Tribunal dismisses challenge to claim rejection in liquidation proceedings under Insolvency and Bankruptcy Code

The Tribunal dismissed the Deputy Commissioner's application challenging the rejection of their claim by the Liquidator appointed in the Corporate Debtor's liquidation proceedings. The Tribunal emphasized the strict timelines under the Insolvency and Bankruptcy Code, noting delays in lodging the claim and filing the appeal without sufficient justification or condonation requests. Citing the importance of adherence to statutory timelines, the Tribunal rejected the application without costs, highlighting the principle that limitations must be strictly followed in insolvency proceedings.

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Issues Involved:
1. Rejection of claim by the Liquidator.
2. Delay in lodging claims with the Liquidator.
3. Delay in filing an appeal against the Liquidator’s decision.
4. Condonation of delay in filing claims and appeals.

Detailed Analysis:

1. Rejection of Claim by the Liquidator:
The Deputy Commissioner of Commercial Taxes (Audit - 1), Kalburagi, filed an application aggrieved by the rejection of a claim filed before the Liquidator appointed by the Tribunal. The Corporate Debtor, a Public Limited Company, was assessed for tax under the Karnataka Value Added Tax Act (KVAT Act), resulting in a reassessment order dated 15.05.2012, where a sum of Rs. 4,85,74,377/- was assessed. This was later recomputed to Rs. 11,20,61,088/- on 01.01.2018. The Applicant issued a notice under Section 45 of the KVAT Act to the bankers of the Corporate Debtor. However, the Corporate Debtor was under CIRP by order dated 02.01.2018, and the Tribunal ordered liquidation on 12.10.2018, appointing R2 as Liquidator. The Applicant lodged the claim with the Liquidator on 08.04.2019, which was rejected, prompting the present application.

2. Delay in Lodging Claims with the Liquidator:
The Liquidator contended that there was a delay of six months in lodging the claims, as the public announcement calling for claims was made on 15.10.2018, with the last date for submission being 10.11.2018. The claim was lodged on 08.05.2019, prompting the rejection as the Liquidator has no power to condone the delay in filing claims under the Insolvency and Bankruptcy Code, 2016 (IBC).

3. Delay in Filing an Appeal Against the Liquidator’s Decision:
The Applicant also delayed in appealing against the Liquidator’s decision. The Liquidator communicated the rejection on 14.05.2019, and the Applicant filed the appeal on 31.05.2019, beyond the 14-day period specified under Section 42 of the IBC. No application for condonation of this delay was filed.

4. Condonation of Delay in Filing Claims and Appeals:
The Applicant argued that being a statutory authority, the delay should not be a sole reason for rejection. The Applicant cited decisions from the NCLT Kolkata Bench (UCO Bank vs. Nicco Corporation Ltd) and the Mumbai Bench (Natwarlal Shamaldas & Co) where delays in submissions were condoned. However, the Liquidator pointed out that no specific prayer for condonation of delay was made in the present application.

Tribunal’s Decision:
The Tribunal emphasized the time-bound nature of the IBC process. The Liquidator is mandated to verify claims within specified time limits and communicate decisions within seven days. The Tribunal noted the delay in both lodging the claim and filing the appeal. The Applicant failed to provide evidence of the communication date and did not file an application for condonation of delay. The Tribunal distinguished the cited cases, noting that in those instances, the appeals were filed within the mandatory time limit or specific applications for condonation were made.

Conclusion:
Due to the absence of an application for condonation of delay and the strict adherence to the timelines prescribed under the IBC, the Tribunal dismissed the application without costs, underscoring the principle that "there is no equity about limitation."

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