NCLT Bengaluru Rejects Operational Creditor's Delayed Claim in Liquidation — Allahabad Bank Vs Southern Batteries Private Limited
Case Overview
The National Company Law Tribunal (NCLT), Bengaluru Bench, delivered a significant ruling in the matter of Allahabad Bank Vs Southern Batteries Private Limited, dismissing an application filed under Section 42 of the Insolvency and Bankruptcy Code, 2016 (IBC). The applicant — an operational creditor — sought to challenge the liquidator's rejection of its claim and requested condonation of delay in submitting that claim during the ongoing liquidation process. The Tribunal concluded that the application was barred by limitation on two independent grounds: the delayed filing of the appeal under Section 42, and the grossly belated submission of the claim before the liquidator.
Background Facts
Initiation of CIRP and Liquidation
The Corporate Insolvency Resolution Process (CIRP) against the corporate debtor, Southern Batteries Private Limited, was formally initiated on 19.02.2020, following admission of a petition filed by Allahabad Bank under Section 7 of the IBC in C.P. (IB) No. 357/BB/2019. The CIRP ultimately failed, and the corporate debtor was ordered into liquidation, with the respondent appointed as liquidator to conduct proceedings in accordance with the IBC and the IBBI (Liquidation Process) Regulations, 2016.
The Applicant's Claim
The applicant, ICP (India) Private Limited, an operational creditor engaged in manufacturing and supplying fibre glass products including FRP radome covers, gratings, and related items, claimed that the corporate debtor had placed purchase orders for such materials, against which goods were supplied and invoices were raised. Despite partial payments being made, an outstanding operational debt of approximately ₹22,96,814/- remained unpaid.
Reminders and a legal notice dated 22.12.2018 went unheeded, following which the applicant filed a commercial suit for recovery before the Commercial Court at Bengaluru. A judgment and decree dated 01.12.2021 was passed, directing the corporate debtor to pay the decretal amount along with interest and costs.
Late Discovery and Claim Submission
During the course of execution proceedings for enforcement of the decree, the applicant claims to have first learnt of the ongoing liquidation and the appointment of the liquidator. Thereafter, the applicant filed its claim in Form C before the liquidator on 09.05.2024, along with supporting documents. However, the liquidator rejected the claim vide email dated 28.06.2024, citing two grounds:
- The claim was filed 398 days beyond the last date prescribed under the IBBI (Liquidation Process) Regulations, 2016.
- Liquidation proceeds had already been distributed in accordance with
Section 53of the IBC.
Aggrieved by this rejection, the applicant filed the present application under Section 42 of the IBC on 19.07.2024.
Liquidator's Reply
The liquidator filed a detailed reply on 21.10.2024, raising the following key objections: