The National Company Law Tribunal (NCLT), Kochi Bench, has clarified that a liquidator under the Insolvency and Bankruptcy Code (IBC) cannot adjudicate disputed claims. The Tribunal held that the liquidator’s role is strictly administrative and limited to verification of claims.
A Bench of the NCLT Kochi made it clear that liquidators cannot act as adjudicating authorities while handling claims during liquidation.
The ruling reinforces the distinction between administrative functions and judicial powers under the IBC.
Liquidator’s Role Limited to Verification
The Tribunal observed that Sections 38 to 40 of the IBC define the scope of a liquidator’s duties. These duties include:
- Verification of claims
- Collation of records
- Admission or rejection of claims based on available documents
However, the Tribunal clarified that liquidators cannot decide disputed issues. These include contractual disputes, contested liabilities, or competing legal rights.
Disputes Must Be Decided by NCLT
The NCLT held that when a claim involves a dispute, it must be decided by the adjudicating authority.
The Tribunal referred to Section 42 of the IBC. This provision allows aggrieved parties to approach the NCLT if a claim is rejected or disputed.
Therefore, liquidators cannot replace the role of the Tribunal in resolving disputes.
Tribunal Emphasises Separation of Powers
The NCLT Kochi stressed that the IBC creates a clear division of roles:
- The liquidator performs administrative functions
- The NCLT acts as the adjudicating authority
Allowing liquidators to decide disputes would blur this distinction. It may also delay liquidation and create inconsistent decisions.
The Tribunal noted that strict adherence to roles ensures efficiency and fairness in insolvency proceedings.
Significance of the Ruling
The judgment is important for insolvency practice. It:
- Prevents liquidators from conducting quasi-judicial proceedings
- Ensures disputes are decided by competent authority
- Protects stakeholders from arbitrary claim decisions
- Supports timely completion of liquidation
Conclusion
The NCLT Kochi has reaffirmed that liquidators cannot adjudicate disputes under the IBC. Their role is limited to verification and administration of claims.
Disputed claims must be resolved before the adjudicating authority. This ensures procedural clarity and maintains the statutory framework of insolvency law.
Case Title: HLL Infra Tech Services Ltd. v. Reuben George Joseph
