NCLT Delhi: Unawareness About CIRP Is No Ground To File Claims At Belated Stage

The National Company Law Tribunal (“NCLT”), New Delhi Bench comprising of Mahendra Khandelwal (Judicial Member) and Rahul Bhatnagar (Technical Member), dismissed an application filed in Toyota Financial Services India Ltd. vs. Mr. Suresh Kumar Jain by Toyota Financial Services India Ltd., a Financial Creditor (‘Applicant’) for seeking directions against the Mr. Suresh Kumar Jain, Resolution Professional (‘RP’) of MK Overseas Pvt. Ltd. (Corporate Debtor) to admit claim of the Applicant. The Tribunal held that unawareness about the initiation of CIRP against the Corporate Debtor is not a ground to file claims at a belated stage. Background Facts: The Corporate Insolvency Resolution Process (CIRP) of Corporate Debtor was initiated on 19.09.2019. The Applicant had no knowledge of the CIRP proceedings and it was only via the Collection Agent in May 2023 came to know about CIRP proceedings and hence, could not file their claim within the prescribed time limit. Immediately on the knowledge of the CIRP proceedings, the Applicant filed its claim. The RP was very well aware of the claim prevailing in the records of the Corporate Debtor. The RP rejected the claim and stated that the Resolution Plan of Exclusive Motors Pvt. Ltd. (‘SRA’) has been approved by the Committee of Creditors (CoC) and the application for the Resolution Plan’s approval is pending before the NCLT. The Applicant argued that it constitutes a substantial voting share in the CoC and would be a grave prejudice if its claim is not admitted by the RP. Further, as per the Information Memorandum by the RP before the SRA ought to have included the claim of the Applicant, who has not filed its claims to correct the liabilities of the Corporate Debtor for its appropriate resolution. Contentions of the RP: The RP argued that the public announcement of the CIRP was made on 21.09.2019 with the deadline for submission of claims till 04.10.2019. The Applicant filed its claim belatedly on 23.05.2023 i.e., after a delay of 1327 days without any sufficient cause for the delay, and also did not seek condonation of delay. RP submitted that the Applicant violated Regulation 12(2) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (‘IBBI Regulations 2016’) as per which a creditor, who fails to submit a claim with proof within the time stipulated in the public announcement, may submit the claim with proof to the RP on or before the ninetieth day of the CIRP commencement date. Further, the Resolution Plan has been submitted by the SRA pending before the NCLT for approval. Accepting new claims at this belated hour, that too without sufficient cause, would jeopardize and derail the entire resolution process. NCLAT Verdict: The NCLT New Delhi dismissed the application and held that unawareness about the initiation of CIRP against the Corporate Debtor is not a ground to file claims at a belated stage. The Tribunal emphasized that the purpose of a public announcement is to inform all stakeholders about the initiation of the CIRP for the Corporate Debtor allowing creditors to submit their claims and help in preparation of the Information Memorandum. The Information Memorandum, containing claims from Operational and Financial Creditors, is crucial for Resolution Applicants to create a legally and financially sound Resolution Plan as required by Section 29 of the Code. Moreover, the IBBI Regulations, 2016, set clear timelines under Regulation 12(2) for creditors to submit claims with proof. If a creditor fails to do so within the specified time in the public announcement, it enables potential resolution applicants to submit realistic and viable resolution plans after conducting due diligence. The Tribunal noted that the Applicant filed the claim with a delay of more than 3 years later and submitted that they were unaware of the CIRP initiation against the Corporate Debtor and only filed their claim when they became aware of it. In conclusion, NCLT held that there was no due diligence on the part of the Applicant as the application was filed more than 3 years later after the approval of the Resolution Plan by the CoC. Case Title: Toyota Financial Services India Limited vs. Mr. Suresh Kumar Jain Case No.: IA. No. 3643/2023 in CP IB NO. 1731/ND/2019 Click here to Read/Download Order

NCLT Delhi: Unawareness About CIRP Is No Ground To File Claims At Belated Stage

Sachika Vij

Tags