Introduction
A recent landmark judgment by the National Company Law Appellate Tribunal (NCLAT) has shed light on the critical issue of accepting late claims during the Resolution Plan approval process. The case in question, D.S. Kulkarni Associates Vs. Manoj Kumar Aggarwal (RP of D.S. Kulkarni Developers Ltd), has far-reaching implications for the insolvency resolution framework.
Background of the Case
The Committee of Creditors (CoC) granted approval to the Resolution Plan on August 13, 2021. However, a noteworthy turn of events occurred when the Appellants submitted their applications in February 2023—well over a year and a half after the CoC had endorsed the Resolution Plan.
Details of the Ruling
The NCLAT bench, led by Mr. Justice Ashok Bhushan (Chairperson) and Mr. Arun Baroka (Technical Member), delivered a nuanced judgment with two key observations:
(i) The Memorandum of Understanding (MoU) submitted by the Appellant, intended to establish financial debt, did not distinctly demonstrate that the transactions fell under the purview of Section 5, sub-section (8) of the Code.
(ii) The mere pendency of an application for Resolution Plan approval with the Adjudicating Authority does not automatically confer the right upon the Appellant(s) to file a claim more than one and a half years post the CoC’s approval of the Resolution Plan.
Conclusion: NCLAT Ruling on Late Claims in Resolution Plan
This ruling underscores the critical importance of adhering to prescribed timelines during the insolvency resolution process, emphasizing the role of the CoC in meticulously approving claims. Late submissions, as in this case, may lack merit, potentially compromising the overall efficacy of the process. The decision sets a precedent, reinforcing the significance of procedural compliance for all stakeholders in insolvency proceedings, contributing to the fairness and robustness of the broader legal landscape. In essence, the NCLAT’s decision establishes a precedent that reinforces the significance of adhering to the established legal framework. This case serves as a reminder to all parties involved in insolvency proceedings—creditors, debtors, and resolution professionals—of the paramount importance of procedural compliance, contributing to the robustness and fairness of the insolvency resolution process within the broader legal landscape.
