Belated Claim Post CoC Plan Approval Rejected; Reg. 6A CIRP Regs Inapplicable to Creditor Not in CD's Books or for CIRPs Commenced Pre-Amendment: NCLT Mumbai - 2025-01-09

NCLT Mumbai Rejects Vistra ITCL's Belated Claim in Rajesh Construction CIRP, Upholds Sanctity of Timelines

Mumbai, India – The National Company Law Tribunal (NCLT), Mumbai Bench, comprising Hon’ble Reeta Kohli (Member Judicial) and Hon’ble Madhu Sinha (Member Technical), on January 9, 2025, dismissed an application by Vistra ITCL (India) Ltd. seeking condonation of delay in filing its claim of approximately Rs. 38.86 crore in the Corporate Insolvency Resolution Process (CIRP) of Rajesh Construction Company Pvt. Ltd. The Tribunal upheld the Resolution Professional's rejection of the claim, primarily because it was filed after the Committee of Creditors (CoC) had already approved the resolution plan.

Case Background: A Belated Claim and Disputed Obligations

Vistra ITCL, acting as a Debenture Trustee for debentures issued by Rajesh Habitat Pvt. Ltd. (RHPL), a sister concern of the Corporate Debtor, asserted its claim based on a mortgage created by Rajesh Construction Company Pvt. Ltd. (the Corporate Debtor) to secure these debentures.

The CIRP against Rajesh Construction was initiated on May 13, 2021. The Resolution Professional (RP), Mr. Abhijit Gokhale , made a public announcement on May 21, 2021, and individually intimated Vistra (through the debenture holder IIFL) on May 22, 2021. Vistra acknowledged this on June 2, 2021, stating it would file its claim shortly due to COVID-19 related difficulties.

However, Vistra submitted its claim only on November 30, 2023. By this time, the CoC had already approved a resolution plan on September 4, 2023, and the last date for claim submission, as per the RP, was April 24, 2023. The RP rejected Vistra's claim on December 6, 2023, citing the delay.

Applicant's (Vistra ITCL) Arguments: Alleged Lack of Intimation and Secured Creditor Rights

Vistra ITCL contended that:

* The RP failed to provide intimation of extended deadlines for claim submission, especially after a stay on CoC formation by the NCLAT (from June 4, 2021, to May 5, 2022) was lifted.

* The RP did not comply with Regulation 6A of the CIRP Regulations (introduced September 16, 2022), which mandates communication of relevant information, including claim submission deadlines, to all creditors.

* As a secured creditor, its security interest could not be dealt with in a resolution plan without its participation, citing Supreme Court precedents like Jaypee Kensington , Vistra ITCL v. Dinkar Venkatasubramanian , and DES Bank v. Ruchi Soya .

Respondent's (Resolution Professional) Counter: Timelines are Sacrosanct

The RP, Mr. Abhijit Gokhale , argued that:

* The claim was filed well after the CoC approved the resolution plan, making it inadmissible as per the Supreme Court's ruling in RPS Infrastructure Ltd. v. Mukul Kumar .

* Vistra was aware of the CIRP since May 2021 and had ample time to file its claim. The NCLAT stay only pertained to CoC formation, not the CIRP or claim collation process.

* Regulation 6A was inapplicable as it was introduced after the CIRP commencement and, moreover, applied to creditors in the Corporate Debtor's books of accounts. Vistra, being a trustee for debentures of a group company and the Corporate Debtor being only a security provider, was not listed as such.

* The precedents cited by Vistra regarding secured creditor rights were distinguishable or, in the case of Vistra ITCL v. Dinkar , held by NCLAT in Edelweiss ARC v. Anuj Jain to be an order under Article 142 and not a binding precedent.

* Allowing the claim at this stage would derail the entire CIRP and violate the "clean slate" principle of the IBC.

NCLT's Findings and Reasoning: Vigilance Required, Reg. 6A Inapplicable

The NCLT meticulously examined the submissions and records, finding in favour of the Resolution Professional.

On Knowledge and Vigilance: The Tribunal noted, "It is clearly evident that after CIRP was initiated against the corporate debtor on 13.05.2021, the respondent informed IIFL regarding the same vide an email dated 22.05.2021... IIFL wrote back... stating...'we endeavour to file our claim in the next couple of days.'" This established Vistra's (representing IIFL) early knowledge. The Tribunal emphasized, "The applicant should have been more vigilant with regard to its own claim and filed the same within time more so when the Code is time bound in nature. The present case is a classic example of the legal maxim ' Vigilantibus Non Dormientibus Jura Subveniunt ' which lays down the principle that law does not protect the one who sleeps over his rights."

NCLAT Stay Interpretation: The NCLT clarified, "A plain reading of the interim order of the Hon’ble NCLAT dated 04.06.2021... makes it clear that the CIRP proceedings were not stayed and it was only the formation of CoC that was stayed." Thus, Vistra's justification for delay based on this stay was deemed unfounded.

Applicability of Regulation 6A: The Tribunal held Regulation 6A inapplicable, stating, "...Regulation 6A of the CIRP Regulations will not be applicable in the present case as there was no direct disbursement made by the applicant of any funds and thereby it found no place in the books of accounts of the corporate debtor." The judgment also implicitly supports the RP's argument that the regulation, introduced in September 2022, wouldn't retroactively apply with full force to a CIRP initiated in May 2021 in the manner argued by the applicant, especially concerning initial communications.

Timeliness of Claim Submission: The claim was filed on November 30, 2023, significantly after the last submission date (April 24, 2023) and after the CoC approved the resolution plan (September 4, 2023).

Scope of Adjudication: The Tribunal also stated, "We also categorically and expressly state that no adjudicatory power will be exercised vis a vis contentions not forming part of the prayers of the present application," referring to oral arguments on secured creditor rights that were not explicitly framed as a distinct relief sought in the application beyond the admission of their financial claim.

Decision and Implications

Concluding its findings, the NCLT rejected I.A. 109 of 2024.

This order underscores the critical importance of adhering to timelines stipulated under the Insolvency and Bankruptcy Code, 2016. It reinforces the principle that claims submitted after the approval of a resolution plan by the CoC face a very high threshold for admission. The decision also provides clarity on the application of Regulation 6A of the CIRP Regulations, particularly concerning creditors not directly reflected in the corporate debtor's books of accounts for fund disbursements and for CIRPs initiated prior to the regulation's introduction. For secured creditors, the judgment highlights the necessity of timely participation in the CIRP to protect their interests within the IBC framework.