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NCLAT Rules Resolution Professional Can Revisit Admitted Claims During Subsequent Verification Under CIRP

  • Writer: Kaustav Chowdhury
    Kaustav Chowdhury
  • 38 minutes ago
  • 4 min read

Background and Facts

The National Company Law Appellate Tribunal (NCLAT), New Delhi, in Somani Worsted Limited v. Amit Aggarwal, RP of Celebration City Projects Private Limited [Company Appeal (AT) (Ins.) No. 150 of 2026, decided on September 1, 2026] addressed a key question: can a Resolution Professional (RP) revisit and reject a claim that was previously admitted during the Corporate Insolvency Resolution Process (CIRP)?

The case arose from the CIRP of Celebration City Projects Private Limited, a real estate company. Somani Worsted Limited had filed a claim as a financial creditor, asserting a debt of Rs. 18.72 crore based on allotment of units in the corporate debtor's project. The RP initially admitted the claim at Rs. 18.84 crore during the first round of verification.

However, after objections from related parties and further scrutiny of the financial records, the RP found that the claim lacked a verifiable banking trail. The supporting documents consisted primarily of journal entries and book adjustments, with no independent evidence of actual fund transfers. The RP accordingly removed Somani Worsted from the list of financial creditors during a subsequent verification round.

Key Legal Issue

The central question before the NCLAT was whether the RP has the power under the Insolvency and Bankruptcy Code, 2016 (IBC) and the CIRP Regulations to revisit a claim that has already been admitted in an earlier verification, and whether such revisitation amounts to a review of a quasi-judicial order.

NCLAT's Ruling

A bench comprising Justice N. Seshasayee (Judicial Member), Arun Baroka (Technical Member), and Indevar Pandey (Technical Member) upheld the RP's action and dismissed the appeal filed by Somani Worsted.

The Tribunal held that verification of claims under Regulation 13(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 is a continuing process. An RP is not bound by an earlier admission if subsequent material or scrutiny reveals that the claim does not meet the statutory threshold.

Claims Verification Is a Continuing Process

The NCLAT observed that the statutory framework does not treat the first verification as final or conclusive. The RP has both the power and the duty to verify claims on an ongoing basis throughout the CIRP. If fresh information or deeper scrutiny reveals deficiencies in an admitted claim, the RP is obligated to act on that information rather than simply maintaining the status quo.

Mere Book Entries Are Not Sufficient

The Tribunal noted that Somani Worsted's claim was supported only by journal entries and internal book adjustments. There was no banking trail, no evidence of actual fund transfers, and no independent documentation corroborating the alleged financial debt. The NCLAT held that mere book entries, without a demonstrable trail of actual financial transactions, cannot establish a financial debt under the IBC.

Precedent Relied Upon

The bench relied on Mr. Umesh Kumar v. Mr. Narendra Kumar Sharma [Company Appeal (AT) (Ins.) No. 100 of 2024], which similarly held that an RP's verification powers are not exhausted after the first round and that subsequent verification is permissible under the regulatory framework.

Practice Notes

In practice, this ruling has significant implications for both Resolution Professionals and creditors participating in the CIRP:

  • For Resolution Professionals: The judgment confirms that RPs have a continuing obligation to verify claims throughout the CIRP. An initial admission does not create a vested right in the claimant. If an RP subsequently discovers that the evidentiary basis for an admitted claim is insufficient, the RP is duty-bound to revisit and, if necessary, reject the claim.

  • For Financial Creditors: Creditors must ensure that their claims are supported by robust documentation beyond internal book entries. A banking trail showing actual fund transfers, bank statements, and third-party confirmations are essential. Claims supported only by journal entries or related-party book adjustments are vulnerable to rejection on subsequent verification.

  • For the Committee of Creditors (CoC): The composition of the CoC may change during the CIRP as claims are revisited. Stakeholders should be aware that voting shares and distribution entitlements under Section 53 of the IBC can shift based on the RP's ongoing verification.

Key Provisions Discussed

  • Section 18(1)(b) of the IBC: Duty of the interim resolution professional to receive and collate claims.

  • Regulation 13(1) of the CIRP Regulations: Verification of claims by the resolution professional.

  • Section 5(8) of the IBC: Definition of 'financial debt' requiring disbursement against the consideration for the time value of money.

  • Section 21 of the IBC: Constitution of the Committee of Creditors based on verified financial debts.

Case Details

  • Case: Somani Worsted Limited v. Amit Aggarwal, RP of Celebration City Projects Private Limited

  • Case No: Company Appeal (AT) (Ins.) No. 150 of 2026

  • Citation: 2026 LLBiz NCLAT 339

  • Date of Order: September 1, 2026

  • Bench: Justice N. Seshasayee (Judicial Member), Arun Baroka and Indevar Pandey (Technical Members)

  • Outcome: Appeal dismissed; RP's removal of the appellant from the list of financial creditors upheld.

Sources and References


Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers should consult a qualified legal professional for advice specific to their circumstances.

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