Commercial Taxes Department vs Base Corporation Ltd. And Ors

Rajeswara Rao Vittanala, J

I.A. No. 211/2020 in C.P.(IB) No. 220/BB/2018 is filed by the Commercial Taxes Department ('Applicant5), Under Rule 11 of NCLT Rules, 2016, by inter-alia seeking to condone the delay in filing the claim; and to direct the Resolution Professional to take the claim of the Commercial Tax Department, Rajasthan Jaipur.

Brief facts of the case as mentioned in the Application, which are relevant to the issue in question, are as follows:

(1) The main Company Petition bearing C.P (IB) No. 220/BB/2018 filed by M/s. Phoenix ARC Private Limited (Petitioner/Financial Creditor), U/s. 7 of IBC, 2016 R/w Rule 4 of the I&B (AAA) Rules, 2016, by inter alia seeking to initiate CIRP in respect of M/s. Base Corporation Limited (Respondent/Corporate Debtor), was admitted by this Adjudicating Authority, vide its Order dated 02.08.2019 ('Admission Order5) by initiating CIRP; appointing Shri Aashish Gupta, as IRP; imposing moratorium, etc. Subsequently, the IRP was confirmed as the Resolution Professional. In pursuance to the order, the IRP published the brief particulars of the invitation for Expressions of Interest (EOI) in the prescribed Form G on 27.11.2019, where by the prospective Resolution Applicants were invited to submit their Eol for submission of Resolution Plans for the Corporate Debtor by 15.12.2019 and Resolution Professional has received two (2) Eols from prospective Resolution Applicants In the 3rd meeting of the CoC of the Corporate Debtor convened on 16.12.2019, the Resolution Professional proposed the extension of the timeline for submission of Eols by publication of a fresh Form G. The matter was put to vote and the CoC approved to extend the timeline for submission of Eols by Prospective Resolution Applicants by 15 days from the date of the 3rd meeting of the CoC, i.e., till 31.12.2019 and the revised Form G was published by the Resolution Applicant on 22.12.2019 approval of the CoC to extend the timeline for completion of the CIRP by 90 days, i.e., till 27.04.2020, The Resolution Professional filed I.A. No. 23/2020, seeking to extend the period of CIRP of the Corporate Debtor for a further period of 90 days beyond original 180 days, i.e., till 27.04.2020, and the same extended by this Adjudicating Authority vide its Order dated 14.01.2020.

(2) It is stated that VAT evasion was detected against the Respondent Company for the year 2013-14 and the demand of Rs. 1,22,31,928/- was created against the Respondent Company on 04.07.2018, which is recoverable till date. Thereafter, the Applicant filed the claim for the said demand before the Resolution Professional in Form-66 on 28.05.2020 and the same was rejected by the Resolution Professional vide its email dated 03.06.2020, rejected the claim of the Applicant, by inter alia stating, as follows:

"the CIRP was started against Base Corporation Limited and 90 days have lapsed for filing of claim, further the resolution plan has already been received on 6th March, 2020 therefore. I cannot admit your claim now at this stage."

(3) It is stated that the Applicant did not receive any information from the IRP/RP for commencement of the CIRP proceedings. However, as soon the Applicant came to know about the initiation of the CIRP proceedings, it immediately without any delay filed its claim before the Resolution Professional.

(4) It is stated that the Order for initiation of CIRP proceedings was passed on 02.08.2019, and the Applicant submitted its claim to the Resolution Professional on 28.05.2020. Hence, the Applicant had submitted the claim after around 300 days of initiation of CIRP and delay in filing of the claim before the IRP/RP is around 200 days. As per the provisions of Regulations 12 of the IBBI (IRP for Corporate Persons) Regulations, 2016 is produced as below:

"12. Submission of proof of claims.

(1) Subject to sub-regulation (2), a creditor shall submit claim with proof on or before the last date mentioned in the public announcement.

(2) A Creditor, who fails to submit claim with proof within the time stipulated in the public announcement, may submit the claim with proof to IRP or the RP, as the case may be, on or before the ninetieth day of the Insolvency Commencement date.

(3) where the Creditor in sub-regulation (2) is a financial creditor under regulation 8, it shall be included in the committee from the date of admission of such claim.

Provided that such inclusion shall not affect the validity of any decision taken by the Committee prior to such inclusion. "

(5) As per the sub-regulation (2) of Regulation 12 of the IBBI (IRP for Corporate Persons) Regulations, 2016, a creditor, who fails to submit claim with proof within the time stipulated in the public announcement, may submit the claim with proof to the IRP or the RP, as the case may be on or before the ninetieth day of the Insolvency Commencement date.

(6) A decision rendered by Principle Bench, New Delhi in C.P.(IB) No. 737/(PB)/2018 pertaining to M/s. Twenty First Century Wire Rods Ltd. (Principal Bench, New Delhi), wherein it is inter alia directed the Resolution Professional to not reject a claim merely on the ground of being filed after prescribed period of 90 days in the matter of IBC, On 28.04.2020, when it came to the notice of the Applicant, that the assesse undergoing CIRP on receipt of the letter dated 20.03.2020, in the office of the Applicant, it has submitted its claim to IRP/RP, which was rejected on the ground of delay.

(7) It is stated that under the Rajasthan Value Added Tax. Act, 2003, the provisions of Sub-section 47 provides that the liability under the RVAT Act shall be first charge and the same reads as under:

"47. Liability under this Act to be the first charge Notwithstanding anything to the contrary contained in any law for the time being in force, any amount of tax and any other sum payable by a dealer or any other person under this Act, shall be the first charge on the property of such dealer or person

Heard Shri Sharanjith Shetty, learned Counsel for the Resolution Professional, through Video Conference. We have carefully perused the pleadings of the Parties and also extant provisions of the Code and Rules made thereunder.

Shri Sharanjith Shetty, learned Counsel for the Resolution Professional, has opposed the maintainability of the instant Petition, and the CIRP proceedings in the instant case is at an advanced stage where in Resolution Plans submitted are under consideration of COC, and if any claim is entertained now, the process already started, and at final stage, would be seriously affected. Therefore, he has urged the Adjudicating Authority to dismiss the Application as not maintainable.

It is true that there are time schedules prescribed under Code and Rules made thereunder, for conducting CIRP/Liquidation. Normally public Notification issued by IRP/RP would bind all concerned part/Parties to respond. However, few days' delays with justified reasons can be condoned provided that such delays would not seriously prejudice the interest of parties concerned. The same principle would apply equally to all Parties either Private or Public Authorities. However, whenever any claim is made by a Party, it is mandatory duty of IRP/RP to consider all claims/representations in accordance with law, in the light of facts of Case and pass detailed speaking order. By reading of the impugned email dated 03.06.2020, it is noticed that it is very cryptic communication and did not give any justified reasons for rejection of the case except mere delay and it can also be condoned in a particular case, however, subject to showing justified grounds for the same.

For the aforesaid reasons and circumstances of the Case, we are of the considered opinion that the Respondent can be directed to re-consider the case of Applicant by taking into consideration of Regulations 12 of the IBBI (IRP for Corporate Persons) Regulations, 2016 and also decision rendered in C.P.(IB) No. 737/(PB)/2018 pertaining to M/s. Twenty First Century Wire Rods Ltd. (Principal Bench, New Delhi), as relied upon by the Applicant and other contentions made in the instant Application.

In the result, I.A. No. 211/2020 in C.P.(IB) No. 220/BB/2018 is hereby disposed of by directing the Resolution Professional/Respondent to re-consider the claim of the Applicant, as per observations made in para 6 supra, and to communicate his decision to the Applicant, within a period of two weeks from the date of receipt of copy of this order. No order as to costs.