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2025 (5) TMI 267 - AT - IBCNature of debt - financial debt or other creditors - appellant entered into a Definitive Agreement with the Corporate Debtor and the claim was reflected in the Corporate Debtor s financial statements - Admission of claim filed by the Appellant after the approval of the Resolution Plan by the Committee of Creditors (CoC) - HELD THAT - The present is a case where Section 9 application was filed by the Appellant which was rejected holding that debt cannot constitute operational debt and thereafter Appellant had filed Commercial Suit in Delhi High Court in 2019 and the CIRP of the Corporate Debtor commenced on 19.05.2023 and after due publication although several other creditors have filed their claims Appellant choose not to file its claim. Appellant cannot contend that he was not aware of the CIRP since in the proceedings filed by the Appellant itself in Delhi High Court the initiation of the CIRP has been noticed as has been noted by the Adjudicating Authority in its impugned order. Appellant was well aware of the initiation of the CIRP and had chosen not to file any claim. Resolution Plan has already been approved by the CoC. When Appellant chose not to file any claim before approval of the plan by CoC it is not open for the Appellant to claim that his claim needs to be accepted as financial debt. This Tribunal in Deputy Commissioner UTGST Daman vs. Rajeev Dhingra 2023 (9) TMI 1688 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI has dismissed the Appeal filed by an Appellant challenging the order approving the Resolution Plan on the ground that their claim was submitted and claim was required to be considered in the CIRP. The claim submitted by the Appellant after approval of the Resolution Plan has rightly not been accepted by the Resolution Professional and we are of the view that the Adjudicating Authority also did not commit any error in rejecting IA No.507 of 2025 filed by the Appellant where direction was sought to Resolution Professional to condone the delay in filing the claim and further direction to the Resolution Professional to accept the claim. The Resolution Professional also cannot be said to have committed any breach of CIRP Regulations 2016 since he has noticed in the Information Memorandum that no claim has been filed by the Appellant although financial statement mentioned receipt of the amount from the Appellant. Conclusion - i) The Appellant s claim was rightly classified as other creditor by the Resolution Professional given the absence of a timely filed claim and prior rejection of the claim as operational debt. ii) The claim filed after the approval of the Resolution Plan by the CoC could not be admitted or considered in the CIRP. There are no error in the order of the Adjudicating Authority allowing the Resolution Plan - appeal dismissed.
1. ISSUES PRESENTED and CONSIDERED
- Whether the claim of the Appellant, who had entered into a Definitive Agreement with the Corporate Debtor and whose claim was reflected in the Corporate Debtor's financial statements, ought to have been classified as a financial debt rather than as an 'other creditor' in the Insolvency Resolution Process? - Whether the claim filed by the Appellant after the approval of the Resolution Plan by the Committee of Creditors (CoC) can be admitted and considered by the Resolution Professional? - Whether the Adjudicating Authority erred in rejecting the Appellant's Interlocutory Application seeking condonation of delay in filing claim and direction to accept the claim? - Whether the Resolution Professional and CoC acted in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) and applicable regulations in classifying the Appellant's claim and approving the Resolution Plan? 2. ISSUE-WISE DETAILED ANALYSIS Classification of the Appellant's Claim as Financial Debt or 'Other Creditor' The Appellant contended that its claim, being reflected in the Corporate Debtor's audited financial statements under 'Other Long-Term Liabilities' as 'advance for building construction', qualified as a financial debt. The Appellant argued that the Resolution Professional was obliged to classify the claim appropriately as financial debt in the Information Memorandum and that the classification as 'other creditor' was erroneous and contrary to law. The legal framework involves the definitions under the IBC, particularly the distinction between financial debt and operational debt, and the obligations of the Resolution Professional to prepare the Information Memorandum accurately reflecting creditors' claims. Precedents emphasize the importance of proper classification for the purpose of resolution. However, the Court noted that the Appellant had earlier filed a Section 9 application under IBC claiming operational debt, which was dismissed by the Adjudicating Authority on 31.10.2018 holding that the claim did not qualify as operational debt but was a transaction by way of collaboration and seed money. The Appellant thereafter filed a commercial suit for recovery of money, which remains pending. The Resolution Professional, in the Information Memorandum dated 27.07.2024, noted that several claimants including the Appellant had not filed claims and were categorized as 'other creditors'. The Resolution Plan explicitly proposed no payment to 'other creditors'. The Court observed that the Resolution Professional's classification was based on the absence of a filed claim and the commercial decisions of the CoC. The Court held that the Appellant's claim, despite being reflected in the financial statements, was not admitted as financial debt for the purposes of the CIRP, especially since the Appellant had not filed its claim within the prescribed timelines and the claim had been previously rejected as operational debt. Admissibility of Claim Filed After Approval of Resolution Plan The Appellant submitted its claim by e-mail dated 24.10.2024 and by hard copy on 25.10.2024, after the CoC had approved the Resolution Plan on 23.10.2024 with 100% voting share. The Appellant sought condonation of delay and acceptance of the claim. The Resolution Professional and CoC contended that the claim was belated and could not be admitted after the approval of the Resolution Plan, as such acceptance would jeopardize the CIRP and defeat the time-bound objectives of the IBC. The Resolution Professional had issued public announcements inviting claims after commencement of CIRP on 19.05.2023, and the Appellant was aware of the CIRP, as evidenced by its own commercial suit proceedings before the Delhi High Court. The Court relied on the relevant CIRP Regulations, particularly Regulation 12(2), which prescribes timelines for filing claims and restricts the Resolution Professional's obligation to accept claims beyond the extended period of 90 days from the insolvency commencement date. The Court also referred to its own precedent dismissing belated claims after plan approval, emphasizing that acceptance of late claims would derail the CIRP and contravene the objectives of the IBC. Applying these principles, the Court held that the claim filed after approval of the Resolution Plan was rightly rejected by the Resolution Professional and the Adjudicating Authority did not err in refusing to condone the delay or direct acceptance of the claim. Adjudicating Authority's Rejection of Interlocutory Application Seeking Condonation The Appellant's IA No.507 of 2025 sought directions to the Resolution Professional to accept the claim despite the delay. The Adjudicating Authority rejected this application, allowing the plan approval application IA No.60 of 2024 simultaneously. The Court found no error or illegality in this decision. The Adjudicating Authority correctly applied the IBC provisions and CIRP Regulations, noting that the Appellant was aware of the CIRP and had failed to file the claim within the stipulated timeframe. The rejection was consistent with the principle that claims cannot be admitted post-approval of the Resolution Plan. Compliance of Resolution Professional and CoC with IBC and CIRP Regulations The Resolution Professional issued public announcements and an Information Memorandum, disclosing the classification of creditors and the status of claims. The CoC considered all claims filed within time and approved the Resolution Plan with 100% voting share. The plan provided for payments to financial creditors, operational creditors, employees, and government dues, but no payment to 'other creditors' including the Appellant. The Court observed that the Resolution Professional and CoC acted within their powers and in accordance with the IBC framework. The commercial wisdom of the CoC in approving the plan with the proposed payments was to be respected unless there was a material irregularity, which was not demonstrated by the Appellant. The Court further noted that the Appellant's prior failure to file claims timely and the rejection of its operational debt claim in 2018 weakened its present contentions. 3. SIGNIFICANT HOLDINGS "The transaction is clearly one which does not qualify as an Operational Debt. The transaction is more by way of collaboration. The petitioner had paid the amount of Rs. 5 Crores as "seed money" to develop the Respondent's property in return for built up space. Such a transaction having gone sour, recovery of money cannot be viewed as an "Operational Debt". On this point alone, this petition is rejected." "After extended period of 90 days of the insolvency commencement date, the IRP/RP is not obliged to accept the claim. Prima-facie, the said CIRP regulation has not provided any discretion to RP for admitting their claim after the extended period." "When the Resolution Plan has already been approved by the CoC and it is pending before the Adjudicating Authority for approval, at this stage, if new claims are entertained the CIRP would be jeopardized and derailed. This would militate against the object of the IBC which is resolution of Corporate Debtor in time bound manner to maximize the value." "No payment has been proposed towards Other Creditors under the Plan." The Court's final determinations were:
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