2021 (5) TMI 309 - Tri - IBC

Tribunal Denies Delay Condonation for Late Claim Submission, Stresses Timely Action in Liquidation Process Under IBC 2016.

The Tribunal dismissed the Application for condonation of delay in submitting a claim before the Liquidator under Section 42 of IBC, 2016. The dismissal ... Condonation of delay - requirement to specify the period of delay in applications seeking condonation - limitation and 'no equity about limitation' - time bound liquidation process and the liquidator's accountability to conclude liquidation within one year - liquidator's duty to verify claims within the prescribed time and to record reasons for rejectionCondonation of delay - requirement to specify the period of delay in applications seeking condonation - limitation and 'no equity about limitation' - time bound liquidation process and the liquidator's accountability to conclude liquidation within one year - liquidator's duty to verify claims within the prescribed time and to record reasons for rejection - Whether the application under Section 42 of the I&B Code for condonation of delay and direction to the Liquidator to admit the claim could be allowed where the claimant failed to state the number of days of delay and filed the claim long after the public announcement of liquidation - HELD THAT: - The Tribunal held that an application for condonation of delay of this nature must expressly state and explain each day of delay; omission to mention the number of days is a fundamental defect. The claimant became aware of the liquidation on the date of the public announcement and therefore could not claim subsequent ignorance. The IBC and the Liquidation Regulations require claims to be submitted in the prescribed form and the Liquidator to verify and either admit or reject claims within the stipulated time, recording reasons for rejection and communicating the same, with a statutory appeal window under Section 42. Liquidation is a time bound process with a one year target for completion, rendering the Liquidator accountable for progress; this framework militates against permitting belated claims that impede the process. The Tribunal applied the settled principle that 'there is no equity about limitation' and, having regard to the inordinate delay and procedural requirements, refused to grant condonation and to direct admission of the claim. [Paras 3, 12, 13, 16, 17]Application under Section 42 seeking condonation of delay and direction to the Liquidator to admit the claim dismissed (without costs).Final Conclusion: The application for condonation of delay and for direction to the Liquidator to accept the claim was dismissed; the Tribunal emphasised the necessity to state and explain the period of delay, the time bound nature of liquidation, and the applicability of limitation. Issues:- Condonation of delay in submitting claim before Liquidator under Section 42 of IBC, 2016.- Rejection of claim by Liquidator on grounds of delay and lack of reflection in Corporate Debtor's books.- Legal provisions regarding claim submission, verification, rejection, and appeal.- Failure to submit claim during Corporate Insolvency Resolution Process and Liquidation proceedings.- Precedents and legal principles related to time-bound liquidation process and limitation.Analysis:1. Condonation of Delay: The Applicant filed an urgent Application seeking early hearing of an Application under Section 42 of IBC, 2016 for condonation of delay in submitting the claim before the Liquidator. The Tribunal noted the lack of specific details regarding the number of days of delay, emphasizing the need for a clear explanation for each day of delay as per limitation laws.2. Rejection of Claim: The Applicant, representing multiple claimants, sought relief for delay in submitting claims before the Liquidator. The Liquidator rejected the claims, citing both delay and lack of reflection in the Corporate Debtor's books. The Liquidator's submissions highlighted discrepancies in the records regarding the claimed amounts and fixed deposits.3. Legal Provisions: The judgment elaborated on the legal requirements for claim submission, verification, rejection, and appeal under IBC, 2016. It emphasized the importance of timely claim submission, the Liquidator's obligations to verify claims, and the rights of creditors to appeal decisions within specified timeframes.4. Failure to Submit Claims: The Tribunal criticized the Applicant for failing to submit claims during the Corporate Insolvency Resolution Process and even after the commencement of Liquidation proceedings, despite being aware of the process. The judgment highlighted the importance of timely action by creditors in insolvency proceedings.5. Precedents and Principles: Citing legal precedents and principles, the Tribunal emphasized the time-bound nature of the liquidation process under IBC, 2016. Referring to relevant regulations and court decisions, the judgment highlighted the accountability of the Liquidator to conclude proceedings within a year and dismissed the Application based on the principle that there is 'no equity about limitation.'In conclusion, the Tribunal dismissed the Application seeking condonation of delay in claim submission, emphasizing the time-bound nature of the liquidation process and the need for strict adherence to limitation laws and procedural requirements under IBC, 2016.