Approved Resolution Plan Cannot be Reopened based on Belatedly agitated Claims: NCLAT [Read Order]

The National Company Law Appellate Tribunal, Principal Bench, New Delhi dismissed the appeals filed under Section 61 of Insolvency and Bankruptcy Code 2016 due to failure of appellant to exercise due diligence on protecting their rights with the prescribed timelines. It was observed that an approved resolution plan cannot be reopened based on belatedly agitated claims.

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The appeals were submitted by the appellants, who were mostly homebuyers who had invested in the "Earth Iconic" real estate project, which was created by Earth Infrastructure Ltd. (EIL).  The appellants had contributed a sizeable sum to the acquisition of project units.  However, EIL went through a Corporate Insolvency Resolution Process (CIRP) as a result of financial difficulty.  Celestial Estate Pt. Ltd. (CEPL) then joined CIRP as well.

In April 2019, CEPL's Resolution Professional (RP) published public notifications seeking claims.  The resolution plan had already been authorized by the Committee of Creditors (CoC) and the Adjudicating Authority in March 2021 when the appellants learned about the CIRP proceedings in December 2023, after they had failed to submit their claims within this time frame.

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The appellants contended that even though their names had been corrected in the Corporate Debtor's records, they were not informed of the insolvency proceedings and that the RP had failed to take the appropriate steps to provide them with individualized notifications.  The Appellants' claims are not reflected in the Corporate Debtor's Information Memorandum, therefore the Successful Resolution Applicant (SRA) cannot treat them unfairly, they added.  The following appeals resulted from the Tribunal's decision against the appellants.

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All four of the appellants' appeals were dismissed by the bench, which was made up of Justice Ashok Bhushan (Chairperson), Barun Mitra (Member (Technical), and Arun Baroka (Member (Technical)). The bench stated that the appellants had filed their claims after an excessively long delay of several years, despite the fact that the corporate insolvency resolution process had already begun.

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Citing the Puneet Kaur ruling, which held that the appellants must write an appropriate information memorandum after taking into account the corporate debtor's records, the court likewise rejected the appellants' opinion.  According to the court, the facts of the subsequent case were entirely different, the adjudicating body had not authorized the resolution plan, and the parties had filed their claims a year late.

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The NCLAT upheld the decision of the Adjudicating Authority stating that the appellants had failed to exercise due diligence on protecting their rights with the prescribed timelines.

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