Professional Documents
Culture Documents
TEAM CODE: TN 19
BEFORE THE
IN THE MATTER OF
I.A 776/2020
VERSUS
TABLE OF CONTENTS
PRAYER………………………………………………………………………………………..26
LIST OF ABBREVATIONS
ABBREVIATION MEANING
CD Corporate debtor
CIRP Corporate insolvency resolution process
Coc Committee of creditors
EM Evalution matrix
EoI Expression of interest
I&B Code, 2016 Insolvency and bankruptcy code, 2016.
IM Information memorandum
IBBI Insolvency and bankruptcy board of india
IRP Insolvency resolution professional
NCLT National company law tribunal
OC Operational creditors
NCLAT National company law appellate tribunal
RA Resolution applicant
PRA Prospective resolution applicant
RFRP Request for resolution plan
RP Resolution professional
CIRP Regulation Insolvency resolution process for corporate persons
regulations, 2016
17. Sunil Kumar Aggarwal v. New Okhla (CA)(AT) (Ins.) No. 775/2019.
Industrial Development Authority & Ors.
18. New India Sugar Mill AIR 1963 SC 1207.
Limited v. Commissioner of Sales Tax
Bihar.
19. Committee of Creditors of Essar Steel India MANU/SC/1577/2019.
Ltd. v. Satish Kumar Gupta.
20. ICICI Bank Ltd. v. Anuj Jain,. MANU/ND/0182/2018.
21. Navneet Kumar Gupta v. Bharat Heavy CA (AT) (Ins.) No. 1432/2019.
Electricals Ltd.
22. Edelweiss Asset Reconstruction Co. Ltd. [2018] 90 taxmann.com 243 (NCLT
v.Tecpro Systems Ltd. - New Delhi).
23. Dipco Private Ltd. v. Jayesh Sanghrajaka. CA(AT)(Ins) No.37/ 2020
24. Santosh Wasantrao Walokar v. Vijay Kumar CA(AT)(Ins) No. 871-872/2019.
Iyer.
25. B.K. Educational Services (P.) Ltd. v. Parag MANU/SC/1160/2018.
Gupta and Associates.
26. Rajender Singh v. Santa Singh. (1973) 2 SCC 705.
27. Asset reconstruction co. v. Bisha Jaiswal. [2021] 126 taxmann.com 200 (SC).
57. Digamber Bhondwe v. JM Financial Asset [2020] 117 taxmann.com 188 (NCL
Reconstruction Co. Ltd. - AT)
58. Intec Capital Ltd. v. Arvind Gaudana IRP of 2021 SSC Online NCLT 166.
Vrundavan Ceramic Private Limited.
59. Oriental Bank of Commerce v. Vivita MANU/NC/1562/2021.
Limited
INDEX OF AUTHORITIES
STATUTES/ RULES:
S No. Statutes, Acts and Regulations
1. The Insolvency and Bankruptcy code 2016.
2. The companies Act, 2013
3. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016.
4. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016.
LEGAL DATABASE
LEGAL DICTIONARY
S No. Legal Dictionary
1. Black’s Law Dictionary, 7th Edition.
2. Prem & Saharay’s, Judicial Dictionary of Words and Phrases, 2nd edition, Vol. 1,
Thomas Reuters.
STATEMENT OF JURISDICTION
The Hon’ble National Company Law Tribunal exercises jurisdiction to hear and adjudicate over
the matter under Section 60(5) of the Insolvency and Bankruptcy code,2016.1 The Applicant
Wayne tech enterprises limited (Resolution Applicant) most humbly and respectfully approached
the Hon’ble Tribunal under the same. Section 60(5) of the I&B code, 2016 read as-
(5) Notwithstanding anything to the contrary contained in any other law for the time being in
force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of-
(a) any application or proceeding by or against the corporate debtor or corporate person;
(b) any claim made by or against the corporate debtor or corporate person, including claims by
or against any of its subsidiaries situated in India; and
(c) any question of priorities or any question of law or facts, arising out of or in relation to the
insolvency resolution or liquidation proceedings of the corporate debtor or corporate person
under this Code.
STATEMENT OF FACTS
Stark Enterprise
1
I&B Code 2016, Section 60(5).
Stark Enterprises is a booming tech company which is into providing a variety of services. It has
its reach everywhere and in every major company in India. A few of its clients are: Wigg,
Cromato, Cabber, Archer Industries and others. In the year 2012, Stark Enterprise was
incorporated in the garage of Mr. ShaSha Stark in a small locality in Titan. However, Mr.
ShaSha Stark was known for being insensitive and for having a high temper around those who he
thought were subordinate to him.
Backlash
Stark Enterprise has seen a steady growth up till the year 2015. In the early 2018, Stark
Industries started experiencing mild hacker attacks due to which most of the information in
possession of the company was already out and available on the dark net. Mr. ShaSha stark filed
a criminal complaint against all the tech giants in the country. In the meantime, the image of the
company started taking a hit. Ultimately, shasha stark could only manage to retain around 25
contracts out of around 260. ShaSha Stark managed to secure these clients by selling his assets
and investing in the company infrastructure. After the change in Infrastructure, he called his
company Stark Enterprise 2.0.
On being convinced convinced that there were no adequate cash flows to keep the company
going for long the Iron Bank of Bravos (‘Financial Creditor’) on 1st January 2020,filed
application under section 7 of I&B Code, 2016 before the National Company Law Tribunal at
Titan, Titan Bench (‘NCLT’).
The Financial Creditor had suggested that Mr. Conan Subramanian (bearing IP Registration of
IPA/007/9211) to act as the Interim Resolution Professional and he was given the charge of IRP
on 8.01.2020. On 22nd January 2020, the IRP appears at Stark Enterprises headquarters and took
control over the assets of Stark Enterprises.
When form-G was published, the RP had received 3 EoIs by Wayne Tech Enterprises Private
Limited (PRA 1), Accutech Enterprises Private Limited (PRA 2), and Braintronics Private
Limited (PRA 3). However, the CoC was of the opinion that RA 1 provided for a better plan and
that their plan offered better pay-out with lesser haircut and a better management structure and
future to the Corporate Debtor.
Out of remaining Rs. 726,00,00,000 RA 1 proposed to pay Rs. 290,40,00,000/- and the
remaining was a haircut for the Creditors.
Contentions
Committee of creditors contended that they would be inclined to reject the Resolution Plan
submitted by the RA 1 if the offer was not increased and if the Rs. 754,00,00,000 was also not
considered.
The RA 1 contended that time-barred claims were to be rejected by the RP in the first place and
should not have been allowed to form a part of the total claim amount. Howevr, Resolution
professional explained that the RP does not have the power to adjudicate on claims since he/she
is merely an administrative authority, playing his/her role in CIRP.
There will be no other resolution plan if the current one submitted by RA 1 is not admitted and
that would lead to the liquidation of the Corporate Debtor leading to loss of jobs of hundreds of
employees.
The application is filed by the RA 1and was given the I.A. no. 776/2020 in C.P. (IB)
125/7/Titan/2020 and notice was issued to the RP and members of the CoC. The matter is listed
for final hearing before the NCLT on 03.07.2020.
STATEMENT OF ISSUE
ISSUE 1
ISSUE 2
SUMMARY ARGUMENTS
In the same parlance, by the virtue of the statutory duty bestowed upon resolution professional
by the above mentioned rules and regulations , It is apparent that a Resolution Professional has a
duty to verify and to decide upon the claims. The provision pre-supposes application of mind on
behalf of the Resolution Professional to admit only such claims which are legally permissible.
Therefore, time-barred claim which are not legally valid claims can be rejected by the resolution
professional.
It is humbly submitted that claims other than time-barred claims can be admitted while
constituting a Committee of Creditors. Section 21(1) acknowledges that IRP after collating and
determining all the claims received against the corporate debtor shall constitute a Committee of
Creditors.
Also, Under section 21(4) I&B code, 2016, voting shares of the financial creditors are
determined according to the proportion of the financial debt owed to such creditor. If time-barred
claims are considered in determining voting share, then a situation may arise where debts due
and payable will not be in correct magnitude, ultimately defecting the provision of section 21(4)
of I&B Code, 2016.
ARGUMENTS ADVANCED
2
Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, MANU/SC/1577/2019.
3
Swiss Ribbons Pvt. Ltd. v.Union of India, MANU/SC/0079/2019.
5. Thus, it can be construed that, in the interim, the Resolution Professional can decide upon
claims. The verbatim of the Section 60(5)(c) allows challenging the decisions taken by the
Resolution Professional. Hence, Section 60(5) does not preclude the Resolution Professional
from deciding upon claims rather it subjects the decision to either approval or rejection by
the Hon'ble Tribunal, if challenged
6. In the case of ICICI Bank Ltd. v. Anuj Jain4 The application was admitted under Section
60(5) of the Code. The Hon’Ble NCLT held that “If any Creditor is aggrieved by the decision
of the Resolution Professional, he may challenge the same before the Adjudicating Authority
i.e., the Hon'ble Tribunal”.
7. The counsel humbly submits that Regulation 10 and 12(2) of CIRP Regulations mandates
Resolution professional to call for any evidence or clarification deemed fit from a creditor to
substantiate claim, wholly or partly. In the case of Navneet Kumar Gupta v. Bharat Heavy
Electricals Ltd.,5 The Hon’ble NCLAT, held that Resolution Professional can adjudicate on
claims of various creditors and he must always go into the evidence before deciding upon
such claims under regulation 10 and 12(2) of CIRP Regulations. This directly infer that RP
has to adjudicate the amount of claim with full acknowledgement of documents so as to
determine the validity of claims due from the corporate debtor. If there are no credible
evidence to support the validity of the claims, the same has to be rejected by the resolution
professional by virtue of the statutory duty bestowed upon him by above mentioned
regulations. Similarly, In the case of Edelweiss Asset Reconstruction Co. Ltd. v. Tecpro
Systems Ltd.,6 the Hon'ble NCLAT upheld the decision taken by the Resolution Professional
with regards to exclusion of claims of financial creditor due to lack of sufficient evidence
adduced by him. Thus, vesting the power to adjudicate on a claim with the RP in the interim
which may be challenged before the Adjudicating authority
8. The counsel humbly submits that in the case of Dipco Private Ltd. v. Jayesh Sanghrajaka7,
The Hon’ble NCLT held that the decision of a resolution professional for collating the claims
of the creditors is of quasi-judicial nature and consequently, the NCLT lacks the jurisdiction
to sit in appeal and cannot re-determine the claims already determined by the RP. The
4
ICICI Bank Ltd. v. Anuj Jain, MANU/ND/0182/2018.
5
Navneet Kumar Gupta v. Bharat Heavy Electricals Ltd, CA (AT) (Ins.) No. 1432/2019.
6
Edelweiss Asset Reconstruction Co. Ltd. v.Tecpro Systems Ltd, [2018] 90 taxmann.com 243 (NCLT - New Delhi).
7
Dipco Private Ltd. v. Jayesh Sanghrajaka, CA(AT)(Ins) No.37/ 2020.
Hon’ble tribunal held that that the decision to collate a claim is judicial or quasi-judicial in
nature and that an RP ‘determines’ the claims and not merely ‘collates’ them. Further, in the
case of Santosh Wasantrao Walokar v. Vijay Kumar Iyer8, the Hon'ble Appellate
Tribunal upheld the decision of claims admitted by the RP after the Resolution plan already
approved without any challenge on such approved plan by any creditor.
9. Thus, it can be concluded that the Resolution Professional has the power to decide upon
claims which is then liable for scrutiny before the Adjudicating Authority on merits, if
challenged. This directly infers that resolution professional is empowered to adjudicate upon
claims of various creditors and take decision with regard to inclusion of claims in the
resolution plan.
10. The cousel humbly submits that Resolution Professional is empowered to reject time-barred
claims by virtue of the statutory duty bestowed upon him by Section 13 and 14 of the
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016. Regulation 13(1) of the CIRP regulations itself
makes a distinction between the amount claimed by the creditors and the amount of their
claims admitted. The claim which is going to be admitted would be a claim supported by
documents showing the existence of right to payment or remedy as mentioned in Section 3(6)
of the Code. Therefore, a time-barred claim cannot be said to be a claim admitted for this
purpose. Therefore, the provision pre-supposes application of mind on behalf of the Interim
Resolution Professional to admit only such claims which are legally permissible.
11. It is further contended that, the Resolution Professional is bound to reject time-barred claims
by virtue of Section 238A of the Code that applies the Limitation Act, 1963. In the case of
B.K. Educational Services (P.) Ltd. v. Parag Gupta and Associates9 the Hon'ble Apex
Court expressly held that the Limitation Act was applicable to the Code and that time-barred
claims are not admissible. the Hon’Ble NCLAT held that the intent of the Code could not
have been to give a new lease of life to debts which are time-barred. It is settled law that
when a debt is barred by time, the right to a remedy is time-barred10
8
Santosh Wasantrao Walokar v. Vijay Kumar Iyer, CA(AT)(Ins) No. 871-872/2019.
9
B.K. Educational Services (P.) Ltd. v. Parag Gupta and Associates, MANU/SC/1160/2018.
10
Rajender Singh v. Santa Singh, (1973) 2 SCC 705], Asset reconstruction co. v. Bisha Jaiswal, [2021] 126
taxmann.com 200 (SC).
12. Similarly, In the case of Sree guru transport v. Vasudevan11 , the Hon’ble NCLT held that
to establish that the claims which are not time-barred, has to be proved with positive
evidence that before the expiry of the period of limitation,such amount of debt is claimed. If
however, such evidence is not adduced ResolutionProfessional has right to reject the claim of
the Applicant.12 In the case of Voltas Ltd. v. Rolta India Ltd.13, The Hon’ble NCLAT, held
that Resolution Professional can adjudicate on claims of various creditors and he must
always go into the evidence before deciding upon such claims. Hence, Time-barred claims
which are legally invalid and are not supported on legal grounds cannot be admitted by the
Resolution professional and must be rejected by him.14
13. In the case of A.K. Kraipak v. Union of India15 the Hon'ble Supreme Court held that it was
the duty of an administrative body to act judicially. The Hon'ble Apex Court went further and
stated that, "The procedures which are considered inherent in the exercise of a judicial power
are merely those which facilitate a just and fair decision. In recent years the concept of quasi-
judicial power has been undergoing a radical change. What was considered as an
administrative power some years back is now being considered as a quasi-judicial power."
Further in the case of Mrs. K.L. Sahgal v. State of U.P16 The Hon'ble Apex Court held in
that the Judicial tribunals could exercise both judicial and administrative powers. So also,
administrative bodies may enjoy not only Administrative but also quasi-judicial powers. This
directly infers that resolution professional is bestowed with not only administrative powers
but also with quasi judicial powers and can decide the legal validity of the claim which is
claimed by the creditor.
14. Further, in the case of Jignesh shah v. Union of India and ors., 17 the Hon’Ble NCLT has
held that CIRP regulations[Regulation 13,10,10(2), 14] requires and expect the Resolution
Professional to determine or make best estimate of the amount of the claim based on the
11
Sree guru transport v. Vasudevan, MANU/NC/3457/2019.
12
Salem Stainless Steel Supplies Private limited v. T.V Balasubramaniam RP of Gemini Arts Pvt. Ltd.,
MANU/NC/1301/2021.
13
Voltas Ltd. v. Rolta India Ltd., MANU/SC/0099/2014.
14
Navneet Kumar Gupta RP of Monnet Power Company Ltd. v. Bharat Heavy Electricals Ltd., CA(AT) (Ins.) No.
743 of 2018., Abdul jabbar A. and Ors. v. The authorised officer, Sundaram BNP Paribus Home Finance Ltd. and
Ors. MANU/DR/0083/2018.
15
A.K. Kraipak v. Union of India, MANU,SC/0427/1969.
16
Mrs. K.L. Sahgal v. State of U.P, AIR 1965 All 465.
17
Jignesh shah v. Union of India and ors., MANU/SC/1319/2019.
information available with him and even revise the amounts of claims admitted. 18 Further, it
held that it is evident from bare perusal of regulation 13 of CIRP regulations that there is the
distinction between the amount claimed by the creditors and the claims admitted. The claim
which is going to be admitted would be a claim supported by documents showing the
existence of right to payment or remedy as mentioned in Section 3(6) of the Code. Therefore,
a time-barred which is not legally valid, claim cannot be said to be a claim admitted for this
purpose.
15. The counsel humbly submits that Section 30(2)(e) of the Code casts a duty on the Resolution
Professional to examine each resolution plan to confirm that it does not contravene any of the
provisions of the law for the time being in force. A resolution plan seeking to satisfy time-
barred claims would be in contravention of the law of limitation. In the case of Hero
Fincorp Ltd. v. Rave Scans(P.)Ltd. 19 The Hon’Ble NCLAT held that the 'Resolution Plan'
restructing claims which are barred by limitation do not confirm the test of Section30(2)(e),
being discriminatory, as having discriminated the similarly situated 'Secured Creditors' with
legally valid claims. Thus, Resolution Professional is required to examine validity of each
claim and must make sure that it does not contravene any of the provisions of the law for the
time being in force.
16. The counsel humbly submits that in the recent judgment of the Hon'ble Supreme Court of
India in Jaypee Kensington Bou levard Apartments Welfare Association v. NBCC
(India) Ltd. & Ors.20, arrived at the finding that claims must be made within the
stipulated time and in case a claim is not made within the said time, then it cannot be made
part of information memorandum. This finding of the Supreme Court was based on the
bedrock of Regulation 12(2) of the CIRP Regulations.
17. Thus, it can be construed that, even if the Resolution Professional is merely an administrative
body, he has the duty to act judicially and in the pursuance of the same he is entitled to
certain quasi-judicial powers. The Resolution Professional, while discharging his duty under
Section 13 and 14 of the Regulations, is bound by the decisions of the Supreme Court,
NCLT, NCLAT, CIRP Regulations and Section 238A of the Code, whereby, he must omit or
reject claims to the extent that they are barred by limitation.
18
Supra Note 30.
19
Hero Fincorp Ltd. v. Rave Scans(P.)Ltd. [2019] 109 taxmann.com 225 (NCL-AT)/[2020].
20
Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd. & Ors., [2021] 125
taxmann.com 360 (SC).
21
Axis Bank v. Edu Smart Services (P.)Ltd. (2017) 205 Comp Cas 403 (NCLT).
22
Supra note 3.
23
Supra note 9., Rajender Singh v. Santa Singh, (1973) 2 SCC 705], Bisha Jaiswal v. Asset reconstruction co.,
[2021] 126 taxmann.com SC 200.
24
Section 3(12) I&B Code, 2016.
25
Doha Bank Q.P.S.C. vs. Anish Nanavaty and Ors., MANU/NC/0167/2021, Satish Chand Gupta vs. Servel India
Private Limited.,MANU/NL/0024/2021.
humbly submits that even though time-barred claim is considered as “debt due and
payable”26, the same could not considered as “debt due and recoverable”. 27 This directly
infers that time-barred claim cannot be brought within the ambit of resolution plan as these
claims are not legally payable. The Hon’ble Supreme court also held that limitation Act
would apply to all applications filed by creditors under IBC and that no time-barred debts can
be admitted under the code.
21. Similarly, in the case of Esspee Sarees(P.) Ltd. v. Skipper Textiles (P.) Ltd.28, The Hon’ble
Supreme court observed that the expression “debt due” under section 3(12) of the I&B Code,
2016 would only refer to debts that are “due and recoverable” in law, that is, the debts that
are not time-barred. Therefore, time-barred claim which are not legally in existence and not
legally recoverable cannot be admitted while constituting committee of creditors.
22. The counsel humbly submits that Hon’Ble Supreme Court in its decision in Arcelormittal
(India)(P.) Ltd. v. Satish Kumar Gupta29 and Committee of Creditors of Essar Steel
India Ltd. v. Satish Kumar Gupta30, observed that the preamble of the Code speak of
maximization of the value of assets of corporate debtors and balancing of the interest of all
stakeholders. A key objective of the Code is to ensure that the corporate debtor keeps
operating as a going concern during the insolvency resolution process. Accepting the time-
barred claim will deprive the financial position of the corporate debtor and put further
impediments on corporate debtor to continue as going concern and on other creditors with
legitimate claims. This could diminish the value of asset of corporate debtor which would be
against the fundamental provisions of preamble of the I&B code, 2016.
23. Further, In the case of JM Financial Asset Reconstruction Company Private Limited vs.
Samay Electronics Pvt. Ltd.31, The Hon’ble NCLT held that pursuant to issuance of a
public notice claimants right to file claims with the IRP/RP gets initiated. Claims which are
time-barred may potentially be a part of the resolution plan. Such a resolution plan
restructuring time-barred debts and claims may not be in compliance with the existing laws
26
Section 3(12) I&B Code, 2016.
27
Supra note 23.
28
Esspee Sarees(P.) Ltd. v. Skipper Textiles (P.) Ltd , [2020] 115 taxmann.com 299 (NCLT-Kolkata)., Innoventive
Industries Limited v. ICICI Bank and Anr. (2018) 1 SCC 407.
29
Arcelormittal (India)(P.) Ltd. v. Satish Kumar Gupta [2018] 98 taxmann.com 99/150 SCL 354.
30
Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta [2019] 111 taxmann.com 234.
31
JM Financial Asset Reconstruction Company Private Limited v. Samay Electronics Pvt. Ltd.
MANU/ND/1135/2020.
for the time being in force as per section 30(2)(e) of the I&B Code. 32 Hence, such claims
should not be admitted and must be struck so that it does not give new lease of life to debts
which are time-barred.33
24. Similarly, in the case of Babulal Vardharji Gurjar v. Veer Gurjar Aluminium industries
Ltd.34 the Hon’Ble NCLAT held that the intention of Code is not to give a new lease of life
to debts which are time-barred. The court held that parties who seek to uphold their legal
right cannot sleep over the matter and at a later stage seek to enforce their rights which is
likely to cause prejudice to the other parties.35 If time-barred claims are admitted they would
cause prejudice to the other claimants who are legally entitled to claim their amount from the
corporate debtor.
25. In the case of JM Financial Asset Reconstruction Company Private Limited case36 The
Hon’ble Single Judge of the Karnataka High Court held that the test that is required to be
applied for purposes of ascertaining whether the debt is in existence at a particular point of
time is whether it would have been permissible to institute a normal recovery proceeding
before a civil court in respect of that debt at that point of time. Since, no recovery proceeding
in respect of the time-barred debt can be initiated in any court, therefore time-barred debt is
not in existence at a particular point of time and same cannot be admitted at any cost.
26. The counsel humbly submits that voting share of a person who is a financial creditor are to
be determined as per Sec. 21(4) which guides out that-
(a) Such person shall be a financial creditor to the extent of the financial debt owed by
the corporate debtor, and shall be included in the committee of creditors, with voting
share proportions to the extent of financial debts owed to such creditor;
27. From the perusal of the above section, it emerges that voting rights of a financial creditor in
the CoC are calculated on the basis of proportion of the financial debt owed to such financial
creditor in relation to the financial debt owed by the corporate debtor.37
32
Akram khan v. Bank of India Limited and Ors. MANU/NL/0649/2019. Akram C. Shivakumar Reddy v. Dena
Bank and ors. MANU/NL/0638/2019. Kuntal R. Amin co. Owner of Rsu kumari v. B Parameshar Udpa, IRPA of
Easum Limited MANU/SC/1048/2021. Sandeep Jindal v. State bank of India MANU/NL/0138/2021.
33
Rajendra narottamdas sheth and ors. v. Chandra prakash Jain and ors. manu/nl/0457/2020.
34
Babulal Vardharji Gurjar v. Veer Gurjar Aluminium industries Ltd. [2020] 118 taxmann.com 323.
35
B.B & D. Mfg. Co. v. ESI Corporation, AIR 1972 SC 1935.
36
Supra note 31.
37
Machhar Polymer(P.) Ltd. v. Sabre Helmets (P.) Ltd [2017]144 SCL 511/87 Taxmann.com., Lasa Engineers (P.)
Ltd. v. Devas Engg. Systems (P.) Ltd. [2019] 152 SCL 172/102 taxmann.com 319 (NCLT - Chennai)., Simplex
28. In the case of Intec Capital Ltd. v. Arvind Gaudana IRP of Vrundavan Ceramic Private
Limited,38 it was held that if time-barred claims are considered in determining voting share,
then a situation may arise where debts due and payable are imprecise and erroneous. In the
same parlance if time-barred claims are included in the resolution plan, then financial
creditors holding such time-barred claims will have largest chunk of voting share which in
considered opinion cannot be the intention of the legislature as time-barred claims are
inferior to actual claims.39
29. Hence, The counsel humbly submits that time-barred claims cannot be considered in
determining and allocating voting share to the creditors, as the voting share is to be
determined on the basis financial debt owed by the corporate debtor towards financial
creditor.40 If such claims are considered in determining voting share, then a situation may
arise where debts due and payable are not in correct magnitude and will be against the
provision of section 21(4) of I&B code, 2016.41
30. Similarly, in the case of Asset ReconstructionCompany (I) Ltd.(ARCIL) v. Koteswara
Rao Karuchola Resolution Professional of Viceroy Hotels Ltd42 the applicants contended
that the claim were admitted by the RP to dilute the voting share of the Financial creditors
who were part of CoC and further the claims that were admitted were bogus and time-barred.
To which it was held that RP was not competent to admit any claims which are barred by
period of limitaton.
31. Similarly in the case of Prasad Gempex v. Star Agro Marine Exports (P.) Ltd.43 CoC has
not accepted the decision of RP in regard to inclusion of financial debt given to ICICI Bank
which was time-barred in the total amount of claim, hence, voting share allocated on the
basis of such financial debt cannot be considered to have been rightly allocated. The counsel
humbly submits that in the present case, inclusion of time-barred claims in the total amount
Infrastructures Ltd. v. Nitesh Estates Ltd. [2019] 154 SCL 711/107 taxmann.com 104 (NCLT - Beng.)., Gaurav
Hargovindbhai Dave v. Asset Reconstruction Co (India) Ltd. [2019] 156 SCL 397/109 taxmann.com 395 (SC).,
Jignesh Shah v. UOI [2019] 109 taxmann.com 486/156 SCL 542 (SC)., Digamber Bhondwe v. JM Financial Asset
Reconstruction Co. Ltd. [2020] 117 taxmann.com 188 (NCL - AT).
38
Intec Capital Ltd. v. Arvind Gaudana IRP of Vrundavan Ceramic Private Limited., 2021 SSC Online NCLT 166.
39
Oriental Bank of Commerce v. Vivita Limited MANU/NC/1562/2021.
40
Pallavi joshi Bakhru v. Universal Buildwell Private Limited MANU/NC/1508/2021. Prachi Devi v. State of
Rajasthan MANU/SC/8526/2008., M.D University v. Jahab Singh MANU/SC/1157/2007.
41
Ajay kumar singh v. Sare Homes Project services private limited MANU/SC/1468/2021.
42
Asset Reconstruction Company (I) Ltd. (ARCIL) v .Koteswara Rao Karuchola Resolution Professional of Viceroy
Hotels Ltd[2020] 113 taxmann.com 494 (NCL-AT).
43
Prasad Gempex v. Star Agro Marine Exports (P.) Ltd 2019] 107 taxmann.com 46 (NCL - AT).
of claims and allocation of voting shares on such merits would be against the provision of
section 21(4), Past precendents of courts and tribunals as well as against fundamental
provision of I&B code 2016.
PRAYER
Wherefore, in light of the issues raised, arguments advanced and authorities cited, may this
Hon’ble Tribunal be pleased to declare and hold that:
1. Issue order, or direction to the resolution professional to adjudicate and reject time-
barred claims.
2. Order for exclusion of time-barred claims from the total amount of claims owed by the
Stark enterprises.
3. Order for rectifying of voting shares which was allocated on the basis of inclusion of
time-barred claims in the total amount of claim owed by the Stark enterprises..
The court being satisfied may also make any such order as it may deem fit in the
light of
Justice, Equity and Good Conscience.
All of which is most humbly and respectfully submitted.