2021 (3) TMI 1261 - Tri - Insolvency and Bankruptcy

Seeking acceptance of claim by RP - claim so submitted was not within the stipulated time - HELD THAT - It is pertinent to mention herein that the Resolution Plan has already been received by the CoC as apprised by the RP and it is at the final stage of approval of the CoC on or before 08.03.2021 (as per RP). At this belated stage if such types of applications are allowed the Resolution Plans already received by the CoC from the prospective Resolution Applicants may get failed as those are filed on the basis of Information Utility (IU).The prospective Resolution Applicants submitted their Resolution Plan on the basis of their financial capacity and availability of funds. There is every likelihood that if the claims of the different creditors are being accepted in a phase manner that too after the stipulated time so provided for submitting claims in that event the Resolution Plans can never get materialized more so when CIRP is to be completed in a time bound manner - Further if the Resolution Applicants have infused money or have taken financial assistance from other sources in that event they will have to approach for enhancement of the loan/infusion of money which practically takes a longer time and by the time they would complete all these processes the period of CIRP will be over. The Hon ble Supreme Court in the matter of Arcelor Mittal India Private Limited vs. Satish Kumar Gupta Ors 2018 (10) TMI 312 - SUPREME COURT unequivocally held that the entire time period within which the CIRP ought to be completed is strictly mandatory in nature and cannot be extended. It relied on the primary objective of the Code which is to ensure a timely resolution process for a CD and principles of statutory interpretation to hold that the literal language of section 12 mandates strict adherence to the time frame it lays down. To enable this adherence to the outer time limit provided in the Code the court also held that the model timeline provided in Regulation 40A of the CIRP Regulations should be followed as closely as possible - in the instant matter the RP allowed not only further 90 days but has also allowed another 68 days of lockdown period so as to facilitate all the creditors to file their claims. Application dismissed.

Summary

Issues:
1. Delay in filing claim by the Applicant in the Corporate Insolvency Resolution Process (CIRP).
2. Consideration of claims by the Resolution Professional (RP) beyond the stipulated time period.
3. Impact of allowing belated claims on the Resolution Plans and completion of CIRP process.

Issue 1: Delay in filing claim by the Applicant in the Corporate Insolvency Resolution Process (CIRP)

The Assistant Commissioner, CGST filed an application seeking the court to direct the opponent to accept the Applicant's claim, which was filed after the stipulated time period. The Applicant's claim was rejected by the RP due to the delay in submission beyond the specified date. The RP justified the rejection citing compliance with the provisions of the Insolvency and Bankruptcy Code, 2016, and related regulations. The RP emphasized the importance of adhering to the timelines in the CIRP to ensure a fair process for all creditors and stakeholders.

Issue 2: Consideration of claims by the Resolution Professional (RP) beyond the stipulated time period

The RP clarified that due to the Covid-19 pandemic and lockdown, claims of creditors were accepted until a certain extended date. The RP highlighted that accepting claims beyond the specified period could disrupt the CIRP process and prejudice other claimants. The RP's decision to reject the Applicant's claim was based on the legal provisions and the need to maintain the integrity and efficiency of the CIRP timeline. The RP's actions were in line with the regulations governing the insolvency resolution process.

Issue 3: Impact of allowing belated claims on the Resolution Plans and completion of CIRP process

The court considered the potential consequences of allowing belated claims on the Resolution Plans and the overall completion of the CIRP process. Allowing claims beyond the prescribed timeline could lead to delays, corrections in plans, and challenges for Resolution Applicants. The court highlighted that multiple applications for condonation of delay had been filed in the same case, indicating a recurring issue. Upholding the importance of timely resolution and maximizing the value of assets, the court referenced legal precedents emphasizing the strict adherence to the CIRP timeline. Ultimately, the court dismissed the Applicant's application, emphasizing the significance of maintaining the sanctity of the resolution process and the timelines set by the law.

In conclusion, the judgment underscores the critical importance of adhering to the prescribed timelines in the Corporate Insolvency Resolution Process to ensure fairness, efficiency, and successful resolution outcomes for all stakeholders involved.