2020 (2) TMI 1714 - Tri - Insolvency and Bankruptcy

Claims Must Be Considered on Merits, Not Rejected for Delay, Per IBC 2016 Ruling.

Vishal Saxena and Ors. Versus Swami Deen Gupta and Ors.

The Adjudicating Authority, addressing an application under Section 60(5) of the IBC, 2016, ruled that a claim rejected by the Resolution Professional ... Rejection of the claim made before the Resolution Professional - rejection solely on the ground of delay - Sufficient reason given for delay or not - HELD THAT:- This adjudicating Authority is of the view that it is a settled law that the claim cannot be rejected by RP solely on the ground of delay by the applicants in filing their claim Moreover, sufficient reason has been shown for delay occurred in filing claim by the applicants before RP and the RP can be directed to accept the claim of the applicants to be considered by it on its merits and subject to proper verification, which will only be in consonance with the purpose sought to be achieved by the IBC. The RP is further directed to accept the claim of the applicant and is at liberty to verify and determine based on material produced before it and to act accordingly. Application allowed. Issues:Application under Section 60(5) of IBC, 2016 against rejection of claim solely based on delay.Analysis:The applicants filed a claim under Section 60(5) of the IBC, 2016 against the rejection of their claim by the Resolution Professional (RP) solely on the grounds of delay. The applicants contended that they were unaware of the initiation of the Corporate Insolvency Resolution Process (CIRP) due to being out of station and not receiving public announcements made in newspapers. They filed their financial claims after the deadline, citing lack of awareness. The RP rejected the claim based on untimely submission, stating that it was received after the approval of the Resolution Plan by the Committee of Creditors (COC) and after the expiry of the CIRP period.The RP argued that they did not have the authority to accept claims beyond the prescribed time limit. However, the applicants relied on legal precedents, including the judgments in 'Vijay Kumar Jain vs. Standard Chartered Bank & Ors. 20169 SCC Online 103' and 'Swiss Ribbons Pvt. Ltd. v. Union of India 2019 (1) SCC 17,' to support their position that the RP's role is limited to receiving, verifying, and correlating claims, not adjudicating them. They also cited a judgment from the NCLT Principal Bench, New Delhi, in the case of 'Clutch Auto Limited,' which held that the Adjudicating Authority could condone delays in filing claims with valid reasons, especially during ongoing liquidation processes.The Adjudicating Authority, considering the facts and legal precedents, concluded that the claim could not be rejected solely based on delay. The Authority found that the applicants provided sufficient reasons for the delay and directed the RP to accept the claim for further consideration based on its merits and proper verification. This decision was deemed necessary to align with the objectives of the IBC. Consequently, the RP was instructed to accept the applicant's claim, verify and determine it based on the evidence presented, and proceed accordingly. As a result, the application was allowed, and the matter was disposed of.