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TMI Blog2023 (12) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Corporate Insolvency Resolution Process ("CIRP" in short) against Prowess International Private Limited, Corporate Debtor/present Respondent and held that the resolution plan of the Corporate Debtor having already been approved and the claims of the Operational Creditor not being part of the resolution plan, the right of the Operational Creditor in respect of their claims stood extinguished. Aggrieved by the impugned order, the present appeal has been filed by the Operational Creditor. 2. Briefly coming to the factual matrix of the case, it is noticed that the Operational Creditor had supplied goods to the Corporate Debtor pursuant to purchase orders issued between 23.07.2013 and 10.10.2015. The materials having been delivered, tax invoice and challans were raised on the Corporate Debtor. Though payments were made from time to time, the Corporate Debtor defaulted in this regard and according to the Operational Creditor the alleged date of default was 24.07.2013 following which several reminders for making payments were issued by the Operational Creditor with the last one being issued on 14.06.2019. Since the reminder emails remained unresponded and payments were not forth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s compelled to institute Section 9 proceedings before the Adjudicating Authority. 4. It is further submitted by the Learned Counsel for the Appellant that the Operational Creditor was entitled for admission of the Section 9 petition since their claims in respect of the invoices raised were an undisputed claim and there was clear default by the Corporate Debtor. Further keeping in view that supply of goods was admitted and operational debt acknowledged by issuance of Balance Confirmation Statements the debt was established and default having occurred, it was a fit case for admission of Section 9 application. Given this backdrop, the decision of the Adjudicating Authority dated 17.10.2017 in CP No. 150/IB/KB/2017 approving the resolution plan without settling the dues of the Appellant, being one of the Operational Creditors, it was contended that the Corporate Debtor cannot start on a clean slate. Under such circumstances, the present impugned order by holding that the claims as provided in the resolution plan stood frozen and that claims which are not part of the resolution plan stands extinguished does not hold to reason. It was contended that the resolution plan was not approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 4 SCC 17 to contend that Appellant has a right of payment in respect of operational debt particularly when the debt has been acknowledged vide balance confirmations and goods had been received and acknowledged through the issuance of C-Forms. It is their case that these balance confirmations were issued from time to time and finally on 01.04.2018. The Appellant has also submitted that the subsequent balance confirmations for FY 2016-17, 2017-18 and 2018-19 have been placed on page 178-180 of the Appeal Paper Book ("APB" in short). We also notice that it is the case of the Appellant that these balance confirmations have not been disputed by the Corporate Debtor and hence do not attract the question of limitation. The first time the balance confirmation was denied was only after the Operational Creditor had filed the Section 9 application. Submission has also been pressed that reminders for payments were sent by way of emails which have been placed at pages 184-197 of the APB which emails have not been denied by the Corporate Debtor either. It is further the case of the Operational Creditor that the Corporate Debtor neither replied to the Section 8 demand notice nor made any paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the instant petition was filed on 09 August 2019. It is to be noted that the Corporate Debtor had was admitted into CIRP vide order dated 20 April 2017 in Company Petition 150/2017. Subsequently, a resolution plan also been approved by this Adjudicating Authority vide order dated 17 October 2017. The Operational creditor had not filed any claim with the Resolution Professional after the Corporate Debtor was admitted into CIRP and has filed the instant petition after the approval of the resolution plan. The same indicates gross negligence on part of the Operational Creditor. 26. The Hon'ble National Company Law Appellate Tribunal, in the matter of Sanjay Chemicals (India) Private Limited vs. Sharon Bio-Medicine Limited', held that since the outstanding dues were prior to the period of initiation of 'Corporate Insolvency Resolution Process' and the creditor had not filed the claim at that stage, the application under Section 9 of the Code after completion of the 'Corporate Insolvency Resolution Process' against 'Corporate Debtor' was not maintainable [Para 3]. 27. Further, the judgment of the Hon'ble Supreme Court in Ghanashyam Mishra & Sons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continue to be paid. It was therefore asserted that the resolution plan clearly provided that Operational Creditor whose dues have not been settled are required to be settled notwithstanding the resolution of the Corporate Debtor. It has been further stated that in the Balance Sheet of the Corporate Debtor as on 31.03.2017, in the column of "Trade Payables" an amount of Rs. 24,17,46,497/- were shown as due and payable by the Corporate Debtor. This column clearly indicates that the Corporate Debtor had not paid all operational creditors including the Appellant. 13. Countering these assertions, it is submitted by the Learned Counsel for the Respondent that the contention of the Operational Creditor that some Sumit Kumar had furnished the opening balance of the Corporate Debtor qua the Appellant as on 01.04.2016, 01.4.2017 and 01.04.2018 is a false claim. It was pointed out that his name did not figure in the list of employees maintained by the resolution applicant as part of the resolution plan which was submitted before the Adjudicating Authority. It has been argued that acknowledgment of debt is the prerogative of the Board and/or has to be approved by shareholders in the Annual G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , till the approval of a resolution plan by the committee........ ......Therefore, it is clear that operational creditors' claim has been settled with the corporate debtor and financial creditor Punjab National Bank itself has certified that accounts of the corporate debtor are classified in their books of accounts as a standard asset. So, in this condition it is clear that no debt is outstanding as on today on the corporate debtor and Committee of Creditors with 100% own shares has made a recommendation for closing the Insolvency Proceedings. Given the resolution passed by Committee of Creditors Resolution Plan submitted by the Resolution Professional deserves to be accepted " 16. This order of 17.10.2017 clearly shows that the dues of all claims from operational creditors had been settled by the time the CIRP was terminated. Only two claims from the category of operational creditors (Parker Hannifin India Pvt. Ltd. and Poonam Enterprise) had been received and both were settled to the satisfaction of the claimants. No other claim from any other Operational Creditor had been accepted. As per the Regulations, any creditor, who had failed to submit proof of claim within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the Appellant can file a Section 9 application at this stage in respect of such extinguished claims. 19. It is undisputed that the Corporate Debtor had started its operations with a clean slate after settlement of dues with the creditors in terms of the orders of the Adjudicating Authority dated 17.10.2017. It is also a well settled legal precept that a resolution applicant cannot be expected to make a provision in relation to any creditor who has failed to make a claim within the stipulated time-line. It logically follows therefore that there is no legitimate scope in the IBC framework for agitating or initiating any proceeding in respect of a claim which was not part of the resolution plan or was not preferred at the relevant time. We would like to refer to the judgement of the Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Ltd v Satish Kumar Gupta & Ors (2020) 8 SCC 534 where the clean slate principle has been enunciated to obviate the possibility of a successful resolution applicant being subjected suddenly to "undecided" claims. In yet another recent judgement of the Hon'ble Supreme Court in RPS Infrastructure Ltd v Mukul Kumar & Anr in CA No. 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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