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TMI Blog2025 (5) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench-I) in C.A No. 19/2024 in C.P. No. 3638/MB/2018. By the impugned order, the Adjudicating Authority has dismissed CA No. 19 of 2024 seeking admission of the claim filed by the Appellant in the insolvency process of IL&FS-Respondent No.2. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant. 2. Coming to the factual matrix of the present case at hand, the salient events are as outlined below: On 22.03.2016, IL&FS Transportation Networks Ltd. ("ITNL" in short), a group subsidiary of Infrastructure Leasing and Financial Services Ltd.("ILFS" in short) had issued and allotted 7800 Non-Convertible Debenture (NCD) pursuant to a Debenture Trustee Deed (DTD). The NCDs were issued and allotted to the Appellant-Asset Manager of DSP Mutual Fund which had been subscribed to by retail investors and salaried persons. Basis the DTD, IDBI Trusteeship Ltd.-Respondent No.3 was appointed as the Debenture Trustee (DT) on 22.03.2016. A Parent Agreement was signed between the Respondent No.2-ILFS and Respondent No.3-DT by which Respondent No.2 had undertaken to fulfil the payment obliga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... include their claims qua Respondent No.2 for pay out under the resolution plan. It was also prayed that no resolution plan be finalised in respect of Respondent No.2-ILFS pending disposal of the application. The CA No. 19/2024 was dismissed and aggrieved with the impugned order, the present appeal has been preferred. 3. Making his submissions the Ld. Sr. Counsel for the Appellant, Shri Krishnendu Dutta submitted that it is an undisputed fact that NCDs were issued under the DTD and had also been duly disbursed and subscribed by Debenture Holders. Further, in terms of clause 4.1 of the DTD, ITNL had undertaken to pay all amounts as due in respect of the NCDs to be redeemed on the redemption date to the Debenture Holders. The DTD terms also provided that non-payment of outstanding debt by due date in respect of NCDs by ITNL constituted an event of default as per Clause 8 of the DTD. Further in terms of Recital of the DTD and pursuant to the Parent Agreement, Respondent No.2-ILFS had also guaranteed discharge of debt arising in respect of these NCDs to the Debenture Holders. It was submitted that the guarantee obligations of Respondent No.2 was co-extensive and co-terminus with ITNL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligence and breach of DTD terms by Respondent No.3 and hence the Appellant cannot be subjected to prejudice on this count. It was vehemently contended that the Appellant cannot be made to suffer because of failure on the part of Respondent No.3 to perform their duty of lodging claims in a timely manner. 6. It was also asserted that no prejudice would be caused if the claims of the Appellant was admitted in the insolvency process keeping in mind particularly the fact that the claims primarily belong to retail investors and salaried persons whose life savings are involved. Denial of the admission of claim of the Appellant who are retail investors and salaried personnel would subject them to unwarranted harm. The Appellant cannot be faulted for not filing their claim on time as they could not have individually filed their claim since only Respondent No.3- Debenture Trustee could have filed the claim on their behalf in terms of DTD. Moreover, the Appellant was all along under a bonafide assumption that Respondent No.3 would file claim on their behalf on time. Furthermore, Regulation 12 of the CIRP Regulations allowed filing of claims of creditors till the stage of issue of request for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst ITNL for the NCDs on 29.07.2019, for the same set of NCDs, claims were filed as late as on 05.06.2023 against Respondent No.2 under the Parent Agreement. The Appellant had clearly filed their claim belatedly in respect of insolvency resolution process of Respondent No. 2 on 05.06.2023 which was more than ten months beyond the final deadline set for filing of claims. In such circumstances, when the deadline of filing claims was extended six times from May 2019 to August 2022 and the Appellant remained dormant in filing their claims, they were clearly responsible in having failed to exercise due vigilance and due diligence in filing the claims within the stipulated time-frame. The Adjudicating Authority therefore committed no mistake in not allowing any relief for admitting such belated claims. 10. It is the case of the Respondent No.3-DT that in terms of Clause 11(b) and Schedule 2 of DTD, the DT could act only on written instructions of Debenture Holder. Since DT could not have acted unilaterally without the explicit and unambiguous instructions of Debenture Holders, the DT cannot be held responsible for any omission, neglect or delay in filing of claims. It is also their c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bution of assets which has taken place so far thereby delaying resolution process as it would entail the remapping of the creditors. Moreover, this would lead to a situation where others who have not yet filed their claim may also stake their claims by relying on this precedent. If belated claims are allowed it will result in the resolution process becoming an endless and unceasing process which violates the objectives of timely resolution and in support of their contention relied on the judgements of the Hon'ble Supreme Court in Committee of Essar Steel India Ltd vs Satish Kumar Gupta & Ors (2020) 8 SCC 531 and RPS Infrastructure Ltd vs Mukul Kumar &or in Civil Appeal no 5590 of 2021. The Adjudicating Authority therefore rightly dismissed the application for filing claims in a belated manner as the delay had no justifiable basis and lacked bonafide. 12. Coming to the submissions made by Respondent No.1-CMA, it was outrightly denied that claims can be admitted till approval of resolution plan takes place. It was pointed out that the CMA was bound by the Resolution Framework and was required to act within the prescriptions of the Resolution Framework. It was also pointed out that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess of ITNL, no prejudice would be caused to the Appellant for not having filed their claims in the insolvency resolution process of Respondent No.2. The Adjudicating Authority therefore refused to pass any direction on the consideration of the belated claim filed by the Appellant qua Respondent No.2. 16. It is the case of the Appellant that there were standing instructions since 21.09.2018 for Respondent No.3 as Debenture Trustee to take all steps to secure and protect the interest of the Appellant with regard to filing of claims in respect of obligations to be discharged by Respondent No.2-ILFS. Since the Debenture Trustee-Respondent No.3 was duty bound to file the claims on the behalf of Appellant, the latter cannot be faulted for not filing their claim on time since it was the Respondent No.3-Debenture Trustee who only could have filed the claim on their behalf in terms of DTD. It is further their case that the Respondent No.3 as an after-thought to cover up their inefficiency and negligence came up with the excuse that they needed the prior instructions of the Appellant for filing their claim in the insolvency of Respondent No.2. In any case, if any instructions were requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was subsequently extended until 18.08.2022 after allowing six extensions. These extensions were allowed not for any specific party but was open for all stake-holders to stake their claims and therefore does not suffer from any arbitrariness. The public announcement of 22.05.2019 made by Respondent No.1-CMA inviting claims clearly stipulated that in case of those Debenture Holders having an appointed trustee, the claims were to be filed only through such a trustee. It is also an undisputed fact that the Appellant did not file their claim qua Respondent No.2 within the extended time so allowed either directly by themselves or through the Respondent No.3-DT. Their claim was eventually filed on 05.06.2023 by the DT which was much beyond the sixth extension of time-line allowed until 18.08.2022. It is therefore abundantly clear that substantial time had elapsed since the date of issue of public announcement inviting claim and the actual date of filing of claim on behalf of the Appellant by the DT qua the obligations of Respondent No.2-ILFS. 19. From available material on record, it is noticed that Respondent No.3 had intimated the Appellant as well as the Debenture Holders of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the Appellant and Respondent No.3 regarding filing of claims of the Appellant in relation to insolvency resolution process of Respondent No.2-ILFS following which on 05.06.2023 the Respondent No.3 filed Form-C with the CMA with request to admit the claim of the Appellant. It therefore becomes clear that no claim had been filed in respect of the Appellant qua the Respondent No.3 though the time-line had lapsed. We also notice that even the CMA-Respondent No.1 had informed the Appellant on 23.05.2023 that Respondent No.3 had not filed the claim of the Appellant for the guarantee given by Respondent No.2-ILFS. The Appellant had clearly filed their claim belatedly in respect of insolvency resolution process of Respondent No. 2 on 05.06.2023 which was more than ten months beyond the final deadline set for filing of claims. In such circumstances, when the deadline of filing claims was extended six times from May 2019 to August 2022 and yet the Appellant slept over in filing their claims, they had clearly failed to exercise requisite diligence in filing the claims within the stipulated time-frame. The Appellant should have been more vigilant in taking timely steps to file their c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tributed thereby rendering the resolution process endless. 23. It is however the case of the Appellant that their belated claim can be admitted since the resolution of Respondent No.2 had not occurred and the resolution plan was yet to be received. However, when we look at the Resolution Framework as approved by this Tribunal, we find that said framework envisaged Asset Level Resolution through various methodologies including capital infusion/asset monetisation/resolution or winding-up based on the feasibility and viability on the parent holding and groups entities. The first round of interim distribution of funds to creditors had already been carried out in the interest of successful implementation of the Resolution Framework and revival of the ILFS and its group entities following approval of the interim distribution mechanism by this Tribunal on 31.05.2022 as is placed at page 189 of reply of Respondent No.2. Coming to the reliance placed by the Appellant on the judgement of this Tribunal in Puneet Kaur judgement, we notice that the facts of the present case are distinguishable. While in Puneet Kaur matter, the resolution plan had not yet been approved by the Adjudicating Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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