The NCLAT, Principal Bench New Delhi opined that the statutory scheme makes it clear that the claims are to be filed by the claimants as on the liquidation commencement date. The Liquidation Regulations, does not contemplate consideration of any claim, which arises subsequent to liquidation commencement date.
The Bench expounded that when a claim has not arisen on the liquidation commencement date, the Regulation do not contemplate admission of such claim.
Brief Facts:
The present appeal has been filed against the order of NCLT vide which the challenge of Appellant against the order of the Liquidator was dismissed.
The Appellant and its group companies entered into Memorandum of Understanding (“MoU”) with the Corporate Debtor. On an Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) , the Corporate Debtor was admitted into the insolvency. Liquidation was ordered.
Meanwhile, in arbitral proceedings between the Appellant and the Corporate Debtor, the Resolution Professional (“RP”) sent a letter to the Arbitral Tribunal communicating that he has authorised the continuation of ongoing arbitration proceedings on behalf of the Corporate Debtor. The cost was jointly and severally payable by the promoters and Corporate Debtor. On request made by the Appellant for re-verification of certain clarification/ typographical error in the Award, the Arbitral Tribunal issued a Memorandum of Correction for the arbitration Award
Contentions of the Appellants:
It was submitted that when RP was participating in the arbitration proceedings, which culminated into award of cost, the Appellant’s claim, cannot be denied. Further, that any claim, which arises subsequent to liquidation commencement date, can also be admitted, subject to only rider that admission of claim shall not effect the distribution already made.
Contentions of the Respondent:
It was submitted that claim in a liquidation proceedings can be filed as on liquidation commencement date. Further, that claims by all creditors are frozen on the liquidation commencement date and no claim can be filed or admitted subsequent to the said date.
Observations of the Tribunal:
It was observed that tthere were two reasons given by Liquidator for rejection of the claim, namely – (i) the claim did not exist on the liquidation commencement date as per Regulation 12(2)(a) of the Liquidation Regulations; (ii) the claim was submitted after 15.01.2021, which was impermissible under Regulation 16(1) of the Liquidation Regulations.
It was opined that the statutory scheme makes it clear that the claims are to be filed by the claimants as on the liquidation commencement date. The Liquidation Regulations, does not contemplate consideration of any claim, which arises subsequent to liquidation commencement date.
The Bench expounded that when a claim has not arisen on the liquidation commencement date, the Regulation do not contemplate admission of such claim.
The decision of the Tribunal:
Based on aforementioned facts and findings, appeal was accordingly dismissed.
Case Title: SBS Holdings v. Mohan Lal Jain
Case No.: Company Appeal (AT) (Insolvency) No. 624 of 2024
Coram: Justice Ashok Bhushan, Arun Baroka (Technical Member)
Advocate for Appellant: Advs.Mr. Gautam Narayan, Ms. Asmita Singh, Mr. Tushar Nair
Advocates for Respondent: Advs. Mr. I.P.S. Oberoi, Mr. R.K. Srivastava, Mr. Himrit SinghWadhwa
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