NCLT Upholds ₹1 Notional Admission Of MCD's Rs 6,000-Crore Claim Against MEP Infrastructure

The National Company Law Tribunal (NCLT) at Mumbai has upheld the treatment of a Rs. 6,000-plus crore claim filed by the Municipal Corporation of Delhi in the insolvency process of MEP Infrastructure Developers Ltd. The tribunal refused to interfere with the notional admission of the claim and its classification as unsecured.

A bench of Judicial Member K.R. Saji Kumar and Technical Member Anil Raj Chellan held that the admission of MCD's claim at a notional value of Rs. 1 did not warrant interference. The remaining amount of Rs. 6,073.35 crore continued to be reflected as a contingent claim in the insolvency process.

“We have thus come to the conclusion that the claim filed by the Applicant is to be verified by the Respondent under the category of 'operational-debt unsecured,' and make the best estimate of the amount of the claim based on the information/documents available to him,” the tribunal observed.

MEP Infrastructure Developers Ltd was admitted into the corporate insolvency resolution process on March 28, 2024, on a petition filed by Bank of India. MCD submitted its claim in June 2024, claiming that more than Rs. 6,000 crore was due from MEP in terms of toll tax and environment compensation charge collections under a contract signed in September 2017.

The interim resolution professional sought clarifications on the claim and eventually admitted it at a notional value of Rs. 1, while treating the remaining Rs. 6,073.35 crore as contingent, citing disputes and counterclaims between the parties.

MCD challenged this treatment. It argued that its dues were recoverable as arrears of land revenue and that attachments issued against the corporate debtor's properties created a secured interest.

The tribunal rejected the submission that these factors elevated the claim to the status of a secured debt. It held that recovery powers available to a municipal body do not, by themselves, create a security interest.

It also clarified that attachment is only a mode of recovery and does not amount to a charge unless created and registered in accordance with law. “Attachment itself does not create security, and there is a fine distinction between attachment of property and a charge over the property by operation of law,” the tribunal said.

The tribunal accordingly dismissed MCD's application.