2021 (6) TMI 604 - Tri - Insolvency and Bankruptcy

Condonation of delay in filing the claim before the Resolution Professional of the Corporate Debtor - HELD THAT - In accordance with section 15(1)(c) of the Code read with regulation 6(2)(c) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations), once the application for initiation of the CIRP is admitted by the National Company Law Tribunal (NCLT), a public announcement is required to be released by the IRP for inviting claims - Regulation 12(2) of the CIRP Regulations provides that a creditor, who fails to submit claim with proof within the time stipulated in the public announcement, may submit the claim with proof to the IRP or the RP, as the case may be, on or before the ninetieth day of the insolvency commencement date. This deadline of 90 days was introduced by way of an amendment, with effect from July 2018. Regulation 12(2) of the CIRP Regulations provides that a creditor, who fails to submit claim with proof within the time stipulated in the public announcement, may submit the claim with proof to the IRP or the RP, as the case may be, on or before the ninetieth day of the insolvency commencement date. This deadline of 90 days was introduced by way of an amendment, with effect from July 2018 - Although the introduction of a fixed timeline for submission of claims was more than welcome, the amended Regulation 12 (2) seems to have raised more issues than it purports to resolve. The amended Regulation 12 (2) is silent in regard to the status of creditors who have missed the deadline and are desirous of filing their claims. In the recent orders/judgments, the Hon'ble Tribunals have condoned the delay even after the time period of elapse of ninety days, citing that the amended Regulation 12 (2) is directory. In the present case, the Applicant has failed to establish the reason for the delay in submission of the claim. This led us to the questions that why not the Respondent/RP take cognizance of outstanding statutory dues as per book of accounts of the Corporate Debtor. The Respondent has clearly stated that the alleged dues are not yet quantified and litigations under various authorities are pending - The Respondent has also stated that the Resolution Plan is pending for approval before CoC. Hence, we are of the view that there is no merit in this application. The Applicant has failed to reason out the delay in submission of claim, the quantified amount is also under dispute. Hence, at this fag end of CIRP, this application cannot be entertained. Application dismissed.

Summary

Issues:
Delay in filing claim before the Resolution Professional of the Corporate Debtor under section 60(5) of the Insolvency and Bankruptcy Code, 2016.

Analysis:
1. The Applicant sought to condone a delay of 217 days in filing a claim before the Resolution Professional. The claim pertained to duty saved amount and interest owed by the 2nd Respondent under Customs Notification. The Applicant contended that as an Operational Creditor, they were entitled to claim the amount payable to the Government of India.

2. The Respondents argued against condoning the delay, highlighting that the Applicant was aware of the initiation of Corporate Insolvency Resolution Process (CIRP) against the 2nd Respondent. They also raised issues regarding the quantification of the claim and pending litigations, stating that the Resolution Plan was awaiting approval before the Committee of Creditors (CoC).

3. The Adjudicating Authority examined the provisions of the Insolvency and Bankruptcy Code and the Insolvency Resolution Process Regulations. It noted the requirement for timely submission of claims to ensure a time-bound resolution process. The Authority highlighted Regulation 12(2), which introduced a 90-day deadline for submitting claims, effective from July 2018.

4. The question arose whether the 90-day period stipulated in Regulation 12(2) was mandatory or could delays be condoned. Recent judgments by various Tribunals indicated a trend of condoning delays beyond the specified timeline, considering the regulation as directory rather than mandatory.

5. The Authority referenced specific cases where delays were condoned, emphasizing the need to consider claims even if filed after the deadline. Notably, in a case involving government dues, the Tribunal directed the Resolution Professional to collate the claim despite the expiration of the 90-day period.

6. Ultimately, the Authority dismissed the Applicant's claim for condonation of the 217-day delay. The decision was based on the Applicant's failure to provide a valid reason for the delay, the disputed nature of the quantified amount, and the pending Resolution Plan approval. The Authority concluded that at the advanced stage of the CIRP, the application could not be entertained.

7. The judgment highlighted the importance of timely claim submission in insolvency proceedings while acknowledging the evolving interpretation of regulations regarding condonation of delays. The decision underscored the need for creditors to adhere to prescribed timelines and provide justifiable reasons for any delays in filing claims.