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2022 (10) TMI 63 - AT - Insolvency and BankruptcySeeking issuance of direction to the Respondents, to make payment towards the Applicant s Claim from the Contingency Fund - documents enough to establish their claim or not - Section 60(5) of the I B Code, 2016 read with Rule 11 of the NCLT Rules, 2016. Whether the Resolution Professional was right in rejecting claims of Appellants with reasoning that the documents were not enough to establish their claim? - HELD THAT - This Tribunal has noted that during the pleadings and averments made by the ₹ 2nd Respondent that he had no access to the Corporate Debtor s books of accounts and records, and he had no access to the SAP portal to verify the Appellant s claim. This proved to be a handicap for the Resolution Professional for verifying the Claims, especially, when the Appellant had failed to furnish / supply the required documents, to establish his claims, as requested by the 2nd Respondent through email. The approval of a Resolution Plan gives the Corporate Debtor a fresh start and resolves, once and for all, the financial position of the Corporate Debtor as it stood on the day of approval of the Resolution Plan, in order to allow it to have a clean slate for the future. This Tribunal also notices that amended provision as contained in Section 31 of I B Code, 2016 makes the Successful Resolution Plan binding on all concerned including the Government. It is held in the judicial pronouncement that this particular Amendment to be clarificatory in nature and hence, retroactive / retrospective in operation. Therefore, any Claim, even if it pertains to a date, prior to the effective date of this Amendment, would not be entertained after the Resolution Plan is so approved. Thus, the provisions in the I B Code, 2016 this Tribunal upholds the decision of the Resolution Professional adjudicated by the Adjudicating Authority to reject the Claims of the Appellant on the basis that claims are unsupported and documentary evidence furnished by the Appellant were not proper. Whether the relief sought by the Appellant for payment of Rs. 62,31,242/- towards claim from contingency fund admissible? - HELD THAT - The Contingency Fund is for the specific purpose to cater for Claims which were not Determined and settled finally, at the time of the Resolution Plan. There is a stipulated time frame as provided in the Resolution Plan and the Fund after meeting out the requirements of the Claims, ceased to exist. By no stretch of imagination, it can be inferred that any Claim can be entertained after the Resolution Plan, was fully implemented and the new management of the Successful Resolution Applicant had taken over - this Tribunal upholds the decision of the Adjudicating Authority to be a correct and proper one, on this issue. Appeal dismissed.
Issues Involved:
1. Whether the 'Resolution Professional' was right in rejecting claims of 'Appellants' with reasoning that the documents were not enough to establish their claim. 2. Whether the relief sought by the 'Appellants' for payment of Rs. 62,31,242/- towards claim from contingency fund is admissible. Issue-wise Detailed Analysis: Issue No. (I): Whether the 'Resolution Professional' was right in rejecting claims of 'Appellants' with reasoning that the documents were not enough to establish their claim? (a) The Appellant objected to the reasoning followed by the 'Resolution Professional' in rejecting claims, citing the unavailability of proper documents necessary to prove an 'Operational Debt' as per Section 9(3) of the I & B Code, 2016. (b) The Tribunal noted that the 2nd Respondent had no access to the 'Corporate Debtor's books of accounts and records, and the 'SAP portal' to verify the Appellant's claim. This proved to be a handicap for verifying the claims, especially when the Appellant failed to furnish the required documents. (c) Section 31 of the I & B Code, 2016, mandates that once a resolution plan is approved, it shall be binding on the corporate debtor and all stakeholders, ensuring a clean slate for the future. (d) The Tribunal considered the Supreme Court's decision in Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited, which emphasized that once a resolution plan is approved, all claims not part of the plan stand extinguished. (e) After the direction of the 'Adjudicating Authority' on 26.07.2019, the claims were admitted but found unsupported by necessary documents during verification. The Appellant could not furnish the required documents, leading to the rejection of the claims. (f) The Tribunal referenced its earlier judgment in Santanu T. Ray vs Tata Capital Financial Services, which highlighted that claims filed beyond the stipulated time could not be entertained. (g) The Tribunal upheld the decision of the 'Resolution Professional' and the 'Adjudicating Authority' to reject the claims based on insufficient documentary evidence. Issue No. (II): Whether the relief sought by the 'Appellants' for payment of Rs. 62,31,242/- towards claim from contingency fund is admissible? (a) Contingency Fund is a provision in a 'Resolution Plan' to cover inevitable losses of creditors, including uncertain and pending liabilities. (b) The I & B Code, 2016, emphasizes a time-bound 'Corporate Insolvency Resolution Process' aimed at reviving the 'Corporate Debtor' rather than recovery enforcement. (c) Regulation 14 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, mandates the 'Resolution Professional' to estimate and create a provision for contingent claims in the 'Resolution Plan'. (d) The 'Resolution Plan' is a rehabilitation plan targeting legal, financial, management, and technical strategies to revive the 'Corporate Debtor'. (e) The Tribunal noted that the 'Contingency Fund' was maintained for six months from the date of approval of the 'Resolution Plan'. The Appellant failed to substantiate claims with necessary documents during this period. (f) The Tribunal observed that the 'Resolution Plan' was successfully implemented, the 'Successful Resolution Applicant' took over management, and the 'Monitoring Committee' ceased to exist. (g) The Tribunal emphasized that the Contingency Fund is for claims not determined and settled at the time of the 'Resolution Plan'. Once the fund is exhausted and the plan is fully implemented, no further claims can be entertained. (h) The Tribunal upheld the decision of the 'Adjudicating Authority' on this issue. Conclusion: The Tribunal agreed with the decision of the 'Adjudicating Authority' (National Company Law Tribunal, Chennai Bench-II) and sustained the 'Impugned Order' passed in IA/IB/920/2020 in CP/280/IB/2018. Consequently, the appeal was dismissed as devoid of merits.
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