2023 (9) TMI 1261 - AT - Insolvency and Bankruptcy

Appeal Dismissed for Delayed Challenge in Insolvency Resolution Process

The Tribunal dismissed the appeal of a Suspended Managing Director challenging the Corporate Insolvency Resolution Process procedure. The Appellant's ... Condonation of delay in filing the claim - Refusal to admit the claim - HELD THAT:- It is significant to mention that subsequent to the last date of receipt of Claim i.e. 22.10.2020, the Appellant had filed an Appeal on 10.11.2020, without choosing to prefer any Claim, within the stipulated period. Regulation 16 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 clearly stipulates that the Claim has to be submitted on or before the last date mentioned in the Public Announcement. In the instant case, it is an admitted fact that the Claim was submitted with an inordinate delay of 390 days. The contention of the Learned Counsel for the Appellant that this inordinate delay of 390 days is on account of pursuing the Appeal, challenging the Exparte Liquidation Order, is untenable on the ground that the last date for receipt of Claim was 22.10.2020, the Appeal challenging the Liquidation Order, was on 10.11.2020 and moreover, challenging the Liquidation Order by way of an Appeal, specifically in the absence of any `Stay Order’, does not prevent, viewed from any angle, the Appellant in preferring a Claim, within the stipulated period of time. The Liquidator had intimated to the Appellant herein, the reason for having rejected the Claim as the last date for Submission of Claim, was 22.10.2020 and 14 months had elapsed, since the Liquidation Order, was passed. Being the Managing Director of the Corporate Debtor Company, the Appellant cannot plead ignorance of the Proceedings and this Tribunal is of the earnest view that preferring an Appeal and challenging the Liquidation Order, cannot be a substantial ground, for not having preferred the Claim on time. This Tribunal, is of the considered view that IBC is a time bound process and the Liquidator cannot accept a belated Claim, which would go against with the provisions of the IBC, 2016 as well as the scope and objective of the `Code’. It is also seen from the record that the Appellant had made every effort to derail the process and this Tribunal, does not find any substantial grounds to interfere with the well-reasoned order of the Adjudicating Authority. Appeal dismissed. Issues Involved:The issues involved in the judgment include dismissal of applications challenging the procedure adopted in Corporate Insolvency Resolution Process, refusal to admit a claim by the Liquidator, delay in filing the claim, interpretation of regulations regarding submission of claims, and the conduct of the Appellant during the insolvency proceedings.Dismissal of Applications Challenging CIR Process:The Appellant, a Suspended Managing Director, appealed against the Impugned Order dated 21.04.2022, which dismissed the applications challenging the procedure adopted by the IRP/RP and Liquidator in the Corporate Insolvency Resolution Process. The Tribunal observed that the Appellant's intention seemed to be delaying the proceedings by approaching various forums, including the Supreme Court, without success. The Tribunal noted the lack of cooperation from the Suspended Directors in the CIR Process and emphasized that the Appellant, being a shareholder, was not entitled to claim relief against the CoC or the conduct of the CIRP. The Tribunal concluded that the Appellant's challenges were belated, and the dismissal of the appeal was justified.Refusal to Admit Claim by Liquidator:The Appellant submitted a claim after a significant delay, citing reasons such as pursuing remedies against the Order of Liquidation. The Liquidator refused to admit the claim, stating that the last date for submission had passed, and the Appellant, as the Managing Director, was aware of the proceedings. The Tribunal found the delay in submitting the claim unacceptable, emphasizing that the IBC is a time-bound process. The Tribunal noted the Appellant's efforts to derail the process and upheld the decision of the Adjudicating Authority to reject the claim.Interpretation of Regulations on Submission of Claims:Regulation 16 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 requires claims to be submitted before the last date mentioned in the public announcement. The Tribunal highlighted the importance of timely submission of claims and rejected the Appellant's argument that challenging the Liquidation Order prevented timely claim submission. The Tribunal emphasized that the Appellant's delay of 390 days in submitting the claim was not justified and went against the provisions of the IBC.Conduct of the Appellant During Insolvency Proceedings:The Tribunal considered the Appellant's conduct during the insolvency proceedings, noting actions such as registering the Publication of Form B on the Company's Website and requesting the Liquidator not to publish it until the case is disposed of. The Tribunal highlighted communication between the Liquidator and the Appellant regarding the rejection of the claim due to the elapsed time since the Liquidation Order. The Tribunal concluded that the Appellant's challenges and conduct did not warrant interference with the Adjudicating Authority's decision.Conclusion:In conclusion, the Tribunal dismissed the appeal, emphasizing the time-bound nature of the IBC process and the importance of adhering to submission deadlines. The Tribunal found no substantial grounds to interfere with the Adjudicating Authority's decision and closed the connected pending application. No costs were awarded in the judgment.