Illustratively, distinguishing the functions discharged by an Insolvency Professional and a liquidator, the Hon’ble Supreme Court in Swiss Ribbons (P) Ltd. v. Union of India observed that when the liquidator “determines” the value of claims admitted under Section 40, such determination is a “decision”, which is quasi-judicial in nature, and which can be appealed against before the NCLT under Section 42 of the Code. It was further observed that, unlike the liquidator, the Insolvency Professional cannot act in a number of matters without the approval of the committee of creditors under Section 28 of the Code. Thus, the resolution professional is really a facilitator of the resolution process, whose administrative functions are overseen by the committee of creditors and by the Adjudicating Authority.
Likewise, in NPGPL & Anr. v. Ram Ratan Modi, Liquidator of DCIPSPL & Anr, the Hon’ble NCLAT observed that the liquidator, unlike the Insolvency Professional, is required to admit or reject the claim on the basis of documentary evidence and that the role of the liquidator is quasi-judicial in contrast to the role of the Insolvency Professional which is administrative in nature.
What further merits deliberation in this connection is the decision rendered in Committee of Creditors of Essar Steel Limited v. Satish Kumar Gupta, wherein the Hon’ble Supreme Court accorded a contingent claim a notional value of INR 1/- pending adjudication. Subsequently, it became an accepted practice for insolvency professionals to admit contingent claims at a notional value of INR 1/. Taking recourse to the Essar judgment, liquidators also started adopting a similar practice, that is, admitting contingent claims at a notional value of INR 1/-.
The story changed with the ruling in Bharat Heavy Electricals Limited v. Anil Goel, the Liquidator of Visa Power Limited. In this case, a liquidator had rejected a part of the claim on the ground that the said claim was sub-judice before an arbitral tribunal. The NCLT Kolkata Bench, relying upon Swiss Ribbons (supra), overturned the decision of the liquidator, concluding that a liquidator while determining the value of a claim performs a quasi-judicial function and is obligated to decide the claim independently irrespective of the fact that the claim is sub-judice. The liquidator cannot simply cast a notional value on the pretext that the claim is sub-judice, the NCLT said.
Unsurprisingly, in Maharashtra State Electricity Distribution Company Limited v. Vijay Kumar Garg, Liquidator, Lanco Vidarbha Thermal Power Limited [2022 SCC OnLine NCLT 194], while the liquidator had rejected the claim of the appellant on the ground that the same was pending adjudication, the same being challenged under Section 42 before NCLT Hyderabad, it was held that the order passed by the liquidator was improper as the liquidator failed to consider the appellant’s claim on merits, merely on the ground that the said claim was sub-judice.
Source: Barandbench
