NCLAT Denies Kotak Mahindra’s Late Claim Post approval of Resolution Plan

Kotak Mahindra Bank Ltd. Vs Sandeep Goel RP (NCLAT Delhi)

The National Company Law Appellate Tribunal (NCLAT) in Delhi has recently made a notable judgment in the case of Kotak Mahindra Bank Ltd. Vs. Sandeep Goel RP, which has significant implications for financial institutions and the insolvency resolution process in India. The case revolved around the rejection of a financial claim by Kotak Mahindra Bank (the Appellant), which was filed 738 days after the deadline and subsequent to the approval of a resolution plan. This article delves into the details of the NCLAT judgment, its basis, and its implications for creditors in insolvency proceedings.

Detailed Analysis:

The crux of the matter lies in the timing and manner in which Kotak Mahindra Bank attempted to assert its claim against the debtor company, well after the resolution process had been set in motion and a resolution plan approved by the Committee of Creditors. The Corporate Insolvency Resolution Process (CIRP) for the debtor commenced on July 9, 2021, with a public announcement following on July 14, 2021. The resolution plan received approval on December 24, 2022. However, Kotak Mahindra Bank filed its claim in August 2023, based on an assignment from PNB Housing related to a mortgage.

The Adjudicating Authority, relying on the precedent set by the Hon’ble Supreme Court in M/s. RPS Infrastructure Limited Vs. Mukul Kumar, dismissed the bank’s application for condonation of the 738-day delay and for the admission of its claim. The NCLAT upheld this decision, emphasizing the importance of adhering to the timelines prescribed under the insolvency and bankruptcy code (IBC) and the principle of due diligence.

Conclusion:

The NCLAT’s judgment underscores the critical nature of timelines in the insolvency resolution process and the necessity for financial creditors to exercise due diligence before and during the CIRP. The dismissal of Kotak Mahindra Bank’s belated claim post-approval of the resolution plan serves as a cautionary tale for creditors, reinforcing the principle that rights must be asserted in a timely manner within the strict framework of the IBC. This decision is pivotal in maintaining the sanctity and efficiency of the insolvency resolution process in India, ensuring that resolution plans are not unduly disrupted by late claims.

FULL TEXT OF THE NCLAT JUDGMENT/ORDER

Heard Learned Counsel for the parties.

2. This Appeal has been filed against the Order dated 21.11.2013 passed by the Adjudicating Authority by which order the Adjudicating Authority has rejected the Application filed by the Kotak Mahindra Bank Limited for admission of its claim and for condonation of delay of 738 days in filing the claim and for direction to RP to admit the claim.

3. In the present case, CIRP commenced on 09^th July, 2021 and thereafter public announcement was made on 14^th July, 2021. The Resolution Plan was received and was approved by the Committee of Creditors on 24.12.2022.

4. The Appellant’s case is that he took assignment from earlier PNB Housing with whom one flat was already mortgaged by the one home-buyer. In the records of the Corporate Debtor, payments received from home-Buyer, Atul Jaidka was already reflected but RP did not notice the claim nor mentioned in the Information Memorandum. The Adjudicating Authority relying on the Judgment of Hon’ble Supreme Court in M/s. RPS Infrastructure Limited Vs. Mukul Kumar, Civil Appeal No. 5590 of 2021 has rejected the Application of the Appellant.

5. Learned Counsel for the Respondent submits that Appellant is claiming his right on basis of assignment dated 04^th March, 2023 from PNB. Appellant is not a financial creditor in a class and he ought to have due diligence prior to taking assignment since by that time resolution plan was already approved.

6. In the facts of the present case, when the Resolution Plan was already approved on 24.12.2022 and claim was filed by the Appellant only in August, 2023, we see no error in the order of the Adjudicating Authority rejecting the application. There is no merit in the Appeal, the Appeal is dismissed.