Tribunal denies late claim citing pandemic impact, stresses time-bound process

The Tribunal dismissed the application by the financial creditor seeking consideration of a delayed claim submission, citing reasons including health issues and the COVID-19 pandemic. Despite acknowledging the lockdown's impact, the Tribunal found the delay unjustified as the creditor was aware of the insolvency proceedings before filing the claim. Emphasizing the time-bound nature of the Corporate Insolvency Resolution Process (CIRP), the Tribunal refused to allow the claim, stating it would disrupt the process and set an unfavorable precedent for late submissions, ultimately directing the dismissal of the application.

---

---

Issues Involved:
1. Consideration of delayed claim submission by the financial creditor.
2. Impact of COVID-19 lockdown on the claim submission timeline.
3. Admissibility of claims filed beyond the stipulated period under the Insolvency and Bankruptcy Code, 2016.

Issue-wise Detailed Analysis:

1. Consideration of delayed claim submission by the financial creditor:
The application was filed by a financial creditor, Dhandhania Electronics Limited, seeking the Tribunal's direction to the Resolution Professional (RP) to consider their claim filed on 24.12.2020. The RP had published the invitation for claims on 29.02.2020, with a deadline of 12.03.2020. The creditor cited health issues and the COVID-19 pandemic as reasons for the delay. The RP initially overlooked the claim due to a misunderstanding but later rejected it on 03.05.2021, stating it was filed beyond the permissible period. The Tribunal found that the RP's mistake was genuine and not intentional. However, the Tribunal noted that the creditor did not follow up promptly after submitting the claim.

2. Impact of COVID-19 lockdown on the claim submission timeline:
The applicant argued that the COVID-19 lockdown and related restrictions prevented timely submission of the claim. They relied on the Supreme Court's Suo Motu Writ Petition (Civil) No. 3 of 2020, which extended the limitation period due to the pandemic. The Tribunal acknowledged the lockdown but noted that the applicant became aware of the CIRP on 02.11.2020 and still delayed filing the claim until 24.12.2020. The Tribunal found the reasons for the delay unsubstantiated, as the lockdown had been lifted in parts since October 2020, and the Tribunal was operational through video conferencing.

3. Admissibility of claims filed beyond the stipulated period under the Insolvency and Bankruptcy Code, 2016:
The Tribunal emphasized that the CIRP is a time-bound process. Allowing the claim at this stage would necessitate changes to the Information Memorandum and potentially restart the CIRP, which was nearing completion. The Tribunal highlighted that the timeline for claim submission, while directory, should not be used to defeat the Code's objective. The Tribunal referred to the substitution of regulation 12(2) of the CIRP Regulations, which aimed to prevent delays. The Tribunal concluded that condoning the delay without sufficient reason would undermine the process and set a precedent for other late claims, disrupting the CIRP's time-bound nature.

Conclusion:
The Tribunal dismissed the application, stating that the delay was not justified and allowing the claim would be unfair to other creditors and contrary to the Code's objectives. The Tribunal directed the Registry to send email copies of the order to all parties and their counsel and stated that a certified copy of the order could be issued upon compliance with requisite formalities.

---