A Resolution Professional may reject a provisionally admitted claim upon verification where the underlying financial debt remains unproven.

Somani Worsted Limited (“Appellant”) initially paid ₹13.60 crore to AEZ Infratech Private Limited under an MoU dated 8 January 2010 for booking commercial space.

Subsequently, pursuant to inter-corporate memos dated 4 October 2010 and an MoU dated 7 October 2010, the Appellant asserted that ₹9.77 crore was invested in Celebration City Projects Private Limited (“Corporate Debtor”) for allotment of 50,000 square feet of commercial space in the RED Mall project.

The Appellant relied on ledger entries, the Corporate Debtor’s balance sheets and related documents to establish the transaction.

After the Corporate Debtor entered CIRP on 21 March 2022, the Appellant filed a claim of ₹18.72 crore as a financial creditor in a class.

The Resolution Professional (“RP”) initially admitted the claim at ₹18.84 crore and included the Appellant in the Committee of Creditors.

Following objections from Sakshi Fincap Private Limited, a related-party financial creditor, the RP sought further documents, categorised the claim as doubtful/suspicious and subsequently removed it from the List of Creditors.

The Appellant filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) seeking restoration of its claim and reconstitution of the CoC.

The NCLT dismissed the application, holding that the RP was justified in rejecting the claim and that the Appellant had already pursued an arbitral claim against AEZ in respect of the same transaction.

The Tribunal applied Section 5(8)(f) of the IBC, under which a debt arising from amounts raised under a transaction having the commercial effect of borrowing, including amounts raised from an allottee in a real-estate project, constitutes a financial debt.

Section 60(5) confers jurisdiction on the Adjudicating Authority over questions arising out of or in relation to the insolvency process, while Section 61 provides for an appeal to the Appellate Tribunal.

Regulation 13(1) of the CIRP Regulations requires the IRP/RP to verify every claim, maintain the List of Creditors and update it based on the material available.

The Tribunal relied on Mr. Umesh Kumar v. Mr. Narendra Kumar Sharma, holding that an RP must scrutinise and verify claims and is not required to mechanically admit every claim.

It distinguished Rajnish Jain v. Manoj Kumar Singh and Byju Raveendran v. Aditya Birla Finance Ltd., which recognise that an RP has no adjudicatory power to decide disputed rights, on the basis that the RP in the present case had merely undertaken statutory verification.

The Tribunal also considered ICICI Bank Ltd. v. Era Infrastructure (India) Ltd., concerning simultaneous remedies and avoidance of double recovery, but held that those principles were irrelevant because the Appellant failed to establish the underlying financial debt itself.

The Tribunal held that the Appellant’s original payment was admittedly made to AEZ and that no bank statement, RTGS record, payment instruction or other banking evidence established a transfer of ₹9.77 crore by the Appellant to the Corporate Debtor.

The ledger entries were treated as internal journal adjustments between closely related entities and were further undermined by the subsequent reversal of the amount in favour of AEZ/ADTV in 2017.

The MoU dated 7 October 2010 was regarded as preliminary because it did not identify a specific commercial unit, omitted essential contractual terms, contemplated an additional payment and envisaged execution of a definitive agreement, which was never executed.

The common directors, common address and cross-shareholding required the internal records to be examined with caution; the balance sheets could not, in those circumstances, conclusively establish an independent liability, particularly as the alleged liability did not appear in later balance sheets.

The Appellant’s conduct also showed that it pursued arbitration and execution only against AEZ, while never seeking possession, specific performance or refund from the Corporate Debtor.

Since no independent financial debt was proved, the Tribunal held that the RP’s subsequent rejection constituted verification and updation under Regulation 13, rather than an impermissible adjudication or review of rights.

It further held that the RP was justified in revisiting the provisional admission and rejecting the claim upon verification under Regulation 13.

The appeal was dismissed, the NCLT’s order dated 8 October 2025 was affirmed, pending applications were disposed of and no order as to costs was made.