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RPS Infrastructure Ltd. Vs. Mukul Kumar and Ors. - (Supreme Court) (11 Sep 2023)

Successful resolution applicant cannot be faced with undecided claims after the resolution plan has been accepted

MANU/SC/1001/2023

Insolvency

An agreement was entered into on 2nd August, 2006 between the Appellant and KST Infrastructure Private Limited ('the Corporate Debtor'), for development of land licensed with the Appellant 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 2nd May, 2011.

The NCLAT, vide the impugned order, did not favour the view adopted by the Adjudicating Authority. NCLAT observed that, Respondent No. 1 had effectuated proper service for inviting claims in accordance with Regulation 6 of the IBBI Regulations which only mandates a pronouncement through newspapers and not through personal service - an aspect that was not disputed by the Appellant. Further, the Appellant failed to show that it filed its claim as soon as it came to know of the initiation of the CIRP. The Appellant even issued a Special Power of Attorney in favour of the Corporate Debtor after confirmation of the arbitral award.

It is undisputed that, the process followed by Respondent No. 1 was not flawed in any manner, except to the extent of whether an endeavour should have been made by Respondent No. 1 to locate the liabilities pertaining to the said award from the records of the Corporate Debtor. Respondent No. 1 did what could be done to procure the Corporate Debtor's records by even moving an application under Section 19 of the Insolvency And Bankruptcy Code, 2016 (IBC).

The IBC is a time bound process. There are certain circumstances in which the time can be increased. The question is whether the present case would fall within those parameters. The delay on the part of the Appellant is of 287 days. The Appellant is a commercial entity. They were litigating against the Corporate Debtor is an undoubted fact. The Appellant ought to have been vigilant enough in the aforesaid circumstances to find out whether the Corporate Debtor was undergoing CIRP. The Appellant has been deficient on this aspect.

Section 15 of the IBC and Regulation 6 of the IBBI Regulations mandate a public announcement of the CIRP through newspapers. This would constitute deemed knowledge on the Appellant. In any case, their plea of not being aware of newspaper pronouncements is not one which should be available to a commercial party.

The mere fact that the Adjudicating Authority has yet not approved the plan does not imply that the plan can go back and forth, thereby making the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump onto the bandwagon. In Committee of Creditors of Essar Steel India Limited through Authorised Signatory v. Satish Kumar Gupta and Ors., present Court opined that, a successful resolution applicant cannot be faced with undecided claims after the resolution plan has been accepted. In Essar Steel, the Court cautioned against allowing claims after the resolution plan has been accepted by the COC. The NCLAT's impugned judgment cannot be faulted to reopen the chapter at the behest of the Appellant. Appeal dismissed.

Tags : RESOLUTION PLAN   APPROVAL   AWARD  

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