NCLT Mumbai: No Claims To Be Taken After Approval Of Resolution Plan By CoC, Citing Disruption Of Time-Bound Resolution Process

The Tribunal held that no claims can be entertained after the approval of the Resolution Plan by the Committee of Creditors (CoC) as as allowing such claims at a later stage could disrupt the entire time-bound resolution process.

Background Facts:

On 31.12.2019, CIRP was initiated against Panache Aluminium Extrusions Pvt. Ltd. (Corporate Debtor), and Mr. Anuj Bajpai was appointed as the Resolution Professional (RP).

In 2013, the Applicant provided financial assistance of Rs. 3 crores for an interest rate of 15% p.a to the Corporate Debtor and its group company as co-borrower. In 2018, the Applicant demanded a total payment of Rs. 9.30 crores from the Corporate Debtor and co-borrower warning that they would invoke the Share Pledge Agreement if the payment was not made. However, no payment was received despite this letter. The said parties asked for loan documents from the Applicant despite being involved parties themselves.

On the filing of the complaint with the Economic Offence Wing, the Applicant learned about the Corporate Debtor's CIRP proceedings. The Applicant contended that it was unaware of these proceedings and could not submit its claim as a secured financial creditor. Nevertheless, the outstanding loan amounts and advances from the Corporate Debtor were recorded in the Corporate Debtor's records, ledger accounts, and balance sheets, making the Resolution Professional responsible for recognizing these secured loans and advances.

It argued that the CoC approved the Resolution Plan without considering the outstanding loans and interest owed to the Applicant and informing the potential Resolution Applicants of the such claims.

Furthermore, it contended that the Corporate Debtor continued to make interest payments to the Applicant even after the 210-day period following the loan disbursement had expired, as specified in the loan agreement. These interest payments were credited to the Applicant's account after a 10% TDS deduction, as confirmed by Form 26AS for the financial years 2013-2014 and 2014-2015.

Contentions of the RP:

The RP argued that the Applicant's claim is time-barred since it was not submitted within the specified timeline as per Regulation 12 of the IBBI (Insolvency Resolution for Corporate Persons) Regulations, 2016. Further, once a Resolution Plan has been approved by the CoC, no new claims can be considered. The RP had submitted the Resolution Plan under section 30(6) of the Code nearly 14 months before the Applicant filed its application. The RP also stated that the loan in question became time-barred because its term was only 210 days, and it expired in July 2014.

Moreover, the RP argued that the Code does not require it to individually notify every creditor to whom the Corporate Debtor owes money. The RP fulfilled the necessary regulations, including the Public Announcement. Additionally, the Applicant has not filed any claim form with their current Application. The Applicant has not provided any evidence or financial statement from the Corporate Debtor to demonstrate that the debt is reflected in the Balance Sheet and that the Applicant should be considered a "secured financial creditor." Furthermore, the Applicant has not proven the existence of any mortgage or security from the Corporate Debtor that would establish a charge in favor of the Applicant.

NCLT Verdict:

The NCLT Mumbai dismissed the application and observed that the Applicant did not file its claim within the stipulated timeline. Further, the CoC approved the Resolution Plan on 30.03.2021, and as per the Supreme Court case of Jaypee Kensington Boulevard Apartments Welfare Association and others vs. NBCC (India) Limited and Others, no claims can be entertained after the CoC has approved the plan as allowing such claims at a later stage could disrupt the entire time-bound resolution process. Moreover, it also placed reliance on the Supreme Court case of Jaypee Kensington Boulevard Apartments Welfare Association and others. Vs. NBCC (India) Limited and Others, and emphasized that it is important to adhere to the timelines specified in the Code and related regulations for the resolution process.

The Tribunal highlighted that if a claim is not made within the stipulated time, it cannot be included in the Information Memorandum prepared by the Interim RP. Furthermore, it was clarified that a Successful Resolution Applicant should not be burdened with unresolved claims that arise after their resolution plan has been accepted, as this would introduce uncertainty regarding the amounts payable by the prospective resolution applicant taking over the Corporate Debtor's business.

In conclusion, the NCLT noted that since the CoC already approved the Resolution Plan in March 2021 and it is pending approval before the Adjudicating Authority, admitting any claim at this stage would jeopardize the entire resolution process.

Case Title: Suraksha Realty Limited vs. Mr. Anuj Bajpai

Case No.: IA No. 1758/2022 in C.P.(IB)2808/2018

Counsel for Applicant: Ansh Karnawat and Simran, Advocates

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