After Lapse Of Extended Period Of 90 Days Of Insolvency Commencement Date, RP Not Obliged To Accept Any Claim: NCLAT New Delhi

Brief Facts

A petition under section 7 of the IBC was filed by IDBI Bank Ltd (financial creditor) against JBF Petrochemical Ltd. (Corporate Debtor). The corporate debtor was admitted into insolvency on January 28, 2022. During the moratorium, tax assessment proceedings were initiated by the commissioner of income tax (appellant) against the corporate debtor. An order for the assessment year 2018-19 was passed on March 31, 2022. The appellant filed claims with Resolution Professional (RP) on May 13, 2022 which were filed after the expiry of 90 days within which the claim had to be filed. The time for filing the claims expired on April 28, 2022. The claims for Assessment Year 2018-19 and CPC-processed demands for AYs 2019-20 to 2021-22 were filed. The claims of the appellant were rejected by the RP. The resolution plan in which the claims of the appellant were not included was approved by the adjudicating authority on March 13, 2023. An appeal was filed by the appellant against the rejection of claims and approval of the resolution plan.

Contentions

The appellant submitted that the RP rejected its claims without proper consideration. It was further argued that it was not informed of the rejection of its claims by the RP. It was further argued that the appellant was not provided adequate opportunity to present its claims and against the rejection of its claims. It amounted to the violation of principle of natural justice and contravened section 30(2) of the IBC. It was further contended that the RP did not act in a transparent and fair manner while rejecting the claims. It was further contended that the claims of the appellant should be considered secured as tax liabilities were deemed secure by the Supreme Court judgment in State Tax Officer vs. Rainbow Papers Ltd. (2020).

Per contra, the respondent submitted that the process of CIRP was conducted in accordance with CIRP regulations. It was further argued that the appellant was duly informed of the initiation of the insolvency proceedings. It was further submitted that a public announcement was made for this purpose. It was further contended that the RP was under no obligation to inform every person including the appellant personally about the last date for submitting the claims. It was further argued that the claims of the appellant were time barred as they were filed after 90 days following the insolvency commencement date. It was further submitted that the RP was not obligated to admit the claims filed after the expiry period as per regulation 12 of the CIRP regulations. It was further argued that the status of claims was regularly posted and updated on the website of the corporate debtor and the Insolvency and Bankruptcy Board of India (IBBI) portal. It shall be deemed to be a constructive notice of the rejection of claims of the appellant. It was further argued that the Supreme Court judgment cited by the appellant is not applicable to the present case. The Income Tax Act did not create any charge or security interest for the tax claims.

NCLAT's Analysis

The NCLAT observed that it is the bounden duty of the RP to verify claims of all the stakeholders in a just and transparent manner. The RP can also seek further evidence for this purpose to substantiate the claims. The Tribunal held that the RP was well empowered to seek additional evidence to analyse the admissibility of claims before him. Thus, the RP cannot be faulted for having sought clarifications since the RP was duty bound to verify the claims and call for additional evidence in substantiation of the claims submitted.

The Tribunal further observed that the claims filed after the expiry of 90 days period cannot be admitted by the RP. In the present case, the claims were filed after the deadline and there were no evidence which will demonstrate any contravention of the regulations and lack of due diligence on the part of the RP. The Tribunal held that the RP was right in rejecting the claims of the appellant. The tribunal observed that from a plain reading of the CIRP Regulations, RP can accept claims as per extended period as provided in Regulation 12(1) of CIRP Regulations. After the lapse of extended period of 90 days of the insolvency commencement date, the RP is not obliged to accept any claim. Prima-facie, the said CIRP regulation does not provide any discretion to RP for admitting their claim after the extended period.

The tribunal further noted that list of creditors were regularly updated and posted on the website of the corporate debtor and on IBBI portal which shall be deemed to be a constructive notice. The tribunal did not move with the argument of the appellant that it was kept in dark about the rejection its claims. It was held that it is the duty of the creditors to keep an eye on the websites to check whether the claims were accepted or rejected. The tribunal held that this amounted to deemed knowledge and constructive notice on the Appellant with respect to rejection of its claim. The Appellant cannot shift the burden of their own negligence of not checking the website to ascertain the status of their claim.

The tribunal further observed that no new claim can be admitted after the approval of a resolution plan by the Committee of Creditors (CoC) and adjudicating authority. The tribunal held that when the plan has already been approved by both the CoC and the Adjudicating Authority, it cannot be reopened now on the basis of claims being belatedly agitated by the Appellant who for no justifiable reasons had clearly dropped the guard of being vigilant in pursuing his claims within the time-lines laid down by IBC.

The tribunal further observed that no charge or security interest is created in favour of the Income Tax Department for the tax claims. The tribunal rejected the appellant reliance on the Supreme Court judgment in Rainbow Papers (supra) and held that it was pronounced in a specific context. Additionally, the judgment in the Rainbow Papers (supra) was distinguished by the Supreme Court in a subsequent judgment in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd. & Ors. (2023) in which it was held that the former has to be considered in the facts of that case. This judgment is not applicable in the present case. The tribunal held that the creation of a charge by operation of law must be apparent from the express words of the statute. However, the provisions of Income Tax Act do not create any charge or security interest in favour of the Appellant or provides any foundational basis for the Income Tax Department to be a secured Creditor.

Conclusion

The tribunal concluded that the RP was right in rejecting the claims of the appellant as they were filed after the deadline. In addition to that, the tribunal held that tax claims do not create any charge or security interest in favour of the Income Tax Department therefore they could not be considered as secured creditor. Accordingly, the present appeal was dismissed.

Case Title: Commissioner of Income Tax (TDS-1), Mumbai v. Mr. Sundaresh Bhat (RP)

Court: NCLAT, New Delhi

Case Reference: Company Appeal (AT) (Insolvency) No. 575 of 2023

Judgment Date: 15/10/2024

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