NCLT: Under IBC, Time Frame For Completion Of Liquidation Not Meant To Deny Justice
NCLT: Under IBC, Time Frame For Completion Of Liquidation Not Meant To Deny Justice
Pardons the applicant by referring to Section 42
The National Company Law Tribunal (NCLT) has held that when the liquidation process is underway, admission of the claim shall not result in further delay.
The bench of Kuldeep Kumar Kareer (Judicial Member) and Anil Raj Chellan (Technical Member) was referring to the rejection of a claim by the liquidator to complete the liquidation process within the time frame.
The tribunal observed, "The stipulation of time for submission of a claim and preferring of appeal against the rejection of the claim by the liquidator are intended to complete the liquidation process within the time frame and not meant to destroy the rights of parties or deny the ends of justice."
The corporate debtor was admitted to the Corporate Insolvency Resolution Process (CIRP), which resulted in the liquidation order on 12 July 2021. The respondent was appointed as the liquidator.
The respondent invited claims from creditors and workmen as per the 24 July 2021 advertisement. The last date for submission was 19 August.
However, the applicant submitted its claim on 08 November, after the date expired. Hence, the claim was rejected.
The applicant submitted that the delay in intimating the initiation of the liquidation process and invitation of claims resulted in delayed submission of the claim.
The respondent contended that the applicant did not apply within 14 days as specified under Section 42 of the Insolvency and Bankruptcy Code (IBC), 2016.
Section 42 deals with the appeal against the decision of the liquidator. It states that a creditor may appeal to the Adjudicating Authority (AA) against the decision of the liquidator by accepting or rejecting the claims within 14 days.
Thus, the NCLT pardoned the applicant for the delay in filing the claim by stating that the time frame given was not meant to destroy the rights of the parties or deny them justice.
