Case Note & Summary
The appeal was filed by M/s. FLSmidth Private Limited, an Operational Creditor, against the order of the National Company Law Tribunal (NCLT), Hyderabad Bench, dated 15.10.2019, which rejected its claim in the liquidation proceedings of Lanco Infratech Ltd. (Corporate Debtor). The Corporate Debtor had issued a purchase order to the Appellant for supply of systems and spares. The Appellant supplied the goods and raised invoices, but the Corporate Debtor failed to make payment. Subsequently, CIRP was initiated against the Corporate Debtor on 07.08.2017, and later liquidation proceedings were ordered. The Appellant filed its claim before the Liquidator, but the claim was rejected by the Adjudicating Authority on the ground of delay. The NCLAT examined the facts and held that the rejection solely on the basis of delay was not justified. The Tribunal noted that the Adjudicating Authority should have considered the merits of the claim and that the delay, if any, could be condoned or considered in the interest of justice. The NCLAT set aside the impugned order and directed the Liquidator to consider the claim of the Appellant on its merits and pass appropriate orders in accordance with law. The appeal was allowed.
Headnote
A) Insolvency and Bankruptcy Code - Liquidation - Claim by Operational Creditor - Delay in Filing - The Adjudicating Authority rejected the claim of the Operational Creditor on the ground that it was filed belatedly after the liquidation order was passed. The NCLAT held that the rejection solely on delay was erroneous and that the Authority should have considered the merits of the claim. The Tribunal directed the Liquidator to consider the claim on merits and pass appropriate orders. (Paras 1-11) B) Insolvency and Bankruptcy Code - Section 60(5) - Jurisdiction of NCLT - The NCLT has jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person, including claims arising during liquidation. The rejection of a claim without examining its validity is not sustainable. (Paras 5-10) C) Insolvency and Bankruptcy Code - Section 61 - Appeal - The appeal against the order of the Adjudicating Authority is maintainable under Section 61 of the IBC. The NCLAT can interfere if the order is perverse or suffers from legal infirmity. (Para 1)
Issue of Consideration
Whether the Adjudicating Authority was justified in rejecting the claim of the Operational Creditor solely on the ground of delay in filing the claim during liquidation proceedings, without considering the merits of the claim.
Final Decision
The appeal is allowed. The impugned order dated 15.10.2019 is set aside. The Liquidator is directed to consider the claim of the Appellant on its merits and pass appropriate orders in accordance with law.
Law Points
- Delay in filing claim in liquidation proceedings is not an absolute bar
- Adjudicating Authority must consider merits of claim
- Section 60(5) IBC empowers NCLT to entertain applications related to insolvency
- Section 61 IBC provides for appeal against NCLT orders
- Limitation Act does not apply to IBC proceedings in the same manner.
