Claim Cannot Be Admitted After The Approval Of Resolution Plan By The CoC Even If Approval By The Adjudicating Authority U/S 31 Of IBC Is Pending: NCLT Mumbai

Background Facts

Corporate Insolvency Resolution Process (“CIRP”) was initiated against M/s. Monarch Brookefields LLP (“Corporate Debtor”) through an NCLT order on 27 September 2019. The Interim Resolution Professional issued a public announcement on 24 November 2019 inviting claim under regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“IBBI Regulations”) and the last date for submission of claim was 7 December 2019.

In November 2021, Mr. Jai Kumar Rai and Mrs. Supriya Saxena (“Applicants”) filed their claim with the Resolution Professional, Mr. Arun Kapoor (“Respondent”), for an amount of Rs. 98,83,932 including interest. This claim was rejected by the Respondent on grounds of delay in filing the claim and since the resolution plan had already been approved by the CoC.

The Applicants relied upon the judgment of the National Company Law Appellate Tribunal (“NCLAT”) in the case of Puneet Kaur v. K.V. Developers Pvt. Ltd. [2022 SCC Online NCLAT 245] and argued that even if the Applicants' claim was not filed within time, their claim should have been considered and included in the Information Memorandum prepared by the Respondent.

On the other hand, the Respondent relied upon the decisions of the Supreme Court of India in M/s R.P.S Infrastructure Limited v. Mukul Kumar and Anr. [Civil Appeal No. 5590 of 2021] and Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors. [(2020) 8 SCC 534] and argued that a Resolution Professional cannot be compelled to admit claims received after the approval of the Resolution Plan by the CoC.

NCLT Verdict

The NCLT noted that CIRP is a process which is required to be completed in a time bound manner for achieving the purpose of value maximization for all creditors. It held that merely because the Adjudicating Authority is yet to approve the plan does not mean that the plan can go back and forth, thereby making CIRP an endless process.

It held that in view of the decision in R.P.S Infrastructure Ltd. v. Mukul Kumar & Anr., the decisions relied upon by the Applicants no longer hold the field.

After considering the decisions relied upon by the Respondent, it held:

“Hence, after having due regard to the law settled by the Hon'ble Supreme Court, as discussed above, we are of the considered view that the claim of the Applicant cannot be entertained at such a belated stage where the resolution plan has been unanimously approved by the Committee of Creditors and the same is pending for the approval of the Adjudicating Authority. At this stage, we cannot allow to unleash the hydra-headed monster of undecided claim(s) on the successful resolution applicant.”

In conclusion, it held that the claim cannot be entertained since the resolution plan had already been approved by the CoC and was pending for approval by the Adjudicating Authority and dismissed the application filed by the Applicants.

Case Title: Mr. Jai Kumar Rai and Mrs. Supriya Saxena v. Mr. Arun Kapoor In M/s. Capri Global Capital Ltd. v. M/s. Monarch Brookefields LLP

Case No.: IA No. 3014 of 2021 In CP (IB) 2517(MB) of 2018

Counsel for the Applicant: Adv. Vinit J. Mehta

Counsel for the Respondent: Adv. Amir Arsiwala, Adv. Nupur Shah

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