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2022 (9) TMI 908 - AT - Insolvency and BankruptcyCIRP - admission of belated claim - financial debt - NCLT allowed the claim and issued direction that the claim filed by the Respondent/State of Karnataka in Form-C, shall be put up by the RP to the CoC for its consideration - mandatory requirement of filing a claim - whether the Appellant has made out any case warranting interference by this Tribunal in the order passed by the Adjudicating Authority? - HELD THAT - Admittedly, the Corporate Debtor availed a special scheme / incentive from the 1st Respondent and there is no actual disbursement of money. The said fact was not denied by the 1st Respondent herein. The loan was interest free and towards unpaid Value Added Tax for a period of 10 years which is a benefit issued by the Respondent as a promotion policy of the State Government - it is seen that there is no actual disbursement of money that has made to the Corporate Debtor. Further, there is no enhancement of money after a particular time period. It is pertinent to note that the policy / scheme was to enhance / boost industrial production by providing some monitory incentive/concession and not to earn interest and the interest payment in case of default in repayment is purely in the nature of a penalty. It is reiterated that there is no actual disbursement of money. While so, the contention of the Appellant that since there is no interest factor as per the definition of the financial debt, the claim of the 1st Respondent cannot be considered as financial debt. It is apt to note that one of the most crucial principle is time is essence in any resolution process within which the process has to be completed in a time bound manner as contemplated under the Code - this Tribunal find that the claim of the 1st Respondent herein is belated and cannot be considered and the finding of the Adjudicating Authority in directing the RP to place the claim in Form-C before CoC per se illegal and unsustainable accordingly, the point is answered against the 1st Respondent. Whether the RP has power to admit the claims suo-motu? - HELD THAT - The code prescribes the duties to be performed by the Interim Resolution Professional and the Resolution Professional, as per Section 18 and Section 25 of the I B Code, 2016. The IBBI (Insolvency Resolution Process for Corporate persons) Regulations 2016, prescribes the procedure to be adopted/followed. As per Chapter IV Regulation 7 of the Regulations, the Claims by the Operational Creditor to be submitted with proof to the Interim Resolution Professional in Form-B and as per Regulation 8 of the Regulations, the Financial Creditors shall submit the Claims to the Interim Resolution Professional in Form-C - There is no such provision that the Interim Resolution Professional, shall admit the Claim without filing a Claim Form either in Form-B or in Form-C. Therefore, this Tribunal, is of the considered view, that the Interim Resolution Professional, suo-motu cannot admit the Claims without their being a Claim by the Claimants viz. Operational Creditors, Financial Creditors and Claims by other Creditors. Every Claim shall be submitted by the Claimant with proof. This Tribunal comes to a resultant conclusion that the order passed by the Adjudicating Authority is per se, an illegal and an unjusticiable - Appeal allowed.
Issues Involved:
1. Whether the claim of the 1st Respondent falls within the category of a financial debt. 2. Whether the claim filed is within the time as prescribed under the Code. 3. Whether the claim can be admitted by the Resolution Professional (RP) suo-motu irrespective of non-filing of claim. Issue-wise Detailed Analysis: 1. Financial Debt Classification: The core issue was whether the claim by the 1st Respondent, the State of Karnataka, qualifies as a financial debt under Section 5(8) of the Insolvency and Bankruptcy Code (IBC). The 1st Respondent had provided an interest-free loan to the Corporate Debtor under a special incentives and concessions scheme. The adjudicating authority initially classified this as a financial debt, reasoning that the loan agreement created a borrower-lender relationship, which obligated the Corporate Debtor to repay the loan after ten years. However, the appellate tribunal found that there was no actual disbursement of money and no enhancement of money over time, which are essential elements for a financial debt. The tribunal referred to the Supreme Court's judgment in Phoenix ARC Pvt. Ltd. Vs. Spade Financial Services Limited, which emphasized that the consideration for the time value of money is crucial for a financial debt. Consequently, the appellate tribunal concluded that the claim did not qualify as a financial debt. 2. Timeliness of the Claim: The 1st Respondent filed its claim more than two years after the initiation of the Corporate Insolvency Resolution Process (CIRP) and almost a year after the Committee of Creditors (CoC) had approved a resolution plan. The tribunal noted that the 1st Respondent had not filed any claim in the proper format within the prescribed time before the RP, despite public announcements and advertisements inviting claims. The tribunal cited previous judgments, emphasizing that the CIRP is a time-bound process and that belated claims cannot be entertained, as it would be unfair to other creditors and would dilute the purpose of the public announcement. Therefore, the tribunal held that the claim was belated and could not be considered. 3. Suo-motu Admission of Claims by RP: The tribunal examined whether the RP has the authority to admit claims suo-motu, i.e., without a formal claim being filed by the claimant. The tribunal referred to the duties prescribed for the RP under Sections 18 and 25 of the IBC and the relevant regulations, which mandate that claims must be submitted with proof in specified forms. There is no provision allowing the RP to admit claims without a formal submission. Therefore, the tribunal concluded that the RP could not admit claims suo-motu. Conclusion: The appellate tribunal found the order of the adjudicating authority to be illegal and unsustainable. It set aside the order directing the RP to place the 1st Respondent's claim before the CoC for consideration. The tribunal emphasized the importance of adhering to the time-bound nature of the CIRP and the necessity for claimants to file their claims within the prescribed period. Consequently, the appeal was allowed, and the interim order was made absolute.
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