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Judgment
Ashok Bhushan, J.
These two Appeals have been filed against the same order dated 22.11.2023 passed by National Company Law Tribunal, Mumbai Bench-I in IA No.2114 of 2023 and IA No.2117 of 2023 filed by the Appellants respectively, which were dismissed by the Adjudicating Authority.
The case of the Appellant in Company Appeal (AT) (Insolvency) No. 192 of 2024 is that Appellant No.2 has advanced money to D.S. Kulkarni Co. in 2015. It is submitted that the Directors/ Members/ Partners/ Shareholders of the D.S. Kulkarni Co. were the same as of Corporate Debtor. In 2017, Corporate Debtor decided to take over D.S. Kulkarni Co.’s liabilities and adjusted Appellant No.2’s loan through a registered Agreement dated 30.06.2017. A Tripartite Agreement was executed, involving the Corporate Debtor, Appellants and DSK Global Education for the purchase of a flat, reflecting payments in journal entry and ledger. The Corporate Insolvency Resolution Process (“CIRP”) commenced against the Corporate Debtor on 30.09.2019, to which the Appellants were unaware. The Appellants after coming to know about CIRP filed their claim on 29.03.2023 in Form-CA. The Resolution Professional (“RP”) vide email dated 03.04.2023 informed the Appellants that the Committee of Creditors (“CoC”) has already approved the Resolution Plan in case of Corporate Debtor on 13.08.2021, hence, the claim of the Appellants cannot be considered. The Appellant filed IA No.2114 of 2023 praying for condonation of delay of 1197 days and admission of the claim.
The case of the Appellant in Company Appeal (AT) (Insolvency) No. 193 of 2024 is also similar, who claims to have advanced money to D.S. Kulkarni Co. in 2015. The case of the Appellant is that the Corporate Debtor decided to take over D.S. Kulkarni Co.’s liabilities and adjusted Appellant No.2’s loan through a registered Agreement dated 30.06.2017. A Tripartite Agreement is claimed to have been executed between the Corporate Debtor, Appellants and DSK Global Education for the purchase of a flat, reflecting payments in journal entry and ledger. The CIRP commenced against the Corporate Debtor on 30.09.2019, to which the Appellants were unaware and the Appellants after coming to know about CIRP filed their claim on 29.03.2023 in Form-CA, which was not accepted by the RP and IA No.2117 of 2023 was filed by the Appellant for admission of the claim.
The Adjudicating Authority heard the Applications and by the impugned order dismissed both the Applications. Following was the reason given by the Adjudicating Authority in paragraph 7 for rejecting both the Applications:
“7.We find that this Tribunal has approved the Resolution Plan in the case of Corporate Debtor vide its Order dated 23.06.2023 in IA 1950 of 2021. Accordingly, the claims of the Applicants can not be considered even in terms of decision of Hon’ble NCLAT in the matter of Puneet Kaur, through her Attorney Amrit Pal Singh vs K V Developers Private Limited -Company Appeal (AT) (Insolvency) No. 390 of 2022, wherein it was held that the claims of homebuyer if found in the books of accounts, can be considered even after approval of the plan by CoC in terms of directions stated in the said decision. In the present case, even the Plan stands approved by this Tribunal, and this Tribunal can not give directions to CoC and SRA to consider the claim of the Applicants at this stage. We are of considered view that these applications can not be allowed by condoning the delay even in terms of decision of Hon’ble Supreme Court in case of RPS Infrastructure Ltd. Vs. Mukul Kumar & Anr. (2023) ibclaw.in 102 SC.”
The learned Counsel for the Appellants submits that the Appellants having advanced the money to D.S. Kulkarni Co., whose Directors/ Shareholders were the same that those of Corporate Debtor and Corporate Debtor subsequently has taken the liabilities of D.S. Kulkarni Co. and an Agreement between the Corporate Debtor and the Appellants was also executed in 2017, which was duly registered, the Corporate Debtor is bound to honour the agreement. The Appellant being unaware of the CIRP, could not file the claim. The learned Counsel for the Appellants relied on the judgment of its Tribunal in Puneet Kaur, through her Attorney Amrit Pal Singh vs K V Developers Private Limited Company Appeal (AT) (Insolvency) No. 390 of 2022.
The learned Counsel for the RP refuting the submissions of learned Counsel for the Appellants submits that the CIRP commenced against the Corporate Debtor on 26.09.2019. The public announcement was made on 30.09.2019 and List of Creditors was issued on 09.08.2021. On 13.08.2021, the Resolution Plan was approved by the CoC. The RP has filed an IA No.1950 of 2021 on 24.08.2021 for approval of the Resolution Plan, in which Application, orders were reserved on 22.02.2023. The claims were filed by the Appellant on 29.03.2023, which rightly has not been admitted. The Resolution Plan having been approved by the CoC on 13.08.2021, no new claim can be admitted. It is submitted that the judgment in Puneet Kaur is not applicable. It is further submitted that even on merits, the claims of the Appellants deserve to be rejected. The Appellants’ case is that it has loaned monies to a sister concern of the Corporate Debtor, i.e., DSK & Co., nothing have been brought on record to show that the monies were paid by the Appellants to the Corporate Debtor.
We have considered the submissions of learned Counsel for the parties and have perused the record.
From the facts as noticed above, it is clear that the claims were filed by the Appellant in Form-CA after more than 1 and a half year of the approval of the Resolution Plan by the CoC. Even orders on Application for approval of Resolution Plan was reserved on 22.02.2023 and the claims were filed only on 29.03.2023. The Adjudicating Authority in the impugned order has referred to the judgment of the Hon’ble Supreme Court in RPS Infrastructure Ltd. Vs. Mukul Kumar & Anr. (2023) 10 SCC 718. In Mukul Kumar’s case, the claim was filed with a delay of 287 days, which was based on arbitral award. The Appeal filed by the RP was allowed and it was held that the Adjudicating Authority erred in directing the RP to consider the claim of Respondent, which was filed with a delay of 287 days, where the CoC has already approved the Resolution Plan. This Tribunal in its judgment in Mukul Kumar in Company Appeal (AT) (Insolvency) No.1050 of 2020 – Mukul Kumar Resolution Professional of KST Infrastructure Ltd. vs. RPS Infrastructure Ltd., laid down following in paragraph 34 and 35:
“34.With the aforesaid, we are of the view that when the Resolution Plan has already been approved by the CoC and it is pending before the Adjudicating Authority for approval, at this stage, if new claims are entertained the CIRP would be jeopardized and the Resolution Process may become more difficult. Keeping in view the object of the IBC which is resolution of Corporate Debtor in time bound manner to maximize the value, if such request of claimant is accepted the purpose of IBC would be defeated. Hon'ble Supreme Court in the case of CoC of Essar Steel India Ltd. (Supra) held as under:—
88.For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with “undecided” claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, the NCLAT judgment must also be set aside on this count.
35.With the aforesaid we are of view that the Ld. Adjudicating Authority has erroneously directed the RP to consider the claim of the Respondent which is apparently filed after a delay of 287 days, before that the CoC has already approved the Resolution Plan. Thus, the impugned order is not sustainable in law, therefore, it is hereby set aside and the Appeal is allowed, however, no order as to costs.
The judgment of this Tribunal in Mukul Kumar’s case came to be affirmed by the Hon’ble Supreme Court vide its judgment in RPS Infrastructure Ltd. v. Mukul Kumar. The Hon’ble Supreme Court while dismissing the Appeal filed by the RPS Infrastructure Ltd. laid down following in paragraph 18 to 24:
“18.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.
19.It is undisputed that the process followed by Respondent 1 was not flawed in any manner, except to the extent of whether an endeavour should have been made by Respondent 1 to locate the liabilities pertaining to the said award from the records of the corporate debtor.
20.If we analyse the aforesaid plea, it is quite obvious that Respondent 1 did what could be done to procure the corporate debtor's records by even moving an application under Section 19 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.
21.The second question is whether the delay in the filing of claim by the appellant ought to have been condoned by Respondent 1. The IBC is a time bound process. There are, of course, certain circumstances in which the time can be increased. The question is 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.
22.Section 15 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.
23.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 [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] , the Court cautioned against allowing claims after the resolution plan has been accepted by the COC.
24.We have thus come to the conclusion that NCLAT's impugned judgment [Mukul Kumar v. RPS Infrastructure Ltd., 2021 SCC OnLine NCLAT 648] 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 learned Counsel for the Appellants relied on judgment of this Tribunal in K V Developers Private Limited. That was a case where claims could not be filed by the Homebuyers, but the claims were reflected in the account of the Corporate Debtor. This Tribunal in the said judgment took the view that when claims are reflected in the accounts of the Corporate Debtor, it is the duty of the RP to collate the claim and show the same in Information Memorandum. In the present case, it is not the case of the Appellant that their claims are reflected in the account of the Corporate Debtor, nor any materials have been filed along with the Appeal to prove that their claims have been reflected in the records of the Corporate Debtor. We, thus, are of the view that reliance on the judgment in K V Developers Private Limited is clearly misplaced and does not help the Appellants in the present case.
In the present case, the claims were filed by the Appellant on 29.03.2023, when the Resolution Plan was already approved by the CoC on 13.08.2021. The Application for approval of Resolution Plan was also heard and order was reserved on 22.02.2023 as stated by the learned Counsel for the Respondent. In the facts of the present case, we are of the view that no error has been committed by the Adjudicating Authority in rejecting Applications filed by the Appellants. It is also relevant to notice that Adjudicating Authority by order dated 23.06.2023 has already approved the Resolution Plan, which Plan approval order has been challenged by the Appellants by means of Company Appeal (AT) (Insolvency) Nos.1050 and 1051 of 2023, which Appeals are still pending for consideration.
Taking into overall facts and circumstances of the case, we are of the view that no error has been committed by the Adjudicating Authority in rejecting IA Nos.2114 and 2117 of 2023. There is no merit in these Appeals. Both the Appeal are dismissed. No order as to costs.