Appeal Fails on Belated IBC Claim, No Fresh Cause of Action from Resolution Plan Reconsideration

The NCLAT dismissed the appeal, upholding the NCLT's rejection of the appellant's belated claim and related interlocutory applications as non-maintainable. It held that the order dated 04.03.2024, by which the resolution plan was remitted to the CoC for reconsideration to ensure compliance with statutory requirements and a subsequent SC judgment, did not create any fresh cause of action or confer a right to file fresh or previously rejected claims. The appellant's attempt to amend its earlier objection application to introduce new reliefs was also rejected, as the underlying application had itself become infructuous. The prior rejection of the appellant's claim, affirmed up to the SC, remained binding.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether remittance of the approved resolution plan to the Committee of Creditors for resubmission created a fresh cause of action enabling reconsideration of the appellant's belated claim already rejected up to the Supreme Court, thereby excluding the application of res judicata / constructive res judicata.

1.2 What was the scope and effect of the adjudicating authority's earlier order remitting the resolution plan to the Committee of Creditors in light of the judgment declaring the development authority as a secured creditor, and whether it reopened the process for entertaining fresh or previously rejected claims.

1.3 Whether sub-regulation (1B) of Regulation 13 of the CIRP Regulations, 2016, inserted with effect from 18.09.2023, applied to a CIRP commenced in 2019 so as to mandate verification and possible collation of the appellant's belated claim.

1.4 Whether the objection application against the resolution plan (I.A. 4815/2023) remained maintainable after the plan had been remitted to the Committee of Creditors, and whether the accompanying amendment application (I.A. 4167/2024) seeking insertion of a prayer to direct the Resolution Professional to admit the appellant's claim was maintainable.

1.5 Whether the successful resolution applicant had a right of hearing in the applications filed by the appellant before the adjudicating authority.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Effect of remittance of resolution plan to CoC on res judicata and fresh cause of action for belated claim

Interpretation and reasoning

2.1 The appellant's claim was filed belatedly, rejected by the Resolution Professional as time-barred, and two separate applications seeking its acceptance were dismissed by the adjudicating authority; both dismissals were affirmed successively by the Appellate Tribunal and the Supreme Court.

2.2 The appellant contended that once the earlier CoC-approved plan (of 04.03.2020) was remitted back to the CoC by the adjudicating authority's order dated 05.03.2024 (pursuant to the Supreme Court judgment holding the authority as a secured creditor), the earlier rejection of its claim should not operate as res judicata, since a "new cause of action" had arisen with the plan no longer in existence.

2.3 The Tribunal examined the 05.03.2024 order and held that the remand was only for limited compliance with the parameters laid down in paragraphs 54(b) and 54(c) of the Supreme Court judgment, namely: (i) placing the development authority in the category of secured creditors; and (ii) ensuring that the plan demonstrated feasibility/viability with necessary statutory approvals and timelines where land of the statutory authority was involved.

2.4 The Tribunal held that the remand order did not direct a fresh start of the CIRP or re-opening of the claims process; it merely required re-submission of the plan after aligning it with the law declared by the Supreme Court regarding the treatment of the authority as a secured creditor and related compliances.

2.5 The Tribunal held that insolvency proceedings are time-bound and structured in stages, and rights of stakeholders crystallise at different stages; a limited remand for curing specific non-compliance does not revive or reopen claims already rejected and finalised up to the Supreme Court.

2.6 Relying on authorities cited by the appellant on subsequent events and fresh cause of action (including Pasupuleti Venkateswarlu, Omprakash Gupta, Hope Plantations, Government of NCT of Delhi v. BSK Realtors and other decisions on res judicata), the Tribunal distinguished them factually, holding that those principles apply where a genuine fresh cause of action or change in legal position arises; in the present case, the remand order did not create any such new right for the appellant to re-agitate its rejected claim.

2.7 The Tribunal further noted that in the second round of litigation, the bar of res judicata / constructive res judicata had already been applied to the appellant's attempts to secure admission of the same belated claim, and the appellant could not "create a right already claimed and rejected multiple times."

Conclusions

2.8 Remittance of the resolution plan to the CoC for resubmission in compliance with the development authority-specific directions did not create a fresh cause of action for the appellant to seek reconsideration of its belated claim.

2.9 The earlier adjudications rejecting the appellant's claim, affirmed up to the Supreme Court, continued to bind the appellant; the doctrine of res judicata / constructive res judicata remained applicable, and the appellant could not re-open the claim through the subsequent applications.

Issue 2: Scope and effect of the order remitting the resolution plan in light of the development authority judgment

Legal framework as discussed

2.10 The Tribunal relied on the Supreme Court judgment which held the development authority to be a secured creditor and found the resolution plan non-compliant with Section 30(2) of the Code read with Regulations 37 and 38 of the CIRP Regulations, directing that the plan be sent back to the CoC for re-submission after satisfying statutory parameters, particularly as to (a) correct categorisation and treatment as secured creditor; and (b) feasibility/viability and required statutory approvals where land of a statutory authority was involved (paras 54(b), 54(c), 55 of that judgment).

Interpretation and reasoning

2.11 The adjudicating authority in the present matter, following the above judgment, sent the plan back to the CoC for resubmission "in light of" paragraphs 54(b) and (c) and paragraph 55, explicitly linking the remand only to (i) proper treatment of the authority as a secured creditor; and (ii) ensuring the plan envisaged necessary approvals of the statutory authority.

2.12 The Tribunal interpreted this order as limited in scope: it mandated only that the successful resolution applicant and CoC modify and resubmit the plan to comply with the Supreme Court's directions on the authority's secured creditor status and related feasibility/approval requirements.

2.13 The Tribunal rejected the appellant's reading that the remand implied revival of the claim collation process or re-opening of all previously rejected or time-barred claims. It emphasized that nothing in the order's text or in the Supreme Court's judgment directed acceptance of new or previously rejected claims.

2.14 The Tribunal further noted its own subsequent judgment dated 08.05.2024, where it had (a) declined to interfere with the 05.03.2024 remand order, (b) directed that all pending applications (including the appellant's) be considered by the adjudicating authority, and (c) required the SRA to resubmit the plan only after such applications were decided. It clarified that in that judgment it had expressed no view on the merits of the appellant's claim and had not expanded the scope of the remand beyond compliance with the development authority-related directions.

Conclusions

2.15 The order remitting the resolution plan to the CoC was confined to securing proper treatment of the development authority as a secured creditor and ensuring plan feasibility/approvals in line with the Supreme Court's directions.

2.16 That order did not re-open the entire CIRP, did not revive the claims process, and did not authorise filing or consideration of fresh or previously rejected claims.

Issue 3: Applicability of Regulation 13(1B) of the CIRP Regulations, 2016 to this CIRP

Legal framework as discussed

2.17 Sub-regulation (1B) of Regulation 13, inserted by Notification dated 18.09.2023, provides that where claims are received after the period specified in Regulation 12(1) and up to seven days before the meeting of creditors for voting on the resolution plan or initiation of liquidation, the interim resolution professional or resolution professional shall verify such claims and categorise them as acceptable or non-acceptable for collation.

2.18 The Tribunal referred to Supreme Court decisions (including Nara Chandrababu Naidu and Hitendra Vishnu Thakur) to reiterate that amendments creating new rights and liabilities are, in the absence of contrary indication, prospective in operation.

Interpretation and reasoning

2.19 The Tribunal held that the insertion of Regulation 13(1B) confers a new right on claimants/creditors to have delayed claims up to a specified late stage verified and categorised, and imposes a new obligation on the Resolution Professional to undertake such verification beyond the original time frame under Regulation 12.

2.20 On this basis, the Tribunal characterised the amendment as one creating new rights and liabilities and therefore presumptively prospective in nature.

2.21 The Tribunal noted that the CIRP in question commenced in 2019, that the plan had been approved by the CoC in March 2020, and that the belated claim had already been rejected and litigated up to the Supreme Court before the 18.09.2023 amendment.

2.22 It held that applying Regulation 13(1B) to such a CIRP would retroactively disturb vested procedural outcomes and impose fresh obligations contrary to the time-bound scheme of the Code and Regulations.

Conclusions

2.23 Regulation 13(1B) is prospective and cannot be applied to the present CIRP, which commenced in 2019 and in which the resolution plan was approved by the CoC in 2020.

2.24 The appellant cannot rely on Regulation 13(1B) to revive or secure admission of its belated claim in this CIRP.

Issue 4: Maintainability of the objection application (I.A. 4815/2023) and of the amendment application (I.A. 4167/2024)

Interpretation and reasoning

2.25 I.A. 4815/2023 was filed as an objection application seeking rejection of the resolution plan then pending approval before the adjudicating authority. Subsequently, the plan was remitted to the CoC for resubmission as per the order dated 05.03.2024.

2.26 The adjudicating authority held, and the Tribunal agreed, that once the plan itself was sent back for resubmission and no longer existed in the form in which it had been placed for approval, the objection application directed against that version of the plan ceased to be maintainable.

2.27 The amendment application (I.A. 4167/2024) sought to (a) amend I.A. 4815/2023, or in the alternative have its content read as part of I.A. 4815/2023, and (b) specifically add a new relief: a direction to the Resolution Professional to consider and admit the appellant's claim.

2.28 The Tribunal noted that the amendment did not delete the original prayers attacking the earlier plan; thus, the core character of I.A. 4815/2023 remained an objection to a plan that was no longer under consideration in its original form.

2.29 It held that where the base application itself is non-maintainable, an amendment to it cannot be sustained; the fate of the amendment application necessarily follows that of the principal application.

2.30 Independently, with respect to the added prayer directing the Resolution Professional to admit the claim, the Tribunal affirmed the adjudicating authority's conclusion that this relief had already been sought and rejected twice in earlier rounds of proceedings up to the Supreme Court and was therefore barred by res judicata/constructive res judicata.

2.31 The Tribunal reviewed the case law cited by the appellant on liberal approach to amendment of pleadings (Pankaja, Abdul Rehman, Rajesh Kumar Aggarwal, LIC v. Sanjeev Builders) and accepted the general principles but held them inapplicable, because: (i) the amendment was sought in a non-maintainable application, and (ii) the amendment effectively reintroduced a claim already adjudicated and rejected up to the Supreme Court, thereby offending settled limitations on amendments that seek to reassert time-barred or previously decided claims.

Conclusions

2.32 The objection application (I.A. 4815/2023) became non-maintainable once the resolution plan it assailed was remitted to the CoC for resubmission.

2.33 The amendment application (I.A. 4167/2024) was also non-maintainable, both because it sought to amend a non-maintainable application and because the additional relief sought-direction to admit the appellant's claim-was barred by res judicata / constructive res judicata.

Issue 5: Right of the successful resolution applicant to be heard

Interpretation and reasoning

2.34 The adjudicating authority framed and answered the issue whether the successful resolution applicant was entitled to be heard in the applications filed by the appellant.

2.35 Considering that the reliefs sought directly impacted the resolution plan and the rights and obligations of the successful resolution applicant, the adjudicating authority held that the successful resolution applicant had a right to be heard in those applications.

2.36 The Tribunal found no error in this conclusion and upheld that view.

Conclusions

2.37 The successful resolution applicant was entitled to be heard in the appellant's applications, as those applications sought reliefs affecting the resolution plan and the applicant's position thereunder.

Overall disposition

2.38 On the above reasoning, the Tribunal held that the adjudicating authority committed no error in dismissing both applications filed by the appellant and dismissed the appeals.

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