2021 (11) TMI 1045 - SC - Insolvency and Bankruptcy

Rejection of claim of appellant - rejection on the ground of time limitation - delay of two months - HELD THAT - Since the appellant was required to file its claim within 3 months from 11.02.2020, and the appellant actually filed claim well before 14th January, 2021, the claim ought not to have been rejected. The order dated 22.03.2020 of this Court was subsisting and in force - In computing the limitation for any application, the period from 22.03.2020 till 14.3.2021 is to be excluded. All litigants whose limitation expired after 22.03.2020 would be entitled to extension of limitation till the 90th day from 15.03.2021. The learned NCLAT also did not notice the orders passed by this Court in IN RE COGNIZANCE FOR EXTENSION OF LIMITATION 2021 (3) TMI 497 - SC ORDER . The learned Adjudicating Authority ought not to have rejected the claim of the appellant. The learned NCLAT erred in dismissing the appeal, without even considering the effect and impact of the orders of this Court in the suo motu writ petition - the appeal is allowed.

Summary

Issues:
1. Condonation of delay in filing claim under the Insolvency and Bankruptcy Code.
2. Applicability of orders passed by the Supreme Court regarding extension of limitation periods due to the COVID-19 pandemic.

Analysis:
1. The appellant filed an application seeking condonation of delay in filing its claim of ?1,13,38,651 against the Corporate Debtor. The delay was attributed to the CEO working from home due to the COVID-19 pandemic and a manpower crisis in the office. The Adjudicating Authority dismissed the application, leading to an appeal before the NCLAT, which was also dismissed mainly due to the approval of the Resolution Process by the Committee of Creditors. However, the Supreme Court highlighted that the appellant filed the claim well before the extended deadline due to the COVID-19 situation, as per the orders passed by the Court in a suo motu writ petition related to limitation periods during the pandemic.

2. The Supreme Court emphasized the significance of the orders passed by the Court in the suo motu writ petition regarding the extension of limitation periods due to the COVID-19 pandemic. The Court noted that the appellant had filed the claim within the extended timeline provided by the Court's orders, which should have been considered by the Adjudicating Authority and the NCLAT. The Court held that the rejection of the claim by the Adjudicating Authority and the dismissal of the appeal by the NCLAT without considering the impact of the Court's orders were erroneous. Consequently, the Supreme Court allowed the appeal, setting aside the judgments of the NCLAT and the Adjudicating Authority, and allowed the appellant's application under Section 60(5) of the IBC for filing the claim.

This detailed analysis of the legal judgment highlights the issues of condonation of delay in filing a claim under the Insolvency and Bankruptcy Code and the applicability of the Supreme Court's orders regarding extension of limitation periods during the COVID-19 pandemic.