Operational Creditor's Claim Rejection Upheld: Deadline Ruling The Tribunal upheld the rejection of the claim by the Operational Creditor, ruling that the claim submission deadline was within 90 days of Corporate ...
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The Tribunal upheld the rejection of the claim by the Operational Creditor, ruling that the claim submission deadline was within 90 days of Corporate Insolvency Resolution Process initiation, not until resolution plan approval. The rejection was deemed lawful, and the Tribunal lacked authority to overturn it. Parties were directed to cover their own costs, as the resolution process had concluded with the Adjudicating Authority's approval of the resolution plan.
Issues: - Challenge to rejection of claim by Operational Creditor - Interpretation of Regulation 12(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 - Timeliness of claim submission by Operational Creditor - Authority to set aside rejection of claim - Approval of resolution plan by Adjudicating Authority
Analysis: 1. The case involved an application challenging the rejection of a claim by an Operational Creditor under Section 60(5) of the Insolvency and Bankruptcy Code, 2016. The Operational Creditor sought to set aside the rejection and have the claim considered valid in the insolvency resolution process of the Corporate Debtor.
2. The petition was filed by a Financial Creditor for initiating Corporate Insolvency Resolution Process against the Corporate Debtor. The Interim Resolution Professional (IRP) was appointed, and the process was initiated with public announcements specifying the last date for claim submission.
3. The Operational Creditor contended that they were unaware of the insolvency process initially and submitted the claim after learning about it. The IRP rejected the claim citing violation of Regulation 12(2) of the Regulations of 2016, stating it was submitted after the stipulated time.
4. The Operational Creditor argued that Regulation 12 allows claim submission until the approval of the resolution plan by the Committee of Creditors, not within 90 days of CIRP initiation. The rejection was deemed arbitrary and against the provisions of the Code and Regulations, causing financial loss to the applicant.
5. The Tribunal noted the communication from the IRP specifying the deadline for claim submission and the rejection based on the late submission by the Operational Creditor. The Resolution Professional completed the process within the stipulated period, and the resolution plan was approved by the Adjudicating Authority.
6. The Tribunal rejected the Operational Creditor's argument that claims could be submitted until resolution plan approval, citing an amendment to Regulation 12(2) limiting claim submission to 90 days after CIRP initiation. The rejection of the claim was deemed legal, and the Tribunal lacked the authority to reopen the resolution process.
7. The Tribunal suggested that if the Operational Creditor had a legitimate claim against the Corporate Debtor, they could pursue it through a separate application under Section 9 of the Code, provided the claim was not time-barred.
8. Consequently, the Tribunal dismissed the application, directing each party to bear their own costs, as the rejection of the claim was found to be in accordance with the law and the resolution process had been concluded with the approval of the resolution plan by the Adjudicating Authority.
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