III.

ARGUMENTS ON BEHALF OF RESOLUTION PROFESSIONAL

ISSUES ON BEHALF OF RESOLUTION PROFESSIONAL-Ms.
ROSEMERY JOSEPH
1. WHETHER RP CAN REFUSE THE CLAIM OF VSCL?
The claim of VSCL arises out of breach of contract for loss of business and not
performing the PPA agreement.1 The agreement did not contain any fixed amount
for the compensation for breach of contract. In such situation the claim made by
VSCL was not within the due process of law. A person, who claims to be a
stakeholder, shall prove his claim for debt to him, including interest, if any, as on
the liquidation commencement date.2

Pertaining to the above sated facts it made it impossible for the resolution
professional to accept the claim. Also, the claim made must be rejected by the RP as
it does not fulfill the reg. 19 read with reg. 293. §40 of IBC also authorizes resolution
professional (liquidator) to admit or reject the claim after verification under §39 of
IBC. VSCL also failed to furnish any record that would make the RP believe that it
had any stake in the said company.

II. WHETHER THE RP CAN DIRECT VSCL TO CRYSTALLIZE THE AMOUNT?

According to section 25 of the IBC, it shall be the duty of the resolution professional
to preserve and protect the assets of the corporate debtor. §25(2)(b)4 says that
resolution professional can represent and act on behalf of the corporate debtor with
third party and exercise rights for the benefit of the corporate debtor in arbitration
proceedings. S. 25(2)(e)5 also imposes duty on resolution professional to maintain
an updated list of claim.

1
Moot Proposition Pg. 5

2
The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, reg 15

3
The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, reg 20

4
The Insolvency and Bankrupcy Code, 2016

5
The Insolvency and Bankrupcy Code, 2016
III. WHETHER VSCL SHOULD CRYSTALLIZE THE AMOUNT BY
APPROACHING THE ARBITRAL TRIBUNAL?

1. It is to bring to your kind notice that VSCL submitted its claim as one of the Creditors
which arises out of breach of contract and loss of business under the PPA.6 In the case
of Jharkhand Bijli Vitran Nigam v IVRCL Ltd. & others7, the NCLAT was with
the opinion to continue/institute the arbitration proceeding. Claim of the VSCL can be
determined only after the determination of counterclaim of corporate debtor in the same
very arbitral proceedings. Arbitrations involving claims of VSCL and counterclaim of
corporate debtor is not violative of section 14(1)(a) of IBC during the pre-award stage.
The moratorium may come into effect after passing of award by arbitration proceeding.
Consecutively, if award is not in favour of corporate debtor then moratorium will apply
and no recovery can be made during the period of moratorium.
2. Similarly, in the case of Power Grid Corporation of India Ltd. v. Jyoti Structures
Ltd.8, the court held that the ‘proceeding’ under s. 14 of IBC does not include all
proceedings. The meaning of ‘proceeding’ depends on the nature of action. Whether
the proceeding is for the benefit of corporate debtor. §14 of the IBC is intended to
prohibit debt recovery action against the assets of the corporate debtor. And
continuation of proceedings which do not result in debt recovery action, endangering,
adversely impacting or diminishing the assets of corporate debtor are not prohibited
under s.14 of IBC.
3. In arguendo, the claim thus arose must first be crystalized by the arbitrational tribunal
and then a formal claim should be submitted else otherwise the claim will fall down.

IV. WHETHER THE APPLICATION BY VSCL TO RECOGNIZE

ITS IN ENTIRETY IS ADMISSIBLE?
It is humbly submitted that the application made by VSCL to recognize its claim
in entirety is not admissible. The claim of VSCL is not crystallized and due to
which resolution professionals directed VSCL to arbitration proceeding. There is

6
Moot Proposition Pg.5

7
Jharkhand Bijli Vitran Nigam Ltd. v. IVRCL Ltd. & Anr. Company Appeal (AT) (Insolvency) No. 285 of
2018

8
Power Grid Corporation of India Ltd. v. Jyoti Structures Ltd.O.M.P.(COMM.) 397/2016
 dispute on amount of debt on ISPL claimed by VSCL. Submission of claim of
VSCL is incomplete and not in accordance with due process of law.

In the case of Mobilox Innovation Pvt. Ltd. v. Kirusa Software Pvt. Ltd.9, the
NCLT held that if there is any dispute between the corporate debtor and the
operational creditor then adjudicating authority may reject the application under
IBC. The apex court further held that dispute under s. 5(6) of IBC includes a suit
or arbitration proceedings related to amount of debt and breach of a representation
or warranty. Meaning of dispute is inclusive in nature. The apex court affirmed
NCLT decision by saying that NCLT acted mechanically.

9
Mobilox Innovation Pvt. Ltd. v. Kirusa Software Pvt. Ltd.CIVIL APPEAL NO. 9405 OF 2017