NCLAT Clarifies the Boundary Between Claim Verification and Adjudication by Resolution Professionals Under IBC

The jurisprudence surrounding the Insolvency and Bankruptcy Code, 2016 is continuously evolving, particularly concerning the exact scope of authority wielded by a Resolution Professional (RP) during the Corporate Insolvency Resolution Process (CIRP). A recurring point of friction arises when operational creditors submit claims, and the RP demands exhaustive proof of the underlying transactions. Creditors often argue that the RP is overstepping their administrative mandate by acting in a quasi-judicial capacity.

This exact legal conundrum was recently addressed by the National Company Law Appellate Tribunal (NCLAT), New Delhi, in the landmark judgment of Umesh Kumar Vs Narendra Kumar Sharma. The appellate tribunal provided a comprehensive interpretation of the statutory duties of an RP, drawing a definitive line between the permissible verification of claims and the impermissible adjudication of disputes.

The Factual Matrix of the Dispute

The controversy stemmed from an appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016. The appellant, an operational creditor, challenged an order passed by the National Company Law Tribunal (NCLT), New Delhi Bench-II. The adjudicating authority had previously dismissed the creditor's application, which sought the formal admission of claims that the RP had persistently rejected.

The Origin of the Claim

According to the appellant's submissions, he was appointed as a media management consultant for the corporate debtor. This professional relationship was allegedly governed by a Consultancy Agreement executed on 01.06.2016. The financial terms of this arrangement dictated a monthly retainership fee of Rs. 10 lakhs. The appellant maintained that the corporate debtor had consistently honored these financial obligations from June 2016 until April 2018.

However, following the initiation of insolvency proceedings against the corporate debtor, the financial dynamics shifted. The appellant submitted a formal claim to the RP, seeking the recovery of a substantial amount totaling Rs. 1.90 crore. This outstanding sum reportedly covered unpaid professional services rendered between May 2018 and August 2020, inclusive of applicable interest.

The Procedural Deadlock

The timeline of claim submission and subsequent communications reveals a deep procedural deadlock:

  • Initial Submission: The appellant initially submitted the claim documentation, including preliminary invoices, to the RP in late March 2020.
  • Demand for Substantiation: The RP, exercising due diligence, requested additional concrete evidence to prove that the media management services were actually delivered.
  • Inadequate Documentation: In August 2020, the appellant responded by submitting a single, consolidated tax invoice encompassing the entire period from June 2018 to August 2019. The service description on this invoice vaguely stated "Management Consultancy" without any granular details of the work performed.
  • Formal Rejection: By September 2020, the RP officially communicated that the corporate debtor's internal records lacked any corroborating evidence of the services claimed. The RP emphasized that unilateral invoices and a foundational agreement were insufficient without proof of actual service delivery.