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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2022 (9) TMI AT This

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2022 (9) TMI 908 - AT - Insolvency and Bankruptcy


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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