2021 (6) TMI 658 - AT - Insolvency and Bankruptcy

Application to consider Proof of claim along with condonation of delay before the Adjudicating Authority - grievance of the Appellant is that when the Adjudicating Authority passed the Impugned Order it did not take into consideration and include the claim made by the department for Operational dues - HELD THAT - The Appellant was required to file claim in terms of IBC provisions but did not follow the procedure as laid down in the IBC read with the Regulations and did not duly file claim in proper format within time. Even when the time was over and the Appellant department was advised by the Resolution Professional to get delay condoned by moving Adjudicating Authority, the department instead of resorting to Section 60 of IBC and other enabling provisions only sent a letter, further with a wrong Format, that too addressed to Adjudicating Authority - The Learned Counsel for the Appellant has not been able to show anything that the Application as such was filed or was registered or taken up with the Adjudicating Authority for consideration on the judicial side. Sending off a letter cannot be said to be in compliance with Part III of NCLT Rules, 2016, or Section 60 of IBC or the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 or the Regulations. There are no fault with Respondent No. 1 for not including such operational debt so as to be part of the Resolution Plan as necessary procedure was not followed. In IBC delay affects maximization of Value, and time bound steps for CIRP are prescribed. Reversal of stages, affects progress. Timely and duly taking steps by all stakeholders is material - appeal dismissed.

Summary

Issues:
1. Appeal against Impugned Order allowing Resolution Plan without considering claim for operational dues.
2. Compliance with procedures for filing claims under the Insolvency and Bankruptcy Code (IBC).
3. Interpretation of relevant IBC provisions regarding approval of resolution plans and extinguishment of statutory dues.
4. Failure to follow prescribed procedures for filing operational debt claims within the specified time limits.
5. Dismissal of the appeal challenging the Impugned Order.

Analysis:
1. The appeal was filed by the Assistant Commissioner of Central Tax against the Impugned Order passed by the Adjudicating Authority in the matter of a Corporate Debtor. The Appellant argued that the Adjudicating Authority did not consider the claim made by the department for operational dues of a specific amount. The Appellant contended that the Resolution Professional was aware of the claim but failed to include it in the Resolution Plan. The Appellant emphasized the importance of including statutory dues in the Resolution Plan to avoid their extinguishment as per the relevant IBC provisions.

2. The discussion in the judgment referred to a Supreme Court case highlighting the amended Section 31 of the IBC, emphasizing the need for statutory dues to be part of the Resolution Plan to avoid their extinguishment. The Appellant claimed to have filed the claim with the Interim Resolution Professional but failed to follow the prescribed procedures for filing claims under the IBC. The Resolution Professional asserted that the department did not submit the claim in the required format within the specified time limits, leading to the claim not being considered for inclusion in the Resolution Plan.

3. The judgment delved into the regulations governing the submission of claims by operational creditors under the IBC. It was noted that the Appellant did not file the claim in the proper format within the stipulated time frame, despite being advised to seek condonation of delay from the Adjudicating Authority. The failure to adhere to the procedural requirements and timely filing of claims resulted in the claim not being included in the Resolution Plan, as per the IBC provisions.

4. The Tribunal found that the Respondent had not erred in accepting the Resolution Plan as the Appellant failed to follow the necessary procedures for filing operational debt claims under the IBC. The judgment emphasized the importance of timely and compliant steps in the Corporate Insolvency Resolution Process (CIRP) to ensure the maximization of value and progression of the resolution process. Ultimately, the appeal was dismissed, and no costs were awarded.

5. In conclusion, the judgment highlighted the significance of procedural compliance and timely filing of claims under the IBC. The failure to follow the prescribed procedures led to the exclusion of the operational debt claim from the Resolution Plan, resulting in the dismissal of the appeal challenging the Impugned Order.