2020 (10) TMI 216 - Tri - Insolvency and Bankruptcy

Tribunal Empowers Liquidator to Evaluate Claims Fairly, Allows for Filing Delays

Akshaya Infrastructures Versus Vishwa Infrastructures & Services Private Limited

The Tribunal directed the Liquidator to examine the claim on its merits and determine whether to admit or reject it, emphasizing that the delay in filing ... Liquidation of Corporate Debtor - contention of the Liquidator that the claim filed by the applicant was beyond the period prescribed in the announcement and as such it cannot be admitted - HELD THAT:- Admittedly, the applicant had not submitted the claim on merits. We are aware, it is for the Liquidator to decide on merits whether the claim of the applicant to be admitted or rejected. We only direct the Liquidator to examine the claim of the applicant on its merits and could decide whether to admit or reject. We cannot direct the. Liquidator to admit the claim. It is for the Liquidator to decide the claim on its merits. We can only condone the delay in filing the claim before the Liquidator. The applicant will be put to inconvenience if the same is not entertained at the threshold. We are convinced that the delay in filing a claim before the Liquidator can be condoned. In order to meet the ends of justice, we can condone the delay which will not in any way affect the liquidation process already started. Therefore, there are grounds to allow the application. Application allowed. Issues:Admission of claim by the Liquidator, Rejection of claim by the Liquidator, Power of Liquidator to condone delay, Interpretation of IBBI (Liquidation Process) Regulations, 2016.Admission of Claim by the Liquidator:The applicant sought direction to admit their claim submitted to the Liquidator entirely. The claim arose from a construction project where financial losses were incurred due to alleged breaches by the corporate debtor. The claim amount was detailed, including outstanding payments and sales tax refund. The Liquidator rejected the claim as time-barred, citing the need to verify and consider claims within a specified timeframe. However, the Tribunal emphasized that it is the Liquidator's prerogative to decide on claim merits. The Tribunal directed the Liquidator to examine the claim on its merits and determine whether to admit or reject it, emphasizing that the delay in filing should be condoned to ensure justice without hindering the ongoing liquidation process.Rejection of Claim by the Liquidator:The Liquidator justified the claim rejection, stating that the applicant failed to attach relevant documents and that the claim was time-barred. Citing the inability to condone the delay, the Liquidator relied on the Supreme Court's judgment emphasizing the procedural nature of certain I&B Code provisions. The Liquidator maintained that the claim rejection was in accordance with the law. However, the Tribunal intervened, highlighting that the Liquidator should assess claim merits and decide on admission or rejection, while also having the authority to condone filing delays to prevent undue inconvenience to the applicant.Power of Liquidator to Condone Delay:The Liquidator contended that they lacked the authority to condone the delay in claim submission, leading to the rejection of the applicant's claim. However, the Tribunal disagreed, asserting that it could condone the delay to uphold justice without impeding the liquidation process. By allowing the application, the Tribunal granted the Liquidator the discretion to evaluate the claim on its merits and make an independent decision regarding admission or rejection, emphasizing that condoning the delay was essential to prevent unfair treatment of the applicant.Interpretation of IBBI (Liquidation Process) Regulations, 2016:The Liquidator based the claim rejection on the IBBI (Liquidation Process) Regulations, 2016, stipulating a 30-day window for claim submission from the commencement of liquidation. The Liquidator argued that the applicant's claim exceeded this timeframe, justifying its rejection. However, the Tribunal clarified that while the regulations set a timeline for claim submission, the Liquidator held the responsibility to assess claims on their merits. The Tribunal's decision to allow the application underscored the importance of considering claim merits over strict adherence to procedural timelines, ensuring fairness and justice in the liquidation process.