Apex Court. The RP

is required to prepare a list of creditors on the basis of the proofs of claim

submitted before it. Basis these claims, it is the responsibility of the RP to

publish the Information Memorandum so that a genuine resolution applicant

gets an accurate idea about the amount that has to be settled in order to take

over and revive the business of the Corporate Debtor.

Company Appeal (AT)(Ins.) No. 100 of 2024 9

17. Given this mandate, the role of the RP becomes vital to the efficient and

transparent conduct of the CIRP process. When claims are submitted to the

RP, even though there are no adjudicatory powers vested on the RP in respect

of the claims filed before him, it remains undisputed that there is an express

provision in the CIRP Regulations which enables RP to seek information

towards establishment of the correctness of a claim. The RP is entitled to seek

substantiation of claims under Regulation 10 of CIRP Regulations. The duty

to verify the claims by the IRP/RP has also been expressly provided under

Regulation 13 of the CIRP Regulations. This verification exercise entails upon

the RP the responsibility to go through the supporting proof/documents to

establish the truth and accuracy of information contained therein in support

of the claim so filed. On verification, if the RP finds that the evidence given in

support of a claim is weak and unconvincing, the RP can always ask for more

proof to substantiate the claim. Towards substantiating a claim, a creditor is

ordinarily expected to provide proof to make it solid or believable. If credible

and satisfactory evidence is not forthcoming from the creditor in spite of

adequate opportunity made available to provide the same, the RP can always

keep in abeyance the decision to accept/reject the said claim.

18. At this stage, we may examine whether the RP had summarily rejected

the claim of the Appellant or made justifiable and bonafide efforts to obtain

additional information from the Appellant towards verification of the claim.

We may also concurrently proceed to examine whether the Appellant was

sufficiently forthcoming in providing the requisite information to substantiate

their claim. This exercise would necessitate going through the various

correspondence exchanged between the Appellant and the RP.

Company Appeal (AT)(Ins.) No. 100 of 2024 10

19. On 28.03.2020 the Appellant had submitted his claim for consultancy

and intimated the RP that all invoices raised in the past including GST details

have been sent. We find that on 28.03.2020, the RP addressed a letter to the

Appellant seeking documents so as to collate and verify their claims other

than what had already been submitted. These emails are placed at pages 123-

127 of the APB. On 25.08.2020, the Appellant again sent an email to the RP

enclosing GST invoice for consultancy till the month of August 2019 as placed

at pages 128-129 of the APB. We find that this tax invoice was a single invoice

for the period June 2018 to August 2019. We also find that in the "Service

Description" column of the invoice, only the words "Management

Consultancy" has been stated without giving any further details.

20. We notice that thereafter a communication dated 01.09.2020 was

served upon the RP on behalf of the Appellant seeking status of the claims

filed by them as at pages 130-134 of the APB. The RP on 14.09.2020 sent a

reply explaining that the reason for non-admission of the alleged claim of the

Appellant was on account of no documents having been submitted by the

Appellant as placed on record at pages 135-138 of the APB and the relevant

excerpts are as reproduced below:

"Amit Punj Advocate C-139, 3rd Floor, Hari Nagar, New Delhi - 110064

Speed post/Courier/Email 14.09.2020

Ms. Nattasha Garg, Advocate C-177, LGF, Suit # F, Defence Colony, New Delhi - 110 024.

Company Appeal (AT)(Ins.) No. 100 of 2024 11 Re: Your legal notice dated 01.09.2020, issued by you on behalf of your client Mr. Umesh Kumar, R/o Pant House 2, Tower-19, ATS Advantage, Indirapuram, Ghaziabad, U.P.

My Client: Shri Narender Kumar Sharma, Resolution Professional, Indirapuram Habitat Centre Pvt. Ltd.

Dear Sir,

My above named client.............

It is stated that the Corporate Debtor's records, checked by my client reveals that there is no document or proof, available with the CD or in its records, which even minutely shows that any kind of services were ever provided by your client to the CD at any point of time. It is stated that even along with the Claim Form submitted by your client as Operational Creditor, no proof, whatsoever, was annexed which could establish providing any kind of services by your client to CD. Upon requisition, your client merely furnished the alleged Agreement dated 01.06.2016 and unilateral invoices made by your client. It is stated that your client was supposed to furnish proofs of providing actual services under the said alleged agreement, which he has failed to furnish. It is stated that in order to verify the claims of your client, the proofs of providing actual services by your client under the alleged agreement, would be required."

......

Yours faithfully, (Amit Punj) Advocate"

(Emphasis supplied)

In the said reply, it was also clarified by the RP that the claims of the Appellant

are still at the stage of verification and only after the same was verified it

would be updated and uploaded on the site. In the said reply it has been

denied that any amount was due or payable to the Appellant by the Corporate

Debtor.

21. From the material available on record, we find that the Appellant sent

yet another legal notice dated 19.01.2021 reiterating their claims as placed at

Company Appeal (AT)(Ins.) No. 100 of 2024 12 pages 195 of the APB. This legal notice was again responded to by the RP on

22.01.2021 as placed at pages 197-200 of the APB wherein the RP again

sought from the Appellant documents evidencing the performance of services.

The relevant portions of the said letter is reproduced below:

"AMIT PUNJ ADVOCATE E.NO. D-591/2000 C-139, 3 FLOOR, HARI NAGAR, NEW DELHI-110064 МОБ: 9810524966 EMAIL: mit.punj@yahoo.com

SPEED POST/COURIER/E-MAIL 22.01.2021

MS. NATTASHA GARG, ADVOCATE, C-177, LGF, SUIT #F DEFENCE COLONY, NEW DELHI-110024.

RE: YOUR LEGAL NOTICE DATED 19.01.2021, ISSUED BY YOU ON BEHALF OF YOUR CLIENT MR. UMESH KUMAR, R/O PANT HOUSE 2, TOWER-19, ATS ADVANTAGE, INDIRAPURAM, GHAZIABAD, U.P., ALSO ON BEHALF OF HIS WIFE MS. SONTA KUMAR

MY CLIENT: SH. NARENDER KUMAR SHARMA, RESOLUTION PROFESSIONAL, INDIRAPURAM HABITAT CENTRE PVT. LTD.

Dear Sir,

My above named client has placed in my hands, your aforesaid legal notice, with the instructions to send you proper and appropriate reply, in response thereto, which is as under:

At the outset, it is stated that the legal notice served by you upon my client, for and on behalf of your client, is absolutely false, frivolous, vexatious and misconceived. It is further stated that the matter in issue i.e. the alleged dispute being raised by you by way of this legal notice is pending adjudication before the Hon'ble NCLT, New Delhi, on an application filed by and on behalf of your client only. It is, as such, stated that till the pendency of the said application, your clients ought to have restrained themselves from issuing the legal notice under reply.

Company Appeal (AT)(Ins.) No. 100 of 2024 13 It is stated that the Corporate Debtor's records, checked by my client reveals that there is no document or proof, available with the CD or in its records, which even minutely shows that any kind of services were ever provided by your client to the CD at any point of time. It is stated that even along with the Claim Form submitted by your client as Operational Creditor, no proof, whatsoever, was annexed which could establish providing any kind of services by your client to CD. Upon requisition, your client merely furnished the alleged Agreement dated 01.06.2016 and unilateral invoices made by your client. It is stated that your cilent was supposed to furnish proofs of providing actual services under the said alleged agreement, which he has failed to furnish. It is stated that my client found the aforesaid claims of your client frivolous and vexatious and as such, vide letter dated 14.09.2020, the aforesaid claims of your client were denied. It was also made clear that in view of denial of all claims of your client, there arose no question to set off the payments payable to my client by Ms. Sonia Kumar from the aforesaid claims of your client........

..................................

.................................

Your faithfully,

(Amit Punj) Advocate"

(Emphasis supplied)

22. The Appellant had also filed IA No. 5589/2020 before the Adjudicating

Authority praying for directions to be given to the RP to admit their claim from

May 2018 to August 2020 amounting Rs.1.90 crore along with interest. This

matter was disposed of by the Adjudicating Authority dated 11.05.2022 with

a direction to the RP to consider their claims along with the documents and

decide the claim within a period of one month. In compliance to the directions

of the Adjudicating Authority, the claim of the Appellant was accordingly re-

considered by the RP on 27.06.2022 and reiterated that the Appellant did not

annex any document with the claim form evidencing any proof of services

Company Appeal (AT)(Ins.) No. 100 of 2024 14 actually rendered as placed at Annexure A-21 at pages 235-240 of the APB.

At para 11 of the said reply, the following has been minuted:

"Despite the numerous opportunities having been granted by the RP and various communications having been made informing the reasons for which the claim could not have been admitted, Mr. Umesh Kumar failed to provide any document to showcase the services that they claim to have provided to the Corporate Debtor. For the purposes of abundant caution, the RP also deems it necessary to specify that the only documents on which the Applicant has been basing his claim are the indeterminate and obscure Agreement and certain unilateral invoices. Therefore, the same cannot be relied upon."

23. Perusal of the above correspondences mentioned in the preceding

paragraphs show that the RP had made it clear, time and again, that due to

want of documents in support of their claims, the RP was unable to verify the

claims of the Appellant. However, the Appellant failed to comply to the

persistent request of the RP for documents. It was pointed out by the Learned

Counsel for the Respondent that apart from unilaterally sending a composite

invoice, the details of the services provided were not adequately explained by

the Appellant except for enclosing a set of random snapshots of television

news which find place at page 78-83A of the APB as against the scope of work

claimed by the Appellant to be one which included generating positive stories,

crisis management, tracking competitor news, overall media management etc.

A glance at the proof of services provided on the other hand shows that it

contained few newspaper advertisements on a film promotion. Moreover, all

these advertisements are dated 05.03.2017 while the invoices pertain to a

later period. Given this backdrop, the skepticism on part of the RP about the

Company Appeal (AT)(Ins.) No. 100 of 2024 15 genuineness of the claims cannot be questioned. We therefore find substance

in the contention of the RP that not only were these media clippings skeletal

and sketchy but that they were all issued on a single day while the invoice

submitted was in respect of services performed for a period which was spread

over more than one year.

24. After going through the invoices, the RP was of the view that there were

no underlying records and hence undertook to verify the genuineness of the

claims. We are of the considered opinion that the RP is not expected to rubber

stamp the claims filed by the creditors without exercising due diligence while

examining the invoices. By merely filing their claims, the creditor cannot rest

on its oars and refrain from providing further evidence if it so sought by the

RP by taking shelter on the ground that the RP lacks adjudicating powers. If

such basic verification is not done, the logical corollary is that the Information

Memorandum is likely to be defective and flawed thereby having

consequential adverse impact on the CIRP process. Allowing such perfunctory

submission of invoices without proper examination has the potential to defeat

the objectives of the IBC. At this juncture it may however not be out of place

to mention here that the observations made by the RP regarding the

Agreement basis which the Adjudicating Authority has termed the Agreement

as nebulous is not in order. We are of the considered opinion that examining

the validity/sustainability of any contractual agreement including its

formatting etc lies outside the purview of the charter of duties and

responsibilities of the RP. In fact, determination of the tenability/validity of a

contractual agreement falls in the realm of a civil dispute and therefore

outside the scope and jurisdiction of both the Adjudicating Authority and the

Company Appeal (AT)(Ins.) No. 100 of 2024 16 Appellate Tribunal. Be that as it may, this does not prevent the RP from

seeking additional information from any creditor to substantiate his claims.

25. In the present case, the Adjudicating Authority after considering in

detail the entire facts and circumstances and material on record has rightly

come to the conclusion that the claims submitted by the Appellant could not

have been admitted in the CIRP of the Corporate Debtor. This inadequacy of

documents to substantiate their claims by the Appellant has been noticed by

the Adjudicating Authority in the impugned order which is as reproduced

below:

"It is the stand of the RP that despite the opportunity, the Applicant could not produce any document to substantiate the services rendered by the Applicant to CD in terms of the aforementioned Consultancy Agreement.

We heard the rival submissions. Even now, we made efforts for twenty minutes to enable the Ld. Counsel for the Applicant to show any document to substantiate the plea of rendering service by the Applicant to CD in terms of the consultancy agreement, she could produce none. The documents to which our attention could be drawn (on pages No. 155-159 of the application) are certain news reports regarding film promotions by certain actors. We are unable to appreciate how the media news regarding promotion of certain films could be accepted as the "media service" rendered by the Applicant to CD. Thus, we find no infirmity in the conclusion drawn by the RP from the book of accounts and balance sheets of the CD, that he could not find any media service rendered by the Applicant to the CD during the period for which the consultancy fees are claimed."

(Emphasis supplied)

Company Appeal (AT)(Ins.) No. 100 of 2024 17

26. The IBC framework has endowed the RP with the cardinal

responsibility as facilitator of the CIRP process. This obligates the RP to take

reasonable care and diligence while performing his duties. That being so the

RP is very much required to undertake appropriate verification and analysis

of the claims filed. RP cannot afford to be unmindful of the fact that he is

expected to assist in the CIRP process in a fair and objective manner in the

best interest of all stakeholders. As an officer of the court vested with

administrative powers, the RP is expected to conduct the CIRP process with

fairness, diligence, forthrightness and highest sense of responsibility. It is

quite clear from the sequence of events in the present facts of the case that

the RP had been consistently pointing out that he is not in a position to verify

the claims due to want of documents substantiating the claims.

27. Prima-facie, we do not find any incidence of wilful negligence, or

deliberate stone-walling of the claims on the part of the RP in dealing with the

claim preferred by the Appellant. We entirely agree with the Adjudicating

Authority that the RP was well within his rights to exercise the discretion of

seeking additional information from the Appellant and for which purpose he

gave reasonable opportunity. The RP had made earnest and credible effort to

verify the claims submitted by the Appellant and his conduct stands in sharp

contrast to rather lacklustre effort by the Appellant in providing information

to substantiate his claim. Thus, the bona-fide and fairness of the RP cannot

be doubted. We are not inclined to agree with the obdurate stand taken by

the Appellant that the RP was not entitled to seek access to further details.

We do not find any error on the part of the Adjudicating Authority in affirming

the conclusion drawn by the RP that the hindrance faced by him in deciding

Company Appeal (AT)(Ins.) No. 100 of 2024 18 the claim of the Appellant was squarely on account of failure on the part of

the Appellant to hand over proof of alleged services.

28. In the light of the above discussions, we do not find any cogent grounds

which warrants any interference in the impugned order. The impugned order

passed by the Adjudicating Authority, not suffering from any infirmities, is

hereby affirmed. The Appeal being devoid of merit is dismissed. No order as

to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

Place: New Delhi Date: 13.02.2024 Ram N.

Company Appeal (AT)(Ins.) No. 100 of 2024 19