NCLAT Upholds Late Claim In Shivam Continental Insolvency As Debt Was Disclosed In Information Memorandum

The National Company Law Appellate Tribunal (NCLAT) at Delhi has refused to interfere with an order admitting a late claim in an insolvency case. The tribunal said the delay did not, by itself, warrant interference since the liability was already disclosed to bidders during the process.

A bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra noted that the Information Memorandum had flagged the dues. It had also cautioned resolution applicants to make their own enquiries.

In that backdrop, the tribunal said the successful resolution applicant was on notice.

"In the facts of the present case, where claims of the Appellant were duly noticed and reflected in the Information Memorandum, admission of the claim by the Adjudicating Authority, although filed belatedly cannot be faulted and that cannot be a ground for this Appellate Tribunal to interfere with the discretion exercised by the Adjudicating Authority in allowing the application filed by the Corporation for accepting this claim," the bench observed.

The case relates to the insolvency of Shivam Continental Private Limited. Punjab Small Industries and Export Corporation Limited is the lessor of an industrial plot held by the company. It filed a claim for dues towards enhanced compensation on July 19, 2024.

This was after the committee of creditors had approved the resolution plan on March 6, 2024. On November 20, 2024, the NCLT at Chandigarh directed the resolution professional to admit the claim.

The resolution professional challenged the order. It argued that the claim was filed too late. It pointed out that several emails sent in 2023 seeking claims had gone unanswered. It also argued that once the resolution plan was approved, no fresh claims could be entertained.

The appellate tribunal was not persuaded. It noted that the Information Memorandum itself recorded PSIEC's dues. It also carried a clear note advising bidders to verify the claim independently.

Taking note of the NCLT's findings, the tribunal observed that “the information memorandum itself captures that there are dues of the corporation, but in spite of the communication, no claim was filed.

It “indicates that prospective resolution applicants are advised to make their own enquiries in respect of claim of PSIEC.”

The NCLT had also held that a successful resolution applicant cannot get a better title than the corporate debtor. Since the leasehold rights were encumbered by unpaid dues, the defect had to be cured.

Finding no reason to interfere, the NCLAT dismissed the appeal and allowed the resolution professional and the successful resolution applicant to address the claim.

For Appellant: Advocate Harsh Garg