2021 (5) TMI 315 - Tri - Insolvency and Bankruptcy

Condonation of delay of 796 days delay in filing the claim before the Liquidator - Regulation 39 of the IBBI (Liquidation Process) Regulations, 2016 read with Section 60(5) of the Insolvency and Bankruptcy Code - HELD THAT - Section 40 of the I B Code, 2016 mandates the Liquidator to record the reason in writing for rejection of the claim and the same is also required to be communicated to the Applicant. In relation to his decision of admission or rejection, the Liquidator is required to communicate to both the creditors and the Corporate Debtor within seven days of such admission or rejection of the claim. As against the rejection of the claim, Section 42 of I B Code, 2016 provides for a time window of 14 days upon receipt of such decision to the creditor to file an appeal to the Adjudicating Authority against the said decision of the Liquidator - Further, it may be noted that under Regulation 44(1) of the IBBI (Liquidation Process) Regulations, 2016, the Liquidator is directed to liquidate the Corporate Debtor within one year from the date of commencement of the liquidation proceedings and Regulation 44(2) stipulates that, after the expiry of one year, the liquidator shall file an application to the Authority to continue the liquidation period along with a report and explain why the liquidation has not been completed. In view of the IBC, 2016 being a time bound process as well as the Learned Liquidator being under a compulsion to complete the liquidation process within a period of one year from the date of commencement of liquidation, the application is dismissed.

Summary

Issues:
Delay in filing claim before the Liquidator.

Analysis:
The judgment deals with an application filed by the Liquidator of a company seeking to condone a delay of 796 days in filing a claim before the Liquidator. The company, admitted into Corporate Insolvency Resolution Process, had dues pending from another company for supply of products. The Liquidator, appointed one year after the last date for claim submission, faced challenges in verifying the claim due to lack of submission records and unavailability of claim details on the respondent's website. The Liquidator prepared the claim with supporting documents but sought to condone the delay in submission. The Liquidator's obligation to verify claims within specified time limits, admit or reject claims, and communicate decisions to creditors and the Corporate Debtor were highlighted. The judgment noted the absence of reasons for the delay in filing the claim and emphasized the time-bound nature of liquidation proceedings, requiring the Liquidator to explain any delays in the process. Citing a Supreme Court ruling on limitation, the judgment dismissed the application due to the time-bound nature of the Insolvency and Bankruptcy Code, emphasizing the lack of equity regarding limitation and the need for timely completion of the liquidation process.