NCLAT Rejects Late Claim Post-Resolution Plan Approval

Department of State Tax Vs Dar Media Pvt. Ltd. & Anr. (NCLAT Delhi)

Introduction: In a pivotal judgment, the National Company Law Appellate Tribunal (NCLAT) in Delhi dismissed an appeal by the Department of State Tax against Dar Media Pvt. Ltd. & Anr., setting a precedent on the timeliness of claim submissions in the Corporate Insolvency Resolution Process (CIRP). The crux of the matter revolved around the Department of State Tax’s attempt to submit a claim after the Committee of Creditors (CoC) had already approved the resolution plan, a move deemed out of bounds by the adjudicating mechanisms.

Detailed Analysis: The Department of State Tax sought to introduce a claim well beyond the deadline set during the CIRP of Dar Media Pvt. Ltd., a move that was subsequently rejected by the Resolution Professional on the grounds that the CoC had already approved the resolution plan. This action was predicated on the procedural timeline established at the outset of the CIRP, which dictated a last date for the submission of claims.

Key points of consideration in the NCLAT’s judgment included:

• Procedural Adherence: The importance of adhering to the procedural timeline established for the CIRP, which is critical for the orderly and efficient resolution of the corporate debtor’s insolvency.
• Resolution Plan Approval: The approval of the resolution plan by the CoC marks a critical juncture in the CIRP, beyond which new claims cannot be entertained, ensuring that the process moves towards conclusion without undue delays.
• Role of the Resolution Professional: The Resolution Professional’s refusal to admit the late claim was validated by the tribunal, emphasizing their role in maintaining the integrity and timeline of the CIRP.

Conclusion: The NCLAT’s decision to dismiss the appeal by the Department of State Tax underscores the tribunal’s strict adherence to the procedural timelines of the CIRP. It highlights the significance of submitting claims within the designated timeframe and the finality of the CoC’s approval of a resolution plan. This judgment serves as a stark reminder to creditors about the importance of vigilance and prompt action within insolvency proceedings. By upholding the decision of the Adjudicating Authority, the NCLAT reinforces the principle that the resolution process is designed to be time-bound and efficient, ensuring that the rights and claims of all stakeholders are considered in a timely manner before the approval of the resolution plan. This decision is a crucial precedent for future CIRP cases, ensuring that the insolvency resolution framework remains robust, fair, and effective.

FULL TEXT OF THE NCLAT JUDGMENT/ORDER

This is an application praying for condonation of 15 days’ delay in filing the Appeal. Learned counsel for the Appellant submits that the Appellant came to know about the order on 29.09.2023 and thereafter some time was taken in obtaining necessary approval from the higher authorities. Cause shown sufficient, delay in condoned. I.A. No.232 of 2024 is disposed of.

2. Heard learned counsel for the Appellant. This Appeal has been filed against order dated 29.08.2023 passed by the Adjudicating Authority in I.A. No.1219 of 2023.

3. In the CIRP of the Corporate Debtor, public announcement was made on 15.05.2022 and last date for submission of claim was 26.05.2022. Appellant lodged its claim on 06.02.2023. The Resolution Professional refused to admit the claim informing that the application for approval of Resolution Plan has already been filed before the Adjudicating Authority on 03.02.2023.

4. The aforesaid clearly indicate that the resolution plan was approved by the CoC prior to 03.02.2023 and the claim which was filed by the Appellant was subsequent to approval of the plan by the CoC. When the plan was already approved by the CoC, we are of the view that no error has been committed by the Resolution Professional in refusing to admit the claim. The Adjudicating Authority has rightly rejected I.A. No.1219 of 2023 filed by the Appellant. There is no merit in the Appeal. Appeal is dismissed.