Adjudicating Authority Rejects Review Claim Under Insolvency Code

The Adjudicating Authority rejected the applicant's claim seeking a review of the order under section 60(5) of the Insolvency and Bankruptcy Code, 2016. The Authority found the applicant's lack of knowledge regarding the initiation of Corporate Insolvency Resolution Process (CIRP) implausible, emphasizing the time-bound nature of the insolvency resolution process. The claim was deemed belated as it was filed after the resolution plan was approved, and the Authority highlighted the principle of "caveat emptor," ultimately concluding that the claim was not maintainable. The application was disposed of, affirming the completion of CIRP in a timely manner.

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Issues:
Review of order under section 60(5) of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:
1. Facts of the Case: The application was filed under section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking a review of the order dated March 19, 2020, passed by the Adjudicating Authority. The case involved CIRP initiated against the corporate debtor, admission of the application, appointment of IRP and RP, and approval of the resolution plan by the Adjudicating Authority.

2. Secured Creditor's Claim: The applicant claimed to be a secured creditor under a deed of assignment dated March 29, 2019, involving L&T Finance and Kotak Mahindra Bank. The applicant alleged that the IRP/RP did not inform them about the initiation of CIRP against the corporate debtor, leading to a delay in submitting their claims.

3. Timeline of Events: The timeline of events included the execution of a memorandum of settlement, passing of an award, issuance of a notice by the Bombay High Court, initiation of CIRP, and submission of claims by the applicant.

4. Adjudicating Authority's Decision: The Adjudicating Authority noted that the applicant, being aware of the liability purchased from L&T Finance, should have followed up with the corporate debtor regarding the consent award passed by the arbitrator. The Authority found the applicant's lack of knowledge regarding the CIRP initiation implausible, given the substantial amount involved and the reminders sent to the corporate debtor.

5. Belated Application: The Authority observed that the applicant approached the IRP after the resolution plan was already passed, and the application was filed at a belated stage. The Authority emphasized that the CIRP process cannot be reversed, especially after the corporate debtor has been acquired by a successful resolution applicant.

6. Legal Principles and Time-Bound Process: The Authority referred to the legal principle of "caveat emptor" from the Indian Contract Act, 1872, highlighting the buyer's duty to be aware of responsibilities. Emphasizing the time-bound nature of insolvency resolution, the Authority rejected the applicant's claim, stating that ignorance or blame game tactics would not yield favorable outcomes.

7. Conclusion: The Authority concluded that the applicant's claim was not maintainable and hence rejected it. The instant application was disposed of with the above observations, affirming the completion of CIRP in a time-bound manner.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive understanding of the case and the Adjudicating Authority's decision.

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