Requirement To Submit Claim As Per Format Given In Liquidation Regulations Is Directory In Nature: NCLT Mumbai

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member), while adjudicating a petition filed in IDBI Bank Limited v EPC Constructions India Limited, has held that the requirement of submitting claims as per format prescribed under ‘Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016’ is directory in nature and to merely ensure timely completion of process. The said requirement is not intended to scuttle rights of persons. “It appears that the requirement to adhere to the forms specified under the Liquidation Regulations is directory in nature for the timely completion of the process and not intended to scuttle the rights of the persons or increase the disputes and consequential appeal under Section 42 of the Code.” Background Facts On 20.04.2018, EPC Constructions India Limited was admitted into Corporate Insolvency Resolution Process (“CIRP”) by the NCLT. Slipco Construction Pvt. Ltd. (“Appellant”) submitted its claim of Rs. 1,06,91,881/- which was approved and admitted by the Resolution Professional. Thereafter the NCLT directed liquidation of the Corporate Debtor. The Appellant filed a claim of Rs. 1,06,00,000/- before the Liquidator within the timeline specified in the public announcement. On 24.07.2021 the Liquidator rejected the Appellant’s claim citing that the claim was not submitted in accordance with Section 38(3) of IBC and Regulation 17 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (“Liquidation Regulations”). The Appellant challenged the rejection of its claim by filing an appeal before the NCLT under Section 42 of IBC. NCLT Verdict The Bench noted that the Appellant’s timely submitted claim was rejected by the Liquidator for not having been filed as per format given in Liquidation Regulations. It was held that the requirement to submit claim as per a particular format given in Liquidation Regulations is directory in nature and not mandatory. Such requirement is not intended to scuttle the rights of persons. Therefore, the Liquidator could not have rejected a timely submitted claim upon a mere procedural lacking. “The above claim was rejected by the Liquidator on the reason that the Appellant did not file the claim in the appropriate format specified under the Liquidation Regulations. It appears that the requirement to adhere to the forms specified under the Liquidation Regulations is directory in nature for the timely completion of the process and not intended to scuttle the rights of the persons or increase the disputes and consequential appeal under Section 42 of the Code. Considering the above and the fact that the claim of Appellant had already been admitted in CIRP and that fresh claim was filed within the time announced by the Liquidator, rejection of the same merely on a procedure / format prescribed in the Liquidation Regulations may not, in our opinion, help to achieve the ends of justice.” The Bench directed the Liquidator to consider and verify the Appellant’s claim. Case Title: IDBI Bank Limited v EPC Constructions India Limited Case No.: CP(IB)No.1832/MB/C-II/2017 Counsel For Appellant: Adv Rajendra Yadav Counsel For Liquidator: Adv. Shriraj Khambete Click Here To Read/Download Order

Requirement To Submit Claim As Per Format Given In Liquidation Regulations Is Directory In Nature: NCLT Mumbai

Pallavi Mishra

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Pallavi Mishra

Requirement To Submit Claim As Per Format Given In Liquidation Regulations Is Directory In Nature: NCLT Mumbai

Pallavi Mishra

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Pallavi Mishra

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