RPS Infrastructure Vs. Mukul Kumar : The Supreme Court Observes That Once Resolution Plan Is Admitted Fresh Claims Can Not Be Admitted Under IBC
The Supreme Court in RPS Infrastructure Vs. Mukul Kumar & Anr (Civil Appeal No. 5590 of 2021) has held that once the Resolution Plan has been submitted, fresh claim cannot be admitted and hydra headed monster of undecided claims cannot be unleashed on the Resolution Applicant.
BRIEF FACTS
RPS Infrastructure and KST Infrastructure Pvt. Ltd. (Corporate Debtor) has entered into agreement for development of land licensed with the appellant. There were disputes regarding advertising of project and arbitration proceedings were initiated. An award was passed in favour of the RPS Infrastructure. An appeal was filed against the award. During Pendency of Appeal KST Infrastructure Pvt. Ltd. was admitted to insolvency. RPS Infrastructure filed claim with delay of 289 days. At the time of filing of claim, Resolution Plan had already been approved and submitted to the NCLT for approval. The claim was rejected by RP on ground of delay.
The RPS Infrastructure filed Application before NCLT seeking direction for admission of its claim. NCLT allowed the application on the ground that claim would have appeared in the books of account. If claim has not appeared in books of account the RP should had a duty to obtain them and verify the financial position. Public announcement may have been missed by RPS Infrastructure.
Appeal was filed against the order of NCLT before NCLAT. The NCLAT reversed the order on the ground that the Respondent has done proper service through public announcement as per IBBI regulations. The Respondent has even filed Application under Section 19 seeking for various records. IBBI regulations can be directory depending on facts of each case. The new claims entertained the Resolution Plan approved by CoC will be jeopardized.
SUBMISSIONS BY PARTIES
RPS Infrastructure submitted that award was a contingent claim as Award under Section 37 of Arbitration Act was pending. It was argued that there should have been provision for contingent claim as per judgment of judgment in State Tax Officer Vs. Ranibow Papers. It was also submitted that timeline provided under Section 12 of the Code is directory as held in Essar Steel. As Resolution Plan has not been approved, the claim of the RPS Infrastructure should have been admitted as contingent claim.
On the other hand the RP submitted that he has followed all the applicable regulations while collating claims. The RP has filed Application under Section 19 of the Code for records of the Corporate Debtor. Belated claims have potential to open floodgates of litigation. RP also submitted that there can not be made provision for contingent claim as Resolution Plan has been made on the basis of Information Memorandum.
THE FINDING OF THE SUPREME COURT
The Supreme Court observed that there was no fault on the Part of the RP. The RP did what could be done to procure the Corporate Debtor’s records by even moving an application under Section 19 of the IBC. The Supreme Court further observed that public announcement would constitute deemed knowledge on the part of RPS Infrastructure. The Adjudicating Authority has not approved the plan, it does not mean that the plan can go back and forth.
__________________________
Mukesh Kumar Suman is an advocate and legal author based at Delhi. He regularly appears before various Judicial Forums including NCLT, NCLAT, High Courts and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.