2021 (6) TMI 236 - Tri - Insolvency and Bankruptcy

Condonation of delay of 873 days in submitting the claim before the liquidator - direction to liquidator to accept the claim of the appellant - HELD THAT - It is a fact borne on record that the applicant has failed to submit the claim during the corporate insolvency resolution process and that it is averred in the application that the applicant came to know about the liquidation process of the corporate debtor only when the public announcement was made on March 22, 2018. The public announcement is being made only for the sake of the stakeholders to submit the claim before the liquidator and the applicant as per the averments made in the application, being aware of the fact that the public announcement has been made has failed to submit the claim before the liquidator. Hence, the applicant came to know about the order of liquidation passed against the corporate debtor as early as on March 22, 2018 and thus cannot take a plea that they came to know about the liquidation of the corporate debtor only on a subsequent date. It is to be noted here that the provisions of the IBC, 2016 mandate that the claimants are required to submit the claim to the liquidator in such form and in such manner along with such supporting documents as specified by the Board. Thereafter, upon submission of the claim, the liquidator is required to verify the claims within the time limits specified by the Board and in this connection referring to the relevant Regulations, namely, the IBBI (Liquidation Process) Regulations, 2016 and more specifically under regulation 30, the liquidator is required to verify the claim submitted within a period of 30 days from the last date of receipt of the claims and may either admit or reject in whole or part as the case may be of such claim - As against the rejection of the claim, section 42 of the I and 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. 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. Thus, it can be seen that the liquidation is a time bound process and the liquidator is being made accountable and required to explain, if there is any delay caused in the liquidation process. 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, application stands dismissed, however without costs.

Summary

Issues:
1. Condonation of delay in submitting claim before liquidator under IBC, 2016.
2. Rejection of claims by the liquidator and subsequent legal proceedings.
3. Compliance with timelines and procedures under IBC, 2016 for claim submission and liquidation process.

Condonation of Delay in Claim Submission:
The applicant sought condonation of delay in submitting a claim before the liquidator under IBC, 2016. The applicant, representing seven claimants, invested in a corporate debtor but failed to submit the claim on time. The applicant, a senior citizen, faced delays due to personal reasons and lack of awareness about the liquidation process. However, the liquidator rejected the claim citing a delay of 873 days. The liquidator highlighted discrepancies in the corporate debtor's records regarding the claimed amounts and interest payments. The Tribunal emphasized the importance of timely claim submission during insolvency proceedings and dismissed the application due to the delay, following precedents and emphasizing the time-bound nature of the liquidation process.

Rejection of Claims and Legal Proceedings:
The liquidator rejected the applicant's claim due to the delay and lack of supporting evidence in the corporate debtor's records. The applicant's failure to submit the claim during the insolvency resolution process and after the public announcement of liquidation was noted. The Tribunal stressed the necessity of adhering to IBC, 2016 provisions, requiring claim submission in specified forms with supporting documents. The liquidator's responsibilities in verifying and communicating claim decisions within set timeframes were highlighted. The Tribunal referred to regulations mandating the liquidator to conclude proceedings within one year, holding them accountable for delays.

Compliance with Timelines and Procedures:
The Tribunal emphasized the time-bound nature of the liquidation process under IBC, 2016, citing regulatory provisions requiring prompt claim submission and liquidation completion within one year. Precedents and legal principles underscored the importance of adhering to timelines and procedural requirements in insolvency proceedings. The Tribunal upheld the dismissal of the application, emphasizing the lack of equity in matters of limitation and the imperative for strict adherence to statutory timelines in the liquidation process. The dismissal was made without costs, underscoring the legal framework's emphasis on procedural compliance and timely actions in insolvency cases.

This detailed analysis of the judgment provides insights into the issues of delay in claim submission, rejection of claims by the liquidator, and the importance of compliance with timelines and procedures under the Insolvency and Bankruptcy Code, 2016.