RP Must Verify CIRP Claims: Not Bound by Mutation Entries

In the fast-paced world of corporate insolvency under the Insolvency and Bankruptcy Code, 2016 (IBC), creditors often submit claims backed by various documents, including land mutation entries. But can a Resolution Professional (RP) in Corporate Insolvency Resolution Process (CIRP) simply accept these without scrutiny? The question arises: Also Find a Judgment which Says in CIRP Proceedings the RP has to Look at Relevant Documents and Verify all Claims it Cannot be Bound by Mutation Entry.

This blog explores the RP's mandatory duty to verify claims through due diligence, emphasizing that mutation entries—summary revenue records—do not bind the RP. Drawing from IBBI regulations and key judgments, we highlight why substantive evidence is crucial for a fair resolution process. Note: This is general information and not specific legal advice. Consult a qualified professional for your case.

What is CIRP and the RP's Pivotal Role?

CIRP is a time-bound process under IBC aimed at maximizing the corporate debtor's value as a going concern. The RP, appointed post-admission, manages operations, invites resolution plans, and verifies creditor claims to form the Committee of Creditors (CoC).

The RP's role in claims verification is administrative yet rigorous. As per the main legal finding, the RP must conduct due diligence, ensure claims are substantiated with evidence, and verify correctness and completeness. Key points include:- Verifying and vetting creditor claims.- Requiring appropriate evidence or clarification.- Considering late claims if properly supported before the 90th day. 2019 2 Supreme 524

This prevents inflated or false claims from derailing the process.

Legal Framework: RP's Duty to Verify Claims

IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, outline the RP's responsibilities. Under Regulation 12(1) and (2), The interim resolution professional or the resolution professional, as the case may be, may call for such other evidence or clarification as he deems fit from a creditor for substantiating the whole or part of its claim. 2019 2 Supreme 524

Creditors must submit claims with proof within the public announcement deadline, but late submissions are allowed on or before the ninetieth day of the insolvency commencement date. 2019 2 Supreme 524

The RP actively vets claims to ensure they conform to procedures and are supported by documentation. This includes rejecting unsupported or belated claims without justification. The RP's verification ensures a fair process but does not extend to adjudicating disputes—that's for the Adjudicating Authority (NCLT). 2025 Supreme(Online)(NCLAT) 7

In one case, a claim of Rs. 18,50,63,527/- was rejected for delay (548 days) and lack of RP's adjudicatory powers over contract breaches. The RP acted properly within the time-bound framework, as IBC is a time bound process and the RP cannot be blamed for dealing with the claim within three days as the prescribed outer time-period to decide on the claims is only seven days. 2025 Supreme(Online)(NCLAT) 7

Why Mutation Entries Do Not Bind the RP

Mutation entries in revenue records (e.g., under Land Revenue Acts) record possession or name changes but are summary proceedings. They do not confer title or decide substantive rights. Courts consistently hold that RPs cannot be bound by them without verifying underlying documents.

For instance, mutation proceedings are summary in nature and do not decide substantive rights, thus a writ petition is not maintainable. 2024 0 Supreme(All) 424 In a property dispute involving will deeds, the court dismissed a writ, noting mutation does not affect title, directing parties to civil courts. 2024 0 Supreme(All) 424

Similarly, mutation orders were not conclusive of the parties' title to the land. Repeated applications based on the same claim were deemed an abuse of process. 2019 0 Supreme(All) 1917 Another ruling clarified, Anything said in this order or by the Mutation Authorities, would bear no consequence on the right, title or interest of parties. 2019 0 Supreme(All) 1917

In CIRP context, RP must look beyond such entries. Claims relying solely on mutations require proof like sale deeds or title documents. Forgery cases underscore this: Prosecution must prove offenses with evidence, not presumptions, mirroring RP's evidentiary burden. 2023 0 Supreme(Jhk) 485

Key Judgments Reinforcing Verification

Several precedents emphasize RP's diligence:

• Claims Adjudication in Liquidation: Workmen claims for wages during CIRP must prove the debtor was a going concern. Liquidator (successor to RP) adjudicates based on evidence within 12 weeks. 2022 0 Supreme(SC) 348

• Time-Bound Rejection: RP rightly rejected delayed non-performance claims, as resolution plans cannot be derailed. RP's role is limited to administrative verification. 2025 Supreme(Online)(NCLAT) 7

• Revenue Mutations Challenged: In land disputes, courts quashed orders relying on invalid mutations, restoring entries only after verification, subject to limitation. 2021 0 Supreme(Guj) 894

• Consolidation Disputes: Equal shares based on sale deeds prevailed over abated proceedings; appellate orders set aside for misconstruing evidence. 2024 0 Supreme(All) 2271

These align with Regulation 12, mandating evidence calls. RP cannot validate unsupported claims post-deadline without justification. 2019 2 Supreme 524

Indirect support comes from RP's due diligence in resolution plans. 2019 0 Supreme(SC) 1271

Exceptions, Limitations, and Best Practices

Exceptions:- Unsupported or post-90-day claims without justification are inadmissible.- RP does not adjudicate title/breach disputes. 2025 Supreme(Online)(NCLAT) 7

Recommendations:- Establish robust evidence-calling processes.- Scrutinize late claims rigorously.- Maintain detailed verification records for transparency. 2019 2 Supreme 524

Creditors: Submit comprehensive proofs early, including title deeds over mutations.RPs: Document decisions to withstand CoC/NCLT scrutiny.

Conclusion and Key Takeaways

In CIRP, the RP is not bound by mutation entries; they must verify claims against relevant documents to uphold IBC's objectives. Regulations and judgments like those in 2019 2 Supreme 524, 2025 Supreme(Online)(NCLAT) 7, and mutation cases 2024 0 Supreme(All) 424 2019 0 Supreme(All) 1917 reinforce this.

Key Takeaways:- RP must call for evidence/clarification. 2019 2 Supreme 524- Mutations are summary, not title-proof.- Time-bound verification prevents process delays.- Late claims need strong substantiation.

Stay compliant to avoid appeals under Section 61 IBC. For tailored guidance, engage insolvency experts.

References: 2019 2 Supreme 524, 2019 0 Supreme(SC) 1271, 2025 Supreme(Online)(NCLAT) 7, 2024 0 Supreme(All) 424, 2019 0 Supreme(All) 1917, 2024 Supreme(Online)(NCLT) 5076, 2023 0 Supreme(Jhk) 485, 2024 0 Supreme(All) 2271, 2022 0 Supreme(SC) 348, 2021 0 Supreme(Guj) 894, 2008 0 Supreme(All) 340.