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SUPREME COURT OF INDIA
SANJAY KISHAN KAUL, SUDHANSHU DHULIA, JJ.
M/s. RPS Infrastructure Ltd. – Appellant
Versus
Mukul Kumar and Another – Respondents
Civil Appeal No. 5590 of 2021
Decided On : 11-09-2023
Arbitration and Conciliation Act, 1996 – Section 37 – Insolvency and Bankruptcy Code, 2016 – Sections 7 and 15 read with Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – Monetary claim against Corporate Debtor arising from arbitral award – Process followed by respondent no. 1 was not flawed in any manner, except to the extent of whether endeavour should have been made by respondent no. 1 to locate liabilities pertaining to the said award from the records of the Corporate Debtor – Respondent no. 1 did what could be done to procure Corporate Debtor’s records by even moving application under Section 19 of IBC – That it was not fruitful is a consequence of Corporate Debtor not making available material – IBC is a time bound process – Appellant is a commercial entity – Plea of not being aware of newspaper pronouncements is not one which should be available to a commercial party – Mere fact that Adjudicating Authority has yet not approved plan does not imply that plan can go back and forth, thereby making CIRP an endless process – This would result in reopening of whole issue, particularly as there may be other similar persons who may jump onto bandwagon – NCLAT’s impugned judgment cannot be faulted to reopen chapter at behest of appellant – Appeal dismissed. (Paras 17, 18, 19, 20, 21, 22 and 23)
Facts of the case:
Sole issue before Court is whether appellant’s claim pertaining to an arbitral award, which is in appeal under Section 37 of the Act, is liable to be included at a belated stage – i.e. after resolution plan has been approved by COC.
Findings of Court:
NCLAT’s impugned judgment cannot be faulted to reopen chapter at behest of appellant. We find it difficult to unleash hydra-headed monster of undecided claims on resolution applicant.
Result : Appeal dismissed.
JUDGMENT :
SANJAY KISHAN KAUL, J.
Factual Background
1. An agreement was entered into on 02.08.2006 between the appellant and M/s KST Infrastructure Private Limited (hereinafter referred to as ‘the Corporate Debtor’) for development of land licensed with the appellant admeasuring 8 acres into a residential group housing complex at Faridabad, Haryana. However, the appellant, being aggrieved by the Corporate Debtor’s alleged misconduct in advertising the project under its own name and without mentioning the name of the appellant, sought reference to arbitration on 02.05.2011.
2. The arbitral proceedings culminated in an award dated 01.08.2016 in favour of the appellant. In addition to awarding a monetary claim, the award inter-alia directed the Corporate Debtor to apply to the authorities for transfer of the requisite licenses to the appellant. Aggrieved by the award, the Corporate Debtor filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Arbitration Act’) on 26.09.2016. It appears that on the same date, the appellant filed execution proceedings in respect of the said award. Those execution proceedings were ultimately adjourned sine die on 22.12.2017 on account of the pendency of the proceedings under Section 34 of the Arbitration Act. These proceedings under Section 34 of the Arbitration Act culminated in the award being upheld by the A.D.J. (Special Commercial Court, Gurugram), albeit with some modifications, on 25.04.2019. An appeal filed against the same under Section 37 of the Arbitration Act is stated to be pending.
3. Meanwhile, the Corporate Insolvency Resolution Process (‘CIRP’) was initiated against the Corporate Debtor in respect of three real estate projects viz. (i) Sector 114, Gurugram, (ii) Sector 89, Faridabad and (iii) KST Whispering Heights in Sector 88, Faridabad by certain homebuyers who had invested in these projects. This application under Section 7 of the Insolvency and Bankruptcy Code (hereinafter referred to as ‘the IBC’) was admitted on 27.03.2019 by the Adjudicating Authority. On the same date, an Interim Resolution Professional (‘IRP’) was appointed. The IRP issued a public announcement inviting claims from creditors, in accordance with Section 15 of the IBC read with Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter referred to as the ‘IBBI Regulations’) on 30.03.2019. After receipt of the claims, the IRP constituted the Committee of Creditors (‘COC’) on 06.11.2019 and circulated the draft information memorandum and invited expressions of interest from prospective resolution applicants. Five such applications were received.
4. Thereafter, the IRP was replaced and respondent no. 1 was appointed as Resolution Professional (RP) of the Corporate Debtor by the COC on 18.06.2020. The resolution plan submitted by KST Whispering Heights Residential Welfare Association was approved by the COC by a majority vote of 80.74% on 11.07.2020. This plan was then submitted by respondent no. 1 to the Adjudicating Authority for approval under Section 31 of the IBC on 08.09.2020. We may note that the Corporate Debtor is not a party before us. However, the Resolution Professional has been arrayed as respondent no. 1, while respondent no. 2 is the successful resolution applicant. Respondent no. 2 was impleaded in the present civil appeal by this Court’s order dated 29.10.2021.
5. The appellant sent an email on 19.08.2020 to respondent no. 1 highlighting their pending claim of Rs. 35,67,05,337 against the Corporate Debtor arising from the arbitral award dated 01.08.2016, confirmed with certain modifications in the proceedings under Section 34 of the said Act. However, respondent no. 1 rejected this claim on 25.08.2020 on the ground that the time period for submitting the claim was within 90 days of initiation of CIRP and the applicant was 287 days late. A Resolution plan ha
IBC is a time bound process – Plea of not being aware of newspaper pronouncements is not one which should be available to a commercial party.
Belated claims submitted after the approval of a Resolution Plan by the Committee of Creditors cannot be entertained as they disrupt the resolution process and the commercial wisdom of the CoC, regar....
Belated claims filed post CoC approval of resolution plan, despite prior awareness and settlement assertion, cannot be condoned; rejection upholds CIRP's time-bound nature and prevents uncertainty fo....
Belated claims post CoC approval of resolution plan cannot be entertained; IBC timelines prevail over equitable considerations.
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