The NCLAT observed that filing of claims under CIRP within a stipulated timeline though important, should be seen as a directory rather than mandatory.
The National Company Law Appellate Tribunal (NCLAT), New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member) and Naresh Salecha & Indevar Pandey (Technical Members) was hearing an appeal and held that filing of claims under CIRP within a stipulated timeline though important, should be seen as a directory rather than mandatory.
The Bench observed that while adherence to timelines specified in the CIRP Regulations is important, it is not absolute. The Resolution Professional, being aware of the claimant's situation and claims, is duty-bound to consider them even if they are filed beyond the prescribed deadline. This highlights the principle that procedural rules should not impede the delivery of substantive justice.
In the Company Appeal (AT) (Insolvency) No. 1537 of 2023, the Appellant, had challenged the Impugned Order dated 10.10.2023 passed by the National Company Law Tribunal, Mumbai Bench, Court-V. This order was related to I.A. No. 4455 of 2023 CP (IB)/1330 (MB) 2020 concerning Privilege Industries Ltd., where Mr. Sripatham Venkatasubramaniam Ramkumar served as the Resolution Professional.
The background revealed that the Appellant, a workman employee of the Corporate Debtor since 30.09.2010, faced legal troubles due to a false criminal case. He was arrested on 03.09.2015 and later acquitted on 16.12.2016. Despite this, the Corporate Debtor terminated his employment on 19.04.2016, a decision challenged by the Appellant before the Labour Court, which ruled in his favour on 12.01.2023.
The Appellant informed the Corporate Debtor about the Labour Court's order on 06.02.2023. However, the Corporate Debtor, now undergoing the Corporate Insolvency Resolution Process (CIRP), asked him to rejoin without back wages on 07.04.2023.
The Corporate Debtor's admission into CIRP occurred on 15.02.2023, and the Resolution Professional issued a public announcement for claims on 22.02.2023. the Appellant's claim, filed on 05.07.2023, was rejected on 18.07.2023, citing delay.
Despite the Appellant's efforts to highlight his entitlement to back wages, his application before the Adjudicating Authority was dismissed on 10.10.2023. The Resolution Plan of SNJ Breweries Private Limited was approved on 23.08.2023, with the Appellant's claims disregarded due to timing issues.
The core issue revolved around the acceptance of the Appellant's claims, filed beyond the 90 days stipulated by the CIRP Regulations, 2016. The Appellant argued that the Respondent, being aware of his claims and legal battles, should have included them despite the delay.
The Appellate Tribunal considered the circumstances, emphasizing that the Respondent had ample time to verify claims but failed to meet regulatory requirements. It noted that timelines, though important, should be seen as a directory rather than mandatory.
Ultimately, the Appellate Tribunal ruled in favour of the Appellant, setting aside the Impugned Order and directing both parties to appear before the Adjudicating Authority for further proceedings.