2021 (1) TMI 506 - Tri - Insolvency and Bankruptcy

Seeking to condone the delay in filing claim before the Resolution Professional - seeking direction to Resolution Professional to admit the claim of the Applicant - Section 60(5) of IBC, 2016, R/w Rule 11 of the NCLT Rules, 2016 - HELD THAT - It is settled position of laws that Court/Tribunal cannot reject a meritorious claim at the threshold, on the ground of delay and laches, provided a litigant has substantiated reasons for delay. In the instant case, the Applicant is an Operational Creditor, and the record shows that admitted claims made by the Financial Creditors of CD were amounting to hundreds of Crores. In terms of Code and the Rules made thereunder, the Secured Financial Creditors are entitled for prior consideration in the matter of settlement of their claims in Resolution Plan as well as in the Liquidation Proceedings. And the Operational Creditors hardly have any say on the question of settlement of their claims. As per the report submitted by the RP, Prospective Resolution Applicant submits Resolution Plan for mere ₹ 71 Crores, whereas the claims of secured Creditors run hundreds of Corers - It is also relevant to point out here that the claim in question start from the year 2014. It is settled position of law that proceedings under provisions of Code should be concluded in a time bound manner and allowing the instant claim would not serve any purpose, rather it would unnecessarily delay the process. Moreover, the Resolution Plan is already in the final stage, and is going to be decided very soon by the COC as per the submissions made on behalf of Respondents. Application disposed off.

Summary

Issues involved:
Delay in filing claim before the Resolution Professional and seeking admission of the claim.

Analysis:
The case involves an application filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking to condone the delay in filing a claim before the Resolution Professional and to direct the admission of the claim. The applicant, a C.T. & G.S.T. Officer, sought to submit a claim against the Corporate Debtor, but faced challenges due to delays. The main Company Petition was admitted by the Adjudicating Authority, initiating the Corporate Insolvency Resolution Process (CIRP). The applicant's claim arose from tax demands against the Corporate Debtor, leading to the initiation of CIRP. Despite attempts to submit the claim within the stipulated timeline, delays occurred due to various factors beyond the applicant's control.

The applicant highlighted the delay in submitting the claim, citing factors such as the COVID-19 pandemic and the directory nature of the time limit prescribed under the IBBI Regulations. The applicant also referenced orders from other NCLT benches to support the claim for condonation of delay. Additionally, the applicant argued that the Resolution Professional should have considered the claim, especially since no Resolution Plan had been finalized or approved yet. The applicant emphasized the statutory nature of the debt owed, which should have been entertained by the Resolution Professional.

The Tribunal reviewed the facts of the case, including the initiation of CIRP, the publication of Public Announcements, and the constitution of the Committee of Creditors. The Tribunal noted that the applicant's claim was an Operational Creditor claim among numerous claims made by various parties. Despite the applicant's contention of being unaware of the proceedings until later, the Tribunal found the reasons for delay insufficient. The Tribunal emphasized the need for time-bound proceedings under the Code and highlighted the priority given to Secured Financial Creditors in settlement matters.

Ultimately, the Tribunal was not convinced by the reasons cited by the applicant to condone the delay and found the application lacking in merits. The application was dismissed, with the Tribunal noting a similar dismissal of another application in the case. The decision was based on the need for timely conclusion of proceedings and the advanced stage of the Resolution Plan, indicating that allowing the claim would only cause unnecessary delays in the process.

In conclusion, the Tribunal dismissed the application, emphasizing the importance of timely proceedings under the Insolvency and Bankruptcy Code and the prioritization of Secured Financial Creditors in settlement matters.