2021 (6) TMI 282 - Tri - Insolvency and Bankruptcy

Seeking direction to Respondent to consider the claim filed by the Applicant - rejection on ground that the same was submitted way beyond the period of ninety days from the initiation of CIRP - Approval of Resolution Plan - HELD THAT - The present application was filed on 27.01.2021 and the Resolution Plan was approved by the CoC on 26.02.2021. An application for approval of the Resolution Plan has also been filed by the RP and the same is pending consideration by this Adjudicating Authority - Although, the present application had been filed before the approval of Resolution Plan by the CoC and before the Respondent rejected the claim, and although, the Respondent is at fault for having not replied to the email by the Applicant herein within reasonable time, the Applicant also does not seem to have put in any reminder or follow up with the RP regarding its claim after submitting it. Further, the claim by other two Applicants named hereinbefore, i.e., Dhandhania Brothers Private Limited and RD Fan Limited filed with the RP on 24.12.2020 had also been rejected by the RP on 26.12.2020, had the RP not mistaken Applicant's e-mail to be a repetition of claim as aforesaid, he would have, in all probability, rejected the Applicant's claim too on the same ground that it was filed beyond the stipulated time period. The CIRP is a time-bound process and if the Adjudicating Authority sets the clock back for the reason that the Applicant was not diligent enough in pursuing its claim, it would certainly go against the main objective of the Code - It is wrong on the part of the Applicant to submit that the RP has himself caused unnecessary delay in consideration of the claim of the Applicant, that had been filed even before the Resolution Plan was received by the RP. The Applicant had filed the claim on 24.12.2020 and the RP had responded to it on 26.12.2020. Since it is not in the powers of the RP to condone the delay, it was Applicant's duty to approach this Adjudicating Authority within reasonable time, especially in a case where the claim with the RP had been submitted by the Applicant's Advocate. While this Adjudicating Authority appreciates the submission of the Applicant that the timeline is only directory and not mandatory, it cannot mean that the directory provision of the Code can be used to contravene the objective of the Code - Application dismissed.

Summary

Issues Involved:
1. Consideration of delayed claim submission by the financial creditor.
2. Impact of COVID-19 lockdown on the claim submission timeline.
3. Admissibility of claims filed beyond the stipulated period under the Insolvency and Bankruptcy Code, 2016.

Issue-wise Detailed Analysis:

1. Consideration of delayed claim submission by the financial creditor:
The application was filed by a financial creditor, Dhandhania Electronics Limited, seeking the Tribunal's direction to the Resolution Professional (RP) to consider their claim filed on 24.12.2020. The RP had published the invitation for claims on 29.02.2020, with a deadline of 12.03.2020. The creditor cited health issues and the COVID-19 pandemic as reasons for the delay. The RP initially overlooked the claim due to a misunderstanding but later rejected it on 03.05.2021, stating it was filed beyond the permissible period. The Tribunal found that the RP's mistake was genuine and not intentional. However, the Tribunal noted that the creditor did not follow up promptly after submitting the claim.

2. Impact of COVID-19 lockdown on the claim submission timeline:
The applicant argued that the COVID-19 lockdown and related restrictions prevented timely submission of the claim. They relied on the Supreme Court's Suo Motu Writ Petition (Civil) No. 3 of 2020, which extended the limitation period due to the pandemic. The Tribunal acknowledged the lockdown but noted that the applicant became aware of the CIRP on 02.11.2020 and still delayed filing the claim until 24.12.2020. The Tribunal found the reasons for the delay unsubstantiated, as the lockdown had been lifted in parts since October 2020, and the Tribunal was operational through video conferencing.

3. Admissibility of claims filed beyond the stipulated period under the Insolvency and Bankruptcy Code, 2016:
The Tribunal emphasized that the CIRP is a time-bound process. Allowing the claim at this stage would necessitate changes to the Information Memorandum and potentially restart the CIRP, which was nearing completion. The Tribunal highlighted that the timeline for claim submission, while directory, should not be used to defeat the Code's objective. The Tribunal referred to the substitution of regulation 12(2) of the CIRP Regulations, which aimed to prevent delays. The Tribunal concluded that condoning the delay without sufficient reason would undermine the process and set a precedent for other late claims, disrupting the CIRP's time-bound nature.

Conclusion:
The Tribunal dismissed the application, stating that the delay was not justified and allowing the claim would be unfair to other creditors and contrary to the Code's objectives. The Tribunal directed the Registry to send email copies of the order to all parties and their counsel and stated that a certified copy of the order could be issued upon compliance with requisite formalities.