New Claims Cannot Be Admitted When Resolution Plan Is Approved By The CoC And Is Pending Before The AA For Approval: NCLT Mumbai Reiterates
The National Company Law Tribunal, Mumbai Bench, comprising Shri H.V. Subba Rao (Judicial Member) and Shri Shyam Babu Gautum (Technical Member), while adjudicating an application under Section 60(5) of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) in Bank of Maharashtra vs DS Kulkarni Developers Ltd. has reiterated that new claims cannot be admitted when the resolution plan...
The National Company Law Tribunal, Mumbai Bench, comprising Shri H.V. Subba Rao (Judicial Member) and Shri Shyam Babu Gautum (Technical Member), while adjudicating an application under Section 60(5) of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) in Bank of Maharashtra vs DS Kulkarni Developers Ltd. has reiterated that new claims cannot be admitted when the resolution plan has been approved by the CoC and is pending before the Adjudicating Authority for approval.
Background Facts
DS Kulkarni Developers Ltd. (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) vide an order dated 26.09.2019. D.S. Kulkarni and Associates (“Applicant”) was a sister concern of the Corporate Debtor and was engaged in various transactions with the Corporate Debtor. The Applicant and the Corporate Debtor entered into an MOU dated 01.01.2011 vide which the Corporate Debtor agreed to allot various properties to the Applicant for a consideration of Rs. 110 crores.
The Authorized Signatory of the Applicant, along with other Directors and Key Personnel of the DS Kulkarni Group, was behind bars due to criminal cases lodged against the DS Kulkarni Group in 2017. The Applicant filed a claim before the Resolution Professional (“RP”) for advances of Rs. 166,74,48,579/- vide an email dated 07.10.2019. The RP sought documents in support of the claim vide an email dated 14.10.2019. The Applicant submitted that they personally provided the requisite documents to the RP by visiting his office but the RP still rejected the aforesaid claim on the ground that no supportive documents were provided.
On the contrary, it was submitted by the RP that after the email dated 14.10.2019, no documents were received by the RP. It was submitted that the RP again addressed a reminder email dated 13.11.2019 to the Applicant seeking the supporting documents. However, the Applicant submitted their revised claim on 03.03.2021. The RP once again requested to submit relevant documents vide an email dated 28.05.2021. Thus, the RP was constrained to reject the claim of the Applicant due to lack of information and documents. It was further submitted that the Committee of Creditors (“CoC”) had approved the Resolution Plan of the Corporate Debtor on 13.08.2021 and an application for approval of the Resolution Plan was pending before the Adjudicating Authority.
Findings of the Tribunal
The Tribunal observed that the Authorized Representatives of the Applicant got bail on 18.11.2022. The contention that the Applicant were not able to submit the documents to the Resolution Professional in time as their Authorized Representative and Key Personnel were in jail was not tenable. It was observed that nothing prevented the officials of the Applicant from submitting the documents even though the Authorized Representative of the Applicant were in jail.
It was further observed by the Tribunal that the resolution plan has been approved by the CoC and has been submitted before the Adjudicating Authority for its approval, which has also reserved its order. It was not desirable to entertain such claims when the resolution plan is pending for approval before the Tribunal. Reliance was placed on the NCLAT judgment of Mukul Kumar Vs. M/s RPS Infrastructure Ltd. in Company Appeal (AT) (Insolvency) No. 1050 of 2020 wherein it was held that if new claims are entertained at the stage when the resolution plan has already been approved by the CoC and is pending before the Adjudicating Authority for approval, then the CIRP would be jeopardized and the purpose of IBC, 2016 would be defeated.
With the aforesaid observations, the Tribunal rejected the application.
Case: D.S. Kulkarni and Associates vs Manoj Kumar Agarwal (Resolution Professional) in the matter of Bank of Maharashtra vs DS Kulkarni Developers Ltd.
Case No. ;IA No. 721/MB/C-I/2023 in C.P. (IB) No. 1633/MB/C-I/2019
Counsels for the Applicant;Adv. Rashmin Khandekar
Counsel for the Respondent ;Adv. Shyam Kapadia, Adv. Nirav Shah and Adv. Jash Shah i/b DSK Legal