Appeal dismissed for claim filed 548 days after deadline in corporate insolvency proceedings under CIRP Regulations

The NCLAT dismissed an appeal challenging rejection of a belated claim in corporate insolvency proceedings. The appellant filed their claim on 12.09.2023, approximately 548 days after the 27.12.2021 deadline set in the public announcement, well beyond the extended 90-day period under CIRP Regulations. The tribunal held that the Resolution Professional acted properly in rejecting the claim, noting that surprise claims should not be imposed on resolution applicants and that RPs lack adjudicatory powers. The court emphasized adherence to statutory timelines is essential for timely resolution processes and found no irregularity in the RP's decision.

---

---

1. ISSUES PRESENTED and CONSIDERED

The judgment primarily revolves around the following legal issues:

• Whether the Resolution Professional (RP) committed any irregularity in rejecting the claim filed by the Appellant for being belated and for being a claim of such nature that it required adjudication beyond the jurisdiction of the RP.
• Whether the RP had the authority to reject claims based on alleged non-performance and breach of contract by the Corporate Debtor.
• Whether the RP's rejection of the Appellant's claim was arbitrary, given the timing of the claim submission relative to the resolution plan approval by the Committee of Creditors (CoC).
• Whether the RP was justified in rejecting the claim on the grounds of delay and the nature of the claim being unadjudicated damages.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Authority of RP to Reject Claims

• Relevant Legal Framework and Precedents: The duties of the RP are outlined in Section 18 of the Insolvency and Bankruptcy Code (IBC) and the CIRP Regulations. The RP is tasked with receiving, collating, and verifying claims but does not possess adjudicatory powers.
• Court's Interpretation and Reasoning: The court emphasized that the RP's role is administrative, not adjudicative. The RP is not empowered to decide on the merits of claims that require judicial adjudication, such as those involving damages for breach of contract.
• Key Evidence and Findings: The RP rejected the Appellant's claim because it was based on allegations of breach of contract that had not been judicially determined.
• Application of Law to Facts: The court found that the RP acted within his jurisdiction by not admitting a claim that required adjudication beyond his administrative capacity.
• Treatment of Competing Arguments: The Appellant argued that the RP had acted beyond his powers, but the court upheld that the RP's rejection was consistent with his statutory duties.
• Conclusions: The RP did not err in rejecting the claim as it was not within his purview to adjudicate such matters.

Issue 2: Timing and Delay in Claim Submission

• Relevant Legal Framework and Precedents: Regulation 12 of the CIRP Regulations allows claims to be submitted within 90 days of the insolvency commencement date, with certain provisions for late submissions.
• Court's Interpretation and Reasoning: The court noted that the Appellant's claim was submitted 548 days late, well beyond the permissible timeframe, and that the RP was justified in rejecting it to maintain the timeliness of the CIRP.
• Key Evidence and Findings: The Appellant was aware of the CIRP but failed to file the claim within the stipulated period.
• Application of Law to Facts: The court held that the RP's rejection of the late claim was in line with the regulatory framework and necessary to avoid disrupting the resolution process.
• Treatment of Competing Arguments: The Appellant contended that the claim was filed before the resolution plan approval, but the court found that the delay was unjustified.
• Conclusions: The RP was correct in rejecting the claim due to the excessive delay in submission.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "It is well settled that the RP as a facilitator of the insolvency resolution process, it is incumbent upon him to assist in the CIRP process in a fair and objective manner."
• Core Principles Established: The RP does not possess adjudicatory powers and must adhere to statutory timelines for claim submission to ensure a timely resolution process.
• Final Determinations on Each Issue: The RP's rejection of the Appellant's claim was affirmed due to the lack of adjudicatory authority over the nature of the claim and the significant delay in its submission.

The judgment underscores the importance of adhering to procedural timelines in insolvency proceedings and clarifies the non-adjudicatory role of the RP in the claims process. The court affirmed the RP's actions as consistent with the statutory framework, emphasizing the need for timely and efficient resolution processes under the IBC.

---