2021 (4) TMI 944 - Tri - Companies Law

Tribunal emphasizes time limits in IBC processes, rejects claim based on procedural requirements

Universal Heat Exchangers Limited Versus V. Mahesh Liquidator of Nagarjuna Oil Corporation Limited and Ors.

The Tribunal dismissed the Applicant's claim challenging the stakeholders' meeting, emphasizing the time-bound nature of the Insolvency and Bankruptcy ... Validity of meeting of stakeholders convened on October 29, 2020 - time limitation - Section 230 of the Companies Act, 2013 - HELD THAT:- As per the provisions of the IBC, 2016, the Applicant is required to submit the claim to the Liquidator in such form and in such manner along with such supporting documents as specified by the Board. Thereafter, upon submission of the claim, the Liquidator is required to verify the claims within the time limits specified by the Board and in this connection referring to the relevant Regulations namely, IBBI (Liquidation Process) Regulations, 2016 and more specifically under Regulation 30, the Liquidator is required to verify the claim submitted within a period of 30 days from the last date of receipt of the claims and may either admit or reject in whole or part as the case may be of such claim - It may be noted that under Regulation 44(1) of the IBBI (Liquidation Process) Regulations, 2016, the Liquidator is directed to liquidate the Corporate Debtor within one year from the date of commencement of the liquidation proceedings and Regulation 44(2) stipulates that, after the expiry of one year, the liquidator shall file an application to the Authority to continue the liquidation period along with a report and explain why the liquidation has not been completed. Thus, it can be seen that the Liquidation is a time bound process and the Liquidator is being made accountable and required to explain, if there is any delay caused in the liquidation process. The Hon'ble Supreme Court in Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company (I) Ltd. & Another [2019 (9) TMI 1019 - SUPREME COURT], in relation to the aspect of limitation has restated the well established and well settled principle that 'there is no equity about limitation', we are unable to entertain this Application/Appeal. In view of the IBC, 2016 being a time bound process as well as the Learned Liquidator being under a compulsion to complete the liquidation process within a period of one year from the date of commencement of liquidation. Petition dismissed. Issues:1. Validity of stakeholders' meeting conducted without due process of law.2. Acceptance of claim under the Insolvency and Bankruptcy Code, 2016.3. Delay in filing claim before the Liquidator.4. Liquidator's power to condone delay in accepting claims.5. Admissibility of claims based on limitation and acknowledgment of liability.6. Treatment of claims by the Liquidator for different classes of creditors.7. Compliance with IBC time-bound processes in liquidation proceedings.8. Approval and binding nature of the Scheme of Compromise.9. Accountability and explanation required from Liquidator for delays in liquidation process.10. Impact of time-bound nature of IBC on claim submissions and appeals.Analysis:1. The Applicant sought to declare the stakeholders' meeting null and void, alleging it was conducted without due process. The Applicant had a claim under the Insolvency and Bankruptcy Code, 2016, against the Corporate Debtor, but faced challenges in receiving payment.2. The Liquidator contested the Applicant's claim, citing delays in submission and lack of explanation for the delay. The Liquidator argued that the IBC mandates a time-bound process for claim submissions to avoid rendering the regulations ineffective.3. The Liquidator emphasized the importance of timely claim submissions and the need for proper documentation, including evidence of liability acknowledgment. Different treatment was highlighted for workmen, employees, and operational creditors in the claim admission process.4. The Tribunal noted the approval of a Scheme of Compromise related to the Corporate Debtor, binding stakeholders. The Liquidator's accountability and explanation for any delays in the liquidation process were emphasized.5. Referring to legal precedents, the Tribunal highlighted the time-bound nature of the liquidation process and the Liquidator's responsibility to conclude proceedings within a year. The dismissal of the Applicant's claim was based on the adherence to time-bound processes under the IBC.6. The Tribunal's decision was influenced by the need for timely liquidation and the binding nature of approved schemes, preventing unresolved claims from disrupting the process. Legal principles regarding limitation and equity in the context of the IBC were also considered.7. The dismissal of the Applicant's claim was based on the time-bound nature of the IBC and the Liquidator's obligation to complete the liquidation process within a specified period. The Tribunal emphasized the importance of adhering to regulatory timelines and the consequences of delays in the liquidation process.8. In conclusion, the Tribunal dismissed the Applicant's claim, emphasizing the time-bound nature of the IBC and the Liquidator's responsibility to adhere to regulatory timelines. The decision highlighted the significance of timely claim submissions and the impact of delays on the liquidation process.