# In the matter of McNally Bharat Engg Co. Limited

> NCLT judgment dated 2023-12-19. Citation: TCN-2023-NCLT-00133. Proton Steels Limited filed an application (I.A. No. 1014/KB/2023) under section 60(5) of the…

- **Court:** NCLT
- **Order date:** 19 Dec 2023
- **Citation:** TCN-2023-NCLT-00133
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/mcnally-bharat-engg-co-limited-09a0afa6

## Summary

### Background

Proton Steels Limited filed an application (I.A. No. 1014/KB/2023) under section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking reliefs related to the admission of its claim in the corporate insolvency resolution process of McNally Bharat Engineering Company Limited. The applicant disputed the Resolution Professional's (RP) decision to admit only a portion of its claim (Rs. 6,62,404.54) and sought the admission of its entire claim (Rs. 11,22,71,322.64) as a financial debt. The applicant's claim originated from a contract with the Corporate Debtor for the supply of steel casting, which led to arbitration proceedings and an arbitral award in favor of the applicant.

## Facts

Proton Steels Limited (the Applicant) had a contract with McNally Bharat Engineering Company Limited (the Corporate Debtor) for the supply of steel casting between 1992 and 1997. The Corporate Debtor failed to pay the entire dues, leading the Applicant to initiate proceedings before the Micro, Small Enterprise Facilitation Council at Cuttack, Orissa (MSMEFC). An arbitral award was passed in favor of the Applicant on 30.11.2011 for Rs. 8,48,711.45. The Applicant sought modification of the award to include interest under the MSMED Act, 2006, which was granted on 13.09.2013. The Corporate Debtor filed a writ petition against the award in the Orissa High Court, which was later withdrawn on 22.02.2023. The Applicant then filed an Execution Petition before the DJ at

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## Issues and analysis

### Issue 1: Whether the Resolution Professional (RP) erred in admitting only a portion of the applicant's claim …

**Ratio:** The principle of complete disclosure in accounting requires that contingent liabilities

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**Reasoning:** The court reasoned that since a Section 34 application challenging the arbitral award was

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**Interpretation:** The interpretation of 'contingent liability' in the context of insolvency

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**Application:** In this case, the pending Section 34 application before the High Court created

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## Parties

- **Judges:** RohitKa…; Balraj…
- **Appellants:** Proton Steels…
- **Respondents:** McNally Bharat…; Anuj…

## Timeline

- **1992-01-01 — Contract between…**: Applicant and Corporate Debtor entered into a contract for the supply of steel casting…
- **2011-11-30 — Arbitral…**: Arbitral award passed in favor of the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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