The Legislation has not provided any discretion to RP for admitting the claim after the extended period. Whenever any claim is filed after extended period provided by CIRP Regulation 12(2), the RP should have rejected the claim.
The Supreme Court dismissed the appeal of a claimant who had obtained an arbitral award against a corporate debtor undergoing insolvency resolution and held that the claimant could not file its claim after the deadline prescribed in the public announcement, as it was bound by the provisions of the Insolvency and Bankruptcy Code and the regulations made thereunder. The Supreme Court also held that the resolution professional had no power or duty to entertain or admit the late claim, as it was required to act in accordance with the time-bound and streamlined process for resolving insolvency and that the resolution plan approved by the committee of creditors was binding on all stakeholders, including dissenting creditors and late claimants, and could not be challenged by the late claimant on the ground that it did not consider its claim.
The appellant and the Corporate Debtor (KST Infrastructure Pvt. Ltd.) for land development into residential group housing complex, however, the appellant sought arbitration being aggrieved by the Corporate Debtor’s alleged misconduct in advertising the project without the appellant’s name. the arbitral award was in favour of the appellant, aggrieved by which the Corporate Debtor filed a Petition under Section 34 of the Arbitration and Conciliation Act, 1996. Meanwhile the appellant filed executing proceeding which were eventually adjourned. Meanwhile, CIRP was admitted under Sec 7 of IBC against the Corporate Debtor by some home buyers. Thereafter IRP was appointed, and it issued a public announcement in accordance with Sec 15 of IBC. The appellant explained that it could not file the claim in time as it was unaware of the public announcement. The appellant explained that it could not file the claim in time as it was unaware of the public announcement. The appellant filed an application under Section 60(5) of the IBC. relief was granted to the appellant by the Adjudicating Authority. Respondent No. 1 preferred an appeal under Section 61 of the IBC before the National Company Law Appellate Tribunal, New Delhi (‘NCLAT’) against the Adjudicating Authority’s order. The view of the NCLAT resulted in the appellant approaching this Court.
The Supreme Court held that the appellant could not file its claim after the deadline, as it was bound by the provisions of the IBC and the regulations made thereunder. The appellant was aware of the initiation of the corporate insolvency resolution process and had sufficient opportunity to file its claim within the stipulated time. The appellant’s claim was not a contingent or unascertained claim, as it was based on an arbitral award that had attained finality. Therefore, the appellant could not invoke Section 60(5) of the Code to seek extension of time for filing its claim.
As observed further by the Hon’ble Supreme Court, the resolution professional had no power or duty to entertain or admit the claim of the appellant, as it was filed after the deadline. The resolution professional was required to act in accordance with the Code and the regulations, which prescribed a time-bound and streamlined process for resolving insolvency. The resolution professional could not act as an adjudicating authority or a court to decide on disputed claims or grant relief to late claimants.
The resolution plan approved by the committee of creditors could not be challenged by the appellant on the ground that it did not consider its claim. The appellant was not a party to the corporate insolvency resolution process and had no locus standi to challenge the resolution plan. The resolution plan was binding on all stakeholders, including dissenting creditors and late claimants. However, in the end, the Supreme Court observed that the resolution plan did not affect the rights of the appellant to enforce its arbitral award against the assets of the corporate debtor that were not covered by the resolution plan.
The judgment is based on the interpretation and application of the Insolvency and Bankruptcy Code, 2016 (the Code) and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (the Regulations), which are the main legal framework for resolving corporate insolvency in India. The judgment upholds the principles of creditor-driven and time-bound resolution process, which are the objectives of the Code. The judgment emphasizes that the creditors have the primary role and responsibility in deciding the fate of the corporate debtor, and that the resolution process must be completed within a fixed timeline to maximize the value of the assets and minimize the losses for all stakeholders.
The judgment further affirms the principles of conclusiveness and the binding nature inherent in the resolution plan, which constitute fundamental elements of the insolvency and bankruptcy framework. Moreover, the judgment explicitly clarifies that the resolution plan does not impede the rights of creditors to pursue their claims against the assets of the corporate debtor that fall outside the scope of the resolution plan.