Introduction
In a recent decision, the National Company Law Appellate Tribunal (NCLAT) emphasized that claims made after the approval of a Resolution Plan by the Committee of Creditors (CoC) should not be entertained. This ruling reinforces the principle established by the Supreme Court of India that once a Resolution Plan is approved by the CoC, the insolvency resolution process (CIRP) should not be prolonged by allowing new claims.
Background
The case, *Superintendent of Stamps & Inspector General of Registration vs. Avil Menezes, Resolution Professional of AMW Autocomponent Ltd., revolved around the submission of Stamp Duty Claims and penalties amounting to Rs. 15,38,79,179/- by the Appellant, which were filed belatedly. The NCLAT’s decision was guided by precedents set by the Supreme Court, notably the judgments in Committee of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta & Ors. and RPS Infrastructure Ltd. vs. Mukul Kumar and Anr..
Legal Framework and Relevant Judgments
Insolvency and Bankruptcy Code (IBC), 2016
The IBC is designed to ensure timely resolution of insolvency cases, providing a clear framework for the processes involved. The key provisions relevant to this case include:
– Section 3(30): Defines a secured creditor.
– Section 3(31): Defines security interest.
– Section 14: Imposes a moratorium on the institution of suits or continuation of pending suits or proceedings against the corporate debtor once the CIRP is initiated.
– Section 30(2)(b): Ensures the Resolution Plan provides for the payment of debts of operational creditors.
Supreme Court Precedents
Committee of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta & Ors.
The Supreme Court held that:
“A successful resolution applicant cannot suddenly be faced with ‘undecided’ claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor.”
Ghanshyam Mishra & Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Ltd. & Ors.
The Supreme Court observed:
“Once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority.”
NCLAT’s Observations on Claims Post Resolution Plan Approval
The NCLAT, comprising Justices Rakesh Kumar Jain, Naresh Salecha, and Indevar Pandey, held that the belated claims submitted by the Appellant were not maintainable. The Tribunal noted:
– The claims were filed 30 months after the public announcement and 25 months after the Appellant claimed to have been informed of the CIRP initiation.
– The Appellant failed to provide a satisfactory explanation for the delay in submitting the claims.
– The Resolution Plan had already been approved by the CoC and subsequently by the Adjudicating Authority, and it included provisions for stamp duty payments.
The Tribunal emphasized:
“The mere fact that the plan has not been approved by the Adjudicating Authority does not imply that the plan can go back and forth, thereby making the CIRP an endless process.”
Conclusion: Addressing Claims Post-Resolution Plan Approval
The NCLAT’s ruling underscores the importance of adhering to the timelines prescribed under the IBC to ensure the swift and efficient resolution of insolvency cases. This decision aligns with the Supreme Court’s jurisprudence, reinforcing that submission of claims after Resolution Plan is approved by CoC should not be entertained. The decision aims to prevent the CIRP from becoming an unending process and ensures that the Resolution Applicant can proceed with implementing the plan without facing unexpected claims.
