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TMI Blog2021 (9) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... ile their claims. In the background of this factual matrix, we hold that the delay/latches are on behalf of the Appellant and there is no dereliction of duty on behalf of the IRP/PR. The Resolution Professional was not duty bound to collate claims which are belatedly received after the last date thereby delaying the entire CIRP which is a time bound process and further having regard to the fact that the claim of the Appellant was incorporated in the Information Memorandum which was circulated to the Prospective Resolution Applicant and the Members of the Committee of Creditors for their consideration, there is no dereliction of duty on behalf of the IRP/RP as provided for under Sections 18 and 21(1) of the Code. Appeal dismissed. - COMPANY APPEAL (AT) (INSOLVENCY) No. 328 of 2021 - - - Dated:- 16-9-2021 - [Justice Anant Bijay Singh] Member (Judicial) And [Ms. Shreesha Merla] Member (Technical) For the Appellant : Mr. Nitya Sharma, Standing Counsel (CBIC) For the Respondent : Mr. Kiran Shah, (RP) JUDGEMENT [Per; Shreesha Merla, Member (T)] 1. Aggrieved by the Order dated 10.03.2021 passed by the Learned Adjudicating Authority (National Company Law Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicants have infused money or have taken financial assistance from other sources, in that event, they will have to approach for enhancement of the loan / infusion of money, which practically takes a longer time and by the time they would complete all these processes, the period of CIRP will be over. 2. Learned Counsel appearing for the Appellant strenuously argued that the Appellant was intimated about the CIRP Proceedings vide email dated 28.07.2020; intimation regarding change in the Resolution Professional was intimated by email dated 11.08.2020; the Appellant filed their claim in Form-B on 04.09.2020 and thereafter received an email dated 05.09.2020 from the Respondent/Resolution Professional that the claim of ₹ 13,34,44,050/- was rejected on the ground that it was belatedly filed after the last date of submission which was 27.08.2020. It is the case of the Appellant that they were neither intimated nor were they aware about the fact that the last date of submission of claim has expired. The departmental claims being statutory levies were reflected by the Corporate Debtor in their books of accounts for the Financial Years 2019-2020 and 2020-2021. 3. The Learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Prospective Resolution Applicant after considering all the modifications suggested by the Members of the CoC. Subsequently, the Plan was approved with 91.02% by the Members of the CoC. 7. It is seen from the record that the Resolution Applicant preferred an Application for the approval of the Resolution Plan before the Adjudicating Authority and the matter was listed for hearing on 16.06.2021. Presently, the Resolution Plan of the Prospective Resolution Applicant is under consideration by the Adjudicating Authority. Assessment: 8. The CIRP has admittedly commenced from 12.03.2020 and the period of 90 days from the Insolvency Commencement Date had concluded on 10.06.2020. Considering the period of lockdown of 68 days, the last date of receipt of claims was considered upto 16.08.2020. Admittedly, the Appellant filed their claim on 04.09.2020 with a delay of 19 days. Section 15 pertaining to Public Announcement of CIRP reads as follows:- 15. Public announcement of corporate insolvency resolution process.-(1) The public announcement of the corporate insolvency resolution process under the order referred to in section 13 shall contain the following information, nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IRP to the Department:- 12. It is clear from the aforesaid email that the intimation with respect to initiation of CIRP and appointment of IRP was duly informed enclosing the copy of the Order of the Adjudication Authority dated 12.03.2020. The claim was made with a 19 days delay on 04.09.2020. It is relevant to note the duties of Interim Resolution Professional as provided for under Section 18 of the Code:- 18. Duties of interim resolution professional.-The interim resolution professional shall perform the following duties, namely:- (a) collect all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of the corporate debtor, including information relating to- (i) business operations for the previous two years; (ii) financial and operational payments for the previous two years; (iii) list of assets and liabilities as on the initiation date; and (iv) such other matters as may be specified; (b) receive and collate all the claims submitted by creditors to him, pursuant to the public announcement made under sections 13 and 15; (c) constitute a committee of creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Once a resolution plan is duly approved by the Adjudicating Authority under Sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan; (ii) 2019 amendment to Section 31 of the I B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I B Code has come into effect; (iii) Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval Under Section 31 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion can only be granted once. In Arcelor Mittal (India) (P) Ltd. v. Satish Kumar Gupta93, this Court had held that the time taken in legal proceedings in relation to the CIRP must be excluded from the timeline mentioned in Section 12. Since this could extend the CIRP indefinitely, the Insolvency and Bankruptcy Code (Amendment) Act 2019, inserted a second proviso to Section 12(3) with effect from 16 August 2019 to state that the CIRP in its entirety must be mandatorily completed within 330 days from the insolvency commencement date, including the time taken in legal proceedings. A legislative amendment that takes away the basis of a judicial finding is indicative of the strong emphasis of the IBC on its timelines and its attempt to thwart the prospect of stakeholders engaging in multiple litigations, solely with the intent of causing undue delay. Delays are also a cause of concern because the liquidation value depletes rapidly, irrespective of the imposition of a moratorium, and a delayed liquidation is harmful to the value of the Corporate Debtor, the recovery rate of the CoC and consequentially, the economy at large. In Essar Steel (supra) a three judge Bench of this Court, empha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the speech not in order to construe the amended Section 12, but only in order to explain why the Amending Act of 2019 was brought about. 127. The decision in Essar Steel (supra) while reiterating the rationale of the IBC for ensuring timely resolution of stressed assets as a key factor, had to defer to the principles of actus curiae neminem gravabit, i.e., no person should suffer because of the fault of the court or the delay in the procedure. In spite of this Court s precedents which otherwise strike down provisions which interfere with a litigant s fundamental right to non-arbitrary treatment under Article 14 by mandatory conclusion of proceedings without providing for any exceptions, this Court refused to strike down the second proviso to Section 12(3) in its entirety. It noted that the previous statutory experiments for insolvency had failed because of delay as a result of extended legal proceedings and chose to only strike down the word mandatorily , keeping the rest of the provision intact. Therefore, the law as it stands, mandates the conclusion of the CIRP including time taken in legal proceedings, within 330 days with a short extension to be granted only in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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