Summary
The Supreme Court rejected a commercial award-holder’s claim submitted 287 days late after creditors had approved a resolution plan. Proper public announcement constituted deemed knowledge, and the creditor ought to have monitored the debtor’s insolvency while litigating against it. The resolution professional had made reasonable efforts to obtain unavailable records. Pending adjudicating-authority approval did not justify reopening the plan and unsettling the resolution applicant with late claims.
Issues
- Whether the belated arbitral-award claim had to be included after creditors approved the resolution plan.
- Whether claimed ignorance of the public announcement or the unavailable corporate records justified reopening the process.
Provisions considered
- Section 15, Insolvency and Bankruptcy Code, 2016The duly made public announcement inviting claims constituted deemed knowledge in this case. The commercial creditor’s asserted failure to see the newspaper notice did not excuse its delay. (¶¶ 3, 9(i), 17, 19, 20)
Held
- The issue was admission of this claim after creditors approved the plan, not final determination of the pending arbitral appeal. A claim did not become timely merely by being described as contingent or because tribunal approval of the plan was still pending. (¶¶ 11, 15, 16, 21, 22)
- The resolution professional made reasonable efforts to secure the debtor’s records, including applying for directions under Section 19. The debtor’s failure to provide them did not establish a failure by the professional, and it was not even known whether the alleged liability appeared in those records. (¶¶ 9(iii), 12, 13, 17, 18)
- The creditor was a commercial entity litigating against the debtor and should have remained vigilant. The valid newspaper announcement supplied deemed knowledge, and the asserted lack of awareness did not justify the substantial delay. (¶¶ 19, 20)
- Although insolvency timelines can be extended in appropriate circumstances, this case did not warrant reopening an already creditor-approved plan. Continued back-and-forth would undermine the time-bound process and expose the successful applicant to uncertain additional claims. (¶¶ 19, 21, 22, 23)
Result
Appeal dismissed, sustaining NCLAT’s refusal to require consideration of the late claim. Parties to bear their own costs.