NCLAT Rejects Belated Kotak Bank Claim in Insolvency Case, Highlights Importance of Timely Filing
The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) has upheld the rejection of a claim submitted
NCLAT Rejects Belated Kotak Bank Claim in Insolvency Case, Highlights Importance of Timely Filing
The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) has upheld the rejection of a claim submitted by Kotak Mahindra Bank Ltd. The bank submitted the claim to the Resolution Professional after a significant delay of 738 days, even after the resolution plan for the corporate debtor was already approved.
Real estate developer Sarvottam Realcon Pvt Ltd entered the Corporate Insolvency Resolution Process (CIRP) on July 9, 2021, as mandated by the National Company Law Tribunal (NCLT). The Interim Resolution Professional made a public announcement for creditors to submit their claims on July 14, 2021. After 17 months, on December 24, 2022, the Committee of Creditors approved a resolution plan for the company.
However, Kotak Mahindra Bank Limited (Appellant Bank) submitted its claim to the Resolution Professional in August 2023, a delay of 738 days past the deadline. This delay ultimately led to the rejection of their claim.
Facing rejection, Kotak Mahindra Bank (Appellant Bank) filed an application with the NCLT on November 21, 2023. This application sought two things: first, a directive for the Resolution Professional to admit their delayed claim, and second, condonation of the significant delay of 738 days in filing it. However, the NCLT dismissed the application on the same day. Undeterred, the Appellant Bank filed an appeal before the NCLAT challenging the NCLT's order.
A home buyer in the Corporate Debtor's real estate project had previously mortgaged a flat with PNB Housing. This debt was subsequently assigned to the Appellant Bank on March 4, 2023. The Appellant Bank argued that records of the Corporate Debtor showed payments received from the home buyer, but the claim was neither identified nor mentioned in the Information Memorandum by the Resolution Professional.
The Resolution Professional countered that the Appellant Bank's claim, based on an assignment from PNB Housing, does not qualify them as a financial creditor entitled to participate in the specific creditor class. They argued that the Appellant should have conducted appropriate due diligence before the assignment, as the resolution plan for the Corporate Debtor had already been approved by that time.
The NCLAT Bench affirmed the NCLT's dismissal of the application, stating that the claim's submission after the resolution plan's approval justified the rejection.
Considering the facts of this case, where the resolution plan was approved on December 24, 2022, and the appellant filed their claim only in August 2023, the NCLAT Bench found no error in the Adjudicating Authority's decision to reject the application. They concluded that the appeal lacked merit and dismissed it accordingly.