2021 (4) TMI 1259 - Tri - Insolvency and Bankruptcy

Seeking direction to the Liquidator to accept the claim of the Appellant as other creditor of the Corporate Debtor - seeking condonation of delay of 90 days in preferring the instant appeal arising from the rejection of the claim Submission on behalf of the Appellant - HELD THAT - The two contracts dated 14.05.2013, bearing Contract No. CS-0370-162C-2- FCCOA-0015 and Contract No. CS-0370-162C-2-SC-COA-0016 are still subsisting and the same having been terminated by any mode is nobody s case. Au contraire, it is Appellant s own case that in the month of July 2019, the Liquidator had signed a program with the Appellant for supply of balance materials and execution of site works within a timeline in order to keep the Corporate Debtor a going concern - the claim of the Appellant is in contemplation of an event where the Corporate Debtor does not receive a bid as a going concern. Admittedly, there has been delay in execution of the contract, the blame of which is being laid on the other party by the either side. However, the delay in execution of the said contract cannot form basis of a claim of such nature in a proceeding such as this, especially when such claim is contingent on Corporate Debtor not being sold as a going concern - furthermore, allowing the claim of the Applicant when the said contracts are still subsisting and the performance of which are underway would mean that the Appellant gains out of the contract by way of its performance as well as in the form of claim realised out of liquidation estate. The Appellant cannot have the cake and eat it too. The prayer of the Appellant for condonation of delay of 90 days in preferring the instant appeal arising from the rejection of the claim of the Appellant by the liquidator becomes infructuous - Application dismissed.

Summary

Issues:
- Appeal under section 42 of the Insolvency & Bankruptcy Code, 2016 seeking direction to accept a claim as an "other creditor" of the Corporate Debtor.
- Claim for outstanding amounts, liquidated damages, miscellaneous expenditures, and additional structural costs.
- Dispute regarding crystallization of debt and rejection of claim by the Liquidator.
- Consideration of delay in project execution and financial analysis of the claim.
- Adjudication on the rejection of the claim and the condonation of delay in filing the appeal.

Analysis:
1. The appeal involved a claim seeking acceptance as an "other creditor" of the Corporate Debtor under the Insolvency & Bankruptcy Code, 2016. The Appellant asserted claims for outstanding amounts, liquidated damages, miscellaneous expenditures, and additional structural costs, totaling a significant sum.
2. The Appellant contended that the Corporate Debtor failed to complete a substantial portion of the project within the prescribed time, justifying the claims made. The Liquidator, however, rejected the claims citing non-crystallization of debt and ongoing project execution by the Corporate Debtor.
3. The Liquidator argued that the ongoing execution of the project and pending fund releases warranted the rejection of the claim as premature. Financial analysis was presented to support the contention that the claim was not yet due for realization.
4. The Appellant, in response, highlighted delays in project completion and the impact on their business, emphasizing the need for consideration and admission of the claim to mitigate losses incurred due to project delays and non-fulfillment of commitments.
5. The Tribunal analyzed the submissions, noting that the contracts were still subsisting and the claim was contingent on the Corporate Debtor not receiving bids as a going concern. It emphasized that the delay in project execution could not solely justify the claim without proper adjudication.
6. Ultimately, the Tribunal dismissed the appeal, upholding the Liquidator's decision to reject the claim. It deemed the claim premature, lacking crystallization of debt, and not suitable for admission in the liquidation process. The prayer for condonation of delay in filing the appeal was rendered infructuous in light of the dismissal.

This detailed analysis encapsulates the key arguments, considerations, and the final decision rendered by the Tribunal in the legal judgment.