Millennium Construction Pvt. Ltd vs Rakesh Kumar Gupta (IRP)

I.A. No. 4131 of 2023: This is an application praying for condonation of 14 days delay in filing the Appeal. Grounds explaining the delay has been given in Para 3, 4 and 5 of the application. Cause shown sufficient delay is condoned.

Heard learned counsel for the parties.   This Appeal has been filed against order dated 08.06.2023 by which IA-5336/2022 filed by the Appellant has been rejected by the Adjudicating Authority. In the present case, CIRP against the Corporate Debtor commenced on 17.12.2019. Public announcement was made on 20.12.2019, according to which last date for submission of claim was 31.12.2019. The Committee of Creditors approved the Resolution Plan on 16.01.2021. The Appellant filed its claim on 11.06.2022, after 511 days after approval of the plan claiming to be Operational Creditor in Form B. The claim having been filed after approval of the Resolution Plan, the Resolution Professional has intimated to the Appellant that last date of submitting claim being 31.12.2019 and plan having been approved by the CoC, claim cannot be considered. An application was filed by the Appellant before the Adjudicating Authority praying that Respondent be directed to admit the claim which application came to be rejected by the impugned order.

Shri Abhijeet Sinha, learned counsel for the Appellant submits that the Adjudicating  Authority  ought  to  have  considered  the reasons  given  for condonation of delay in filing the claim and without considering the reasons claim ought not to have been rejected. The Adjudicating Authority in the impugned order while deciding the application IA-5336/2022 made following observations:

“IA-5336/2022: This is an application filed by Millennium Construction Pvt. Ltd. Ld. Counsel submits that his claim has been rejected by the RP vide e- mail dated 14.06.2022. He seeks direction to the RP to consider the claim of the Applicant company. Ld. Counsel further submits that the delay in filing of the claim was due to change in the directorship. Ld. Counsel for the RP submits that the last date of submission of claims was 31.12.2019, whereas the Applicant submitted his claim on 11.06.2022 with a delay of 511 days. He further submits that the resolution plan of the CD was approved by the CoC on 16.01.2021. Therefore, the present IA is not maintainable. He relies on the order dated 18.06.2021 passed by the Hon'ble NCLAT in the Company Appeal (AT) (Insolvency) No. 420 of 2021 titled "Harish Polymer Product vs. Mr. George Samuel & Anr." which has been upheld  by  the  Hon'ble  Supreme  Court  in  the  Civil Appeal No. 6929/2021. Para 10 & 11 of the judgments are reproduced thus:

“10. We find that the reasons recorded by the Adjudicating Authority have substance and if at belated stage when the Resolution Applicants are already before the Committee of Creditors with their Resolution Plan(s) if new claims keep popping up and are entertained. the CIRP would be jeopardized and Resolution Process may become more difficult. Keeping in view the object of the 'I&B Code' which is Resolution of the Corporate Debtor in time bound manner to maximize value, if such requests of applicants like Appellant are accepted the purpose of '1&B Code' would be defeated.

We do not find any reason to interfere with the impugned order. There is no substance in the Appeal. We decline to admit the Appeal.”

In view of the same, we do not find the present application maintainable and is accordingly dismissed.”

In the present case, the claim has been filed by the Appellant after 511 days of the approval of the Resolution Professional. Learned counsel for the Respondent has relied on recent judgment of Hon’ble Supreme Court in “2023 SCC Onlilne SC 1147, RPS Infrastructure Ltd. vs. Mukul Kumar and Another, decided on 11.09.2023”, where the Hon’ble Supreme Court with regard to belated claim, which was filed after 287 days, has approved the order of the Appellate Tribunal affirming the rejection of the claim. The Hon’ble Supreme Court in Para 17 to 23 laid down following:

“17. We have examined the aforesaid submissions. The only issue before us is whether the appellant's claim pertaining to an arbitral award, which is in appeal under Section 37 of the said Act, is liable to be included at a belated stage i.e. after the resolution plan has been approved by the COC.

It is undisputed that the process followed by respondent no. 1 was not flawed in any manner, except to the extent of whether an endeavour should have been made by respondent no. 1 to locate the liabilities pertaining to the said award from the records of the Corporate Debtor.

If we analyse the aforesaid plea, it is quite obvious that respondent no. 1 did what could be done to procure the Corporate Debtor's records by even moving an application under Section 19 of the IBC. That it was not fruitful is a consequence of the Corporate Debtor not making available the material. It is thus not even known whether there was a reflection in the records on this aspect or not.

The second question is whether the delay in the filing of claim by the appellant ought to have been condoned by respondent no. 1. The IBC is a time bound process. There are, circumstances in which the time can be increased. The question is of course, certain whether the present case would fall within those parameters. The delay on the part of the appellant is of 287 days. The appellant is a commercial entity. That they were litigating against the Corporate Debtor is an undoubted fact. We believe that the appellant ought to have been vigilant enough in the aforesaid circumstances to find out whether the Corporate Debtor was undergoing CIRP. The appellant has been deficient on this aspect. The result, of course, is that the appellant to an extent has been left high and dry.

Section 15 of the IBC and Regulation 6 of the IBBI Regulations mandate a public announcement of the CIRP through newspapers. This would constitute deemed knowledge on the appellant. In any case, their plea of not being aware of newspaper pronouncements is not one which should be available to a commercial party.

The mere fact that the Adjudicating Authority has yet not approved the plan does not imply that the plan can go back and forth, thereby making the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump onto the bandwagon. As described above, in Essar Steel, the Court cautioned against allowing claims after the resolution plan has been accepted by the COC.

We have thus come to the conclusion that the NCLAT's impugned judgment cannot be faulted to reopen the chapter at the behest of the appellant. We find it difficult to unleash the hydra-headed monster of undecided claims on the resolution applicant.”

The present case is fully covered by the above judgment of Hon’ble Supreme Court. In the facts of the present case, no error has been committed by the Adjudicating Authority in rejecting application filed by the Appellant, which was for accepting claim which was filed after 511 days after approval of the plan by the CoC. We dismiss the Appeal.