No Claim Can Be Submitted After Approval Of Resolution Plan By CoC If Creditor Was Aware Of CIRP Initiation Against Corporate Debtor: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Arun Baroka (Technical Member) has held that when a creditor is well aware of the initiation of the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor but chooses not to file a claim before the Resolution Professional, it cannot be permitted to submit the claim after the Resolution Plan has been approved by the Committee of Creditors (CoC). Brief Facts: An Agreement dated 29.05.2015 was entered between United News of India and the Appellant where T.C.A. Surveyors & Advisors Pvt. Ltd. (Appellant) was chosen to develop various properties of United News of India situated in different cities in the Country. Amount of Rs.1 Crore was deposited by another group company of Appellant Poddar Projects Limited (PPL). Corporate Debtor by its letter dated 15.03.2017 informed that stakeholders of the Corporate Debtor are opposed to the signing of the Draft Agreement, Definitive Agreement dated 29.05.2015 was terminated. Appellant issued a Demand Notice dated 21.03.2018 under Section 8 of the Insolvency and Bankruptcy Code, 2016 (Code) demanding an outstanding amount from the Corporate Debtor, thereafter, Operational Creditor filed an application under Section 9 being Company Petition (IB) No. 479 of 2018 before the Adjudicating Authority. The application came to be dismissed by the Adjudicating Authority on 31.10.2018 holding that the transaction is clearly one which does not qualify as an Operational Debt. Resolution Professional filed IA No.60 of 2024 for approval of the Resolution Plan. On 31.10.2024, Resolution Professional sent an e-mail to the Appellant informing that Appellant's claim received on 25.10.2024 by Speed Post cannot be considered. The Resolution Plan has already been approved by the CoC and at that stage, no claim can be considered. Appellant after rejection of his claim filed an IA No.507 of 2025 on 14.11.2024 before the Adjudicating Authority seeking a direction to the Resolution Professional to accept the claim of Rs.9,20,87,500. On 12.02.2025 by the impugned order, Adjudicating Authority allowed the plan approval application IA No.60 of 2024 and rejected IA No.507 of 2025. Against the above order, the present appeal has been filed. Contentions: The Appellant submitted that the debt of the Appellant was required to be treated as financial debt. It was further submitted that it was obligation of the Resolution Professional to prepare the Information Memorandum which shall include the financial statements of the Corporate Debtor and once the amounts paid by the Corporate Debtor were duly reflecting under the head of 'Long-Term Liabilities', there was no occasion to incorrectly classify the Appellant as an 'other creditor'. It was also contended that there is no decision holding that there shall be an automatic extinguishment of all rights and claims which arose prior to the CIRP. Such extinguishment can only take place if the same has been specifically contemplated in terms of the Resolution Plan. Per contra, the Respondent submitted that the claim of the Appellant which was being reflected in the financial statement has been taken due note by the Resolution Professional and in the Information Memorandum, the claim has been referred as 'other creditor'. Counsel for the CoC submitted that the claim filed after approval of the plan by the CoC cannot be considered. The Appellant was very well aware of the commencement of the CIRP which is recorded in the proceedings before the High Court in Commercial Suit filed by the Appellant. Observations: The Tribunal observed that the Appellant, being aware of the initiation of CIRP, is solely responsible for not filing the claim on time, which was submitted only after the Resolution Plan was approved by the CoC. It further noted that the Appellant contended that the Appellant's claim was reflected in the Corporate Debtor's balance sheet as on 31.03.2021 under 'Other Long-Term Liabilities' as an advance of ₹6.5 crore for building construction. However, the Appellant's Section 9 petition was earlier rejected on the ground the debt did not qualify to be an operational debt. The Tribunal further noted that in the present case, the Appellant was classified under the 'other creditors' category by the Resolution Professional based on the financial statements, despite not filing a claim. The Resolution Plan proposed payments to secured financial creditors, operational creditors, employees, government dues, and gratuity liabilities, but excluded 'other creditors'. It also noted that the Appellant argues that the funds infused qualify as financial debt and were wrongly categorised. Earlier, the Appellant's Section 9 application was rejected on the ground that the claim was not operational debt, following which ...

No Claim Can Be Submitted After Approval Of Resolution Plan By CoC If Creditor Was Aware Of CIRP Initiation Against Corporate Debtor: NCLAT

Mohd Malik Chauhan

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

No Claim Can Be Submitted After Approval Of Resolution Plan By CoC If Creditor Was Aware Of CIRP Initiation Against Corporate Debtor: NCLAT

Mohd Malik Chauhan

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers