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Judgment
(Hybrid Mode)
Oral Judgment: Justice Sharad Kumar Sharma, Member (Judicial)
A very short controversy requires consideration in the instant Company Appeal. The Appellant, puts a challenge to the impugned order of 11.03.2024, that was rendered by the Learned NCLT, Chennai Bench in TCP/575/IB/CB/2017, whereby the Learned Tribunal by the impugned order of 11.03.2024, while adjudicating upon the Interlocutory Applications preferred by the Appellant being IA(IBC)/1571(CHE)/2023, IA(IBC)/1572(CHE)/2023 & IA(IBC)/1573(CHE)/2023 had rejected the application IA(IBC)/1573(CHE)/2023 preferred under Section 42 of the I & B Code, on the ground that the said application has been filed with more than 600 days of delay and the application IA(IBC)/1572(CHE)/2023, preferred by the Appellant seeking condonation of delay does not contain any reasonable cause and hence the delay cannot be condoned.
It is the case of the Appellant herein, that a Field Audit was directed to be conducted for the purposes of an assessment of VAT Tax liability, in relation to the Corporate Debtor i.e., M/s. Surya Balaji Steels Private Limited, the Joint Commissioner (ST), the competent authority, directed the Commercial Tax Officer (Enforcement) to conduct field audits at the registered place of business of Corporate Debtor and at various other places of business of Corporate Debtor and to submit the report and the said field audit report proposal, which was received by the Office of the Joint Commissioner, Pudukkottai – 1 Assessment circle.
Further, a revision notice was issued to the dealer, that is, the Corporate Debtor on 03.02.2014 for the purposes of assessment years of 2009-10 to 2013-14. In response to the aforesaid Revision Notice issued by the Joint Commissioner, a reply was submitted by the dealer objecting to the Revision Notice by filing a reply to the said effect on 20.02.2014.
However, the Assessment Order was passed on 19.03.2014 assessing the tax liability under the VAT Act for the years 2009-10 to 2013-14, fixing the same as Rs.2,35,88,750/-.
The said Assessment Order of 19.03.2014 was put to challenge by the Corporate Debtor before the Hon’ble Madurai Bench of Madras High Court by preferring a Writ Petition, being Writ Petition No.5650 to 5655/14. These Writ Petitions were disposed of, remanding the matter back to Joint Commissioner (ST).
Further, a Surprise Inspection was initiated for the financial years 2010-11 to 2014-15 at the registered places of the business of the Corporate Debtor, and the report was submitted on 29.05.2017, based on which notices were served on various dates to the dealer (Corporate Debtor). At that point, the Appellant came to know that the company has been classified as NPA on 21.10.2013, that the bank has initiated action under SARFAESI on 02.01.2015, and that the unit was under their physical possession.
Meanwhile, the Corporate Debtor was placed into the CIRP, by an order of the Adjudicating Authority dated 05.10.2017, and consequently, due to the non-receipt of suitable resolution plans, it was later put to liquidation by an order of 29.05.2018. As a consequence of the Corporate Debtor being put to liquidation on 29.05.2018, a public announcement was made by the liquidator for the invitation of claims on 15.06.2018, and the last date of submission of claims as prescribed therein was settled to be 11.07.2018.
Pursuant to the reassessment of tax liability owing to field audit report and surprise inspection, the Appellant filed its claim in Form-C before the liquidator on 21.12.2019. The said claim was rejected by the liquidator on 14.08.2020 under Section 40 of the I & B Code read with Regulation 30 of IBBI (Liquidation Process) Regulations 2016, on the ground that the claim represents only revision notices and the said claim is not yet crystallised, to be admitted under the Code. Subsequently, the Appellant served revision notices on the liquidator and after following due process, submitted its complete claim in respect of revised assessment based on both field audit and surprise inspection before the liquidator on 22.07.2021. After submission of the said claim, the same was considered by the liquidator vide its order dated 29.07.2021, and was rejected by him on the grounds that he does not have powers to entertain claims beyond 30 days of the date of commencement of liquidation and to update the list of stakeholders which has already been submitted to the Adjudicating Authority unless the Adjudicating Authority directs the same.
Aggrieved against the said order of rejection of the claim by the liquidator on 22.07.2021, the Appellant preferred IA(IBC)/1571(CHE)/2023, by filing the same before the Learned Adjudicating Authority on 30.05.2022, praying for to set aside the rejection of the claim by the liquidator vide its order dated 14.08.2020 and 29.07.2021, on the grounds that because of pendency of Writ Petitions before Hon’ble High Court and directions issued by the Hon’ble High Court in the said Writ Petitions, he had to re-do this assessment process and could complete the same and pass the assessment order on 27.02.2021 and could prefer the claim on 22.07.2021 and therefore the delay in submission in claim was due to pendency of Writ Petitions in Hon’ble High Court and the time required to comply with it and hence claim should be admitted.
The said application, which was preferred by the Appellant, was in the shape of an appeal under Section 42 of the Code, having been preferred as against the rejection of the claim by the liquidator. As the filing of the said application IA(IBC)/1573(CHE)/2023 was delayed, the Appellant himself has filed IA(IBC)/1572(CHE)/2023 on 30.05.2022, praying for condonation of 612 days of delay that has chanced from 14.08.2020 in filing the IA under Section 42 of the I & B Code. This expression or the relief prayed for by the Appellant in IA(IBC)/1572(CHE)/2023, will amount to be an admission on the part of the Appellant that the accompanying application under Section 42 of the I & B Code, in the shape of the Appeal was a much belated application which was delayed by 612 days, which, as contemplated under law, ought to have been preferred within 14 days from the date of the rejection of the claim by the liquidator. The Appellant has also admitted a further delay of 315 days in refiling the application in the application IA(IBC)/1571(CHE)/2023 filed by him. These applications which have been preferred by the Appellant, i.e., the Application, to condone delay in filing, the Application to condone delay in refiling as well as the Application under Section 42 have been rejected by the impugned order, observing thereof that the claim raised by the Appellant was delayed by more than 600 days and since there were no plausible reasons, have been given in the Application to explain the delay and that since the delay was even beyond the exclusion period provided by Hon’ble Apex Court on account of Covid-19 situation, there is no merit in the application to condone the delay. The Learned Tribunal has also observed that since liquidation proceedings have been completed, including distribution of the proceeds, there is nothing available to distribute.
The controversy could be looked into from the perspective that, I & B Code, contemplates that the process of CIRP has had to be completed in a time-bound fashion, and that in all proceedings, time is the essence. Since the claim itself was invited on 15.06.2018, by public announcement and the same was submitted by the Appellant at a much belated stage first on 21.12.2019 and then on 22.07.2021, the Appellant cannot take admission of its claim as a matter of right because the last date of submission of claim has already expired on 11.07.2018. Further, after the rejection of the claim by the liquidator, the Appellant had preferred the proceedings under Section 42 of the I & B Code at a belated stage on 30.05.2022 with a delay of 612 days and thereafter took another 315 days to rectify the defect and to refile the application. Since Section 42 of the I & B Code itself restricts the time period for filing appeal against the order of liquidator to 14 days from the date of such rejection, the Appeal under Section 42 of the I & B Code, since having being preferred only on 30.05.2022, has to be held to have been preferred much beyond the statutory period prescribed under law. Hence, the Interlocutory Applications being IA(IBC)/1571(CHE)/2023, IA(IBC)/1572(CHE)/2023 & IA(IBC)/1573(CHE)/2023 have been rightly rejected by the Learned Tribunal. Owing to the aforesaid facts, the Company Appeal does not call for any interference; the same would stand rejected. All interlocutory applications would stand closed.