2021 (4) TMI 643 - AT - Insolvency and Bankruptcy

Approval of Resolution Plan - grievance of the Appellant is that the Appellant is a Financial Creditor of the Corporate Debtor who filed claim before the Resolution Professional but the same was rejected on the ground of delay - HELD THAT - The IBC was enacted to consolidate and amend the laws relating to reorganization and insolvency resolution of Corporate Persons, Partnership Firms and Individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interest of all stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India and for matters connected therewith or incidental thereto. The IBC has various provisions which are time bound. Stakeholders in IBC cannot act or proceed in such matters in a manner to convert it into any other Ordinary Civil Proceeding or cause destructive delays which plagued the process under Sick Industrial Companies (Special Provisions) Act, 1985. In the present matter, the CIRP started on 08th November, 2019. Already more than one year has passed - the claim were not filed within time specified in the Public Notice or within 90 days from insolvency commencement date, which was 06.02.2020. Till 06.02.2020 there was no lockdown. Even thereafter another 35 days were taken to file claim. When the claim was filed, if it was not decided within reasonable time, still matter was not taken up with the Adjudicating Authority. In the present matter as there is already a Resolution Plan, giving directions to the Adjudicating Authority would further delay the CIRP, which is already delayed - Appeal dismissed.

Summary

Issues:
1. Delay in filing claim by the Appellant before the Resolution Professional.
2. Rejection of the claim by the new Resolution Professional on grounds of delay.
3. Request for condonation of delay by the Appellant.
4. Grievance of the Appellant regarding exclusion from the Committee of Creditors (CoC).
5. Submission of a Resolution Plan by the Resolution Professional.
6. Impact of Covid-19 situation on claim filing.
7. Interpretation of Insolvency and Bankruptcy Code (IBC) provisions regarding time-bound procedures.
8. Consideration of Regulation 12 and its amendments in the case.
9. Balancing the interests of stakeholders and the objectives of IBC.

Analysis:
1. The Appellant claimed to be a Financial Creditor of the Corporate Debtor and filed a claim before the Resolution Professional, which was rejected due to a delay of 37 days in filing the claim after the specified deadline. The Adjudicating Authority was requested to condone the delay, as per Regulation 12 of the Insolvency and Bankruptcy Board of India Regulations. However, the new Resolution Professional rejected the claim on grounds of delay, leading to the Appellant's exclusion from the CoC.

2. The Resolution Professional failed to decide on the claim within the stipulated time frame of 7 days, causing further delays in the process. The Appellant's claim rejection was based on the delay in filing, despite explanations provided for the delay due to Covid-19 challenges. The Appellant's plea for condonation of delay was not accepted, leading to the dismissal of the Appeal.

3. The judgment highlighted the importance of adhering to the time-bound procedures outlined in the IBC to prevent delays and ensure the efficient resolution of insolvency cases. The intention behind Regulation 12 amendments was to prevent undue delays in the Corporate Insolvency Resolution Process (CIRP) and maximize the value of assets. The judgment emphasized the need to balance the interests of all stakeholders and avoid converting insolvency proceedings into prolonged civil proceedings.

4. The judges noted that the Appellant's failure to file the claim within the specified timeline, despite being aware of the proceedings, contributed to their exclusion from the CoC. The dismissal of the Appeal was based on the grounds of the Appellant's delayed filing and subsequent rejection of the claim by the Resolution Professional. The judgment aimed to uphold the integrity and efficiency of the insolvency resolution process by discouraging unnecessary delays and ensuring timely resolution of claims.

5. The judgment concluded by declining to entertain the Appeal, emphasizing that the observations made in the judgment should not hinder the Adjudicating Authority from independently deciding on the pending matter. The decision to dismiss the Appeal was based on the specific circumstances of the case, highlighting the importance of complying with the procedural requirements of the IBC to facilitate a smooth and effective resolution of insolvency cases.