2019 (11) TMI 1513 - Tri - Insolvency and Bankruptcy

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

The Deputy Commissioner of Commercial Taxes Versus Surana Industries Limited

The Tribunal dismissed the Deputy Commissioner's application challenging the rejection of their claim by the Liquidator appointed in the Corporate ... Liquidation of Corporate Debtor - time limitation - delay in lodging the claims with the Liquidator - no specific application for condonation of delay filed - HELD THAT:- It is evident that not only there has been a delay in lodging the claims with the Liquidator by the Applicant but in appealing against the decision of the Ld. Liquidator there has been a delay on the part of the Applicant by three days in approaching this Tribunal. From the records of this Tribunal, it is evident that no Application seeking for condonation of delay of three days has also filed before this Tribunal, as Section 42 has clearly laid-down as noted above, under which it is required of an Appeal to be filed within a period of 14 days from the decision of the Ld. Liquidator. Even though in the Application it is stated that the decision of the Liquidator was communicated to the Applicant on 21.05.2019, no evidence has been placed on record by the Applicant to support the statement, more so when an assertion is made by the Ld. Liquidator in his counter affidavit that the communication of rejection was received by the Applicant on 14.05.2019. In the instant case as rightly brought out by R2/Liquidator as evidenced from tabulation and which is also not disputed by the Applicant/Appellant herein there has been a delay in approaching this Tribunal beyond the prescribed period of 14 days and no application has been filed nor any specific prayer has also been sought for in the Application/Appeal filed by the Applicant seeking for condonation of delay in filing the Appeal. In view of the absence of any specific Application seeking for condonation of delay having been filed by the Applicant in approaching this Tribunal by way of an Appeal against the Order of rejection of its claim by the Liquidator beyond the prescribed period of 14 days and in any case as held by the Hon'ble Supreme Court in Gaurar Hargovindbhai Dave -Vs- Asset Reconstruction Company (I) Ltd. & Another [2019 (9) TMI 1019 - SUPREME COURT], in relation to the aspect of limitation restating the established and well settled principle that 'there is no equity about limitation', we are unable to entertain this Application/Appeal. In view of the I&B Code, 2016 being a time bound process as well as the Ld. Liquidator being under a compulsion to complete the liquidation process within a period of one year from the date of commencement of liquidation - Application dismissed. 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.'