2021 (1) TMI 715 - AT - Insolvency and Bankruptcy

Condonation of delay of 1111 days in submitting proof of claim against against Corporate Debtor - recall of order on the ground that the Resolution Professional failed to check/consider Book of Accounts vis a vis Appellant while making the Resolution Plan and the Adjudicating Authority failed to appreciate the important issue - Resolution Plan approved by the Committee of Creditors - HELD THAT - The Resolution Plan in the Corporate Insolvency Resolution Process against the Corporate Debtor has been approved by the Committee of Creditors as also by the Adjudicating Authority. That being the admitted position, Section 31 (1) of the I B Code would come into play which provides that the Resolution Plan approved by the Committee of Creditors shall be binding on all stakeholders. After approval of the Resolution Plan by the Adjudicating Authority, the Successful Resolution Applicant could not be allowed to be faced with claims filed or admitted after the Resolution Plan was submitted by such Successful Resolution Applicant. The Successful Resolution Applicant, before submission of the Prospective Resolution Plan is entitled to know the liability of the Corporate Debtor so that he can tailor his Prospective Resolution Plan accordingly and make provision for satisfaction of the claims and making payments in terms of the approved Resolution Plan. In the instant case it is not disputed that the claim has been filed by the Appellant not only at a highly belated stage but also after approval of the Resolution Plan. In these circumstances, the Adjudicating Authority was right in rejecting the application as being non maintainable. Appeal dismissed.

Summary

Issues:
Delay in submitting proof of claim against Corporate Debtor; Rejection of application for condonation of delay; Failure to consider Book of Accounts; Resolution Plan approval; Binding nature of Resolution Plan; Liability of Corporate Debtor; Claims filed after Resolution Plan approval; Relevant legal precedent; Rejection of belated claim; Legal infirmity in impugned order.

Analysis:
The judgment pertains to an appeal by the Deputy Commissioner of Customs against the rejection of its application for condonation of delay in submitting proof of claim against the Corporate Debtor, 'M/s Jyoti Structures Ltd.' The Appellant sought to accept and admit its claim and recall the order passed by the Adjudicating Authority due to alleged failure to consider Book of Accounts in the Resolution Plan process. The Adjudicating Authority rejected the application as non-maintainable, leading to the appeal.

The Appellate Tribunal examined the Resolution Plan approved by the Committee of Creditors and the Adjudicating Authority. It highlighted the binding nature of the Resolution Plan as per Section 31(1) of the I&B Code, emphasizing that claims filed after the approval of the Plan cannot be entertained to ensure certainty for the Successful Resolution Applicant. Citing a legal precedent, the Tribunal stressed the importance of all claims being submitted and decided before the Resolution Applicant takes over the business of the Corporate Debtor.

The Tribunal noted that the Appellant's claim was not only belated but also submitted after the approval of the Resolution Plan. In light of these circumstances, the Adjudicating Authority's rejection of the application was deemed appropriate. The Tribunal found no legal infirmity in the impugned order and dismissed the appeal, with no costs awarded. The judgment underscores the significance of timely claim submission and adherence to the Resolution Plan process to maintain clarity and certainty for all stakeholders involved in the Corporate Insolvency Resolution Process.